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<TITLE>STATS ChipPAC LTd.</TITLE>
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
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<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>WASHINGTON, D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B><FONT style="white-space: nowrap;">FORM 20-F</FONT></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(Mark One)</B>
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    <TD align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>Registration statement pursuant to section 12(b) or 12(g) of the Securities Exchange Act of
1934</B></TD>
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</TABLE>
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<DIV align="center" style="font-size: 12pt; margin-top: 6pt"><B>or</B>
</DIV>

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    <TD align="left"><FONT face="Wingdings">&#254;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934<br>
For the fiscal year ended December&nbsp;31, 2006</B></TD>
</TR>
</TABLE>
</DIV>


<DIV align="center" style="font-size: 12pt; margin-top: 6pt"><B>or</B>
</DIV>

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    <TD width="88%">&nbsp;</TD>
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    <TD align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934<br>
For the transition period from <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> to <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></B></TD>
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<DIV align="center" style="font-size: 12pt; margin-top: 6pt"><B>or</B>
</DIV>

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<TR style="font-size: 6pt">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
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<TR valign="top">
    <TD align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>Shell company report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934<br>
Date of event requiring this shell company report <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></B></TD>
</TR>
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Commission file number <FONT style="white-space: nowrap;">000-29103</FONT></B>
</DIV>

<DIV align="center" style="font-size: 24pt; margin-top: 12pt"><B>STATS ChipPAC Ltd.</B>
</DIV>

<DIV align="center" style="font-size: 10pt"><I>(Exact Name of Registrant as specified in its charter)</I></DIV>


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    <TD align="center" valign="top">&nbsp;<BR><BR><B>Republic of Singapore</B><BR>
<I>(Jurisdiction of incorporation or organization)</I>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>10 Ang Mo Kio Street 65<BR>
#05-17/20 Techpoint<BR>
Singapore 569059</B><BR>
<I>(Address of principal executive offices)</I></TD>
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<DIV align="center" style="font-size: 10pt; margin-top: 18pt">Securities registered or to be registered pursuant to Section&nbsp;12(b) of the Act.
</DIV>

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    <TD align="center" valign="top"><B>Ordinary Shares, including Ordinary Shares <BR>
represented by American Depositary Shares<BR>
(each representing ten Ordinary Shares)</B><BR>
<I>(Title of Class)</I>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;<BR><BR><B>NASDAQ Stock Market</B><BR>
<I>(Name of Exchange on which registered)</I></TD>
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<DIV align="center" style="font-size: 10pt; margin-top: 18pt">Securities registered or to be registered pursuant to Section&nbsp;12(g) of the Act.<BR>
<B>None</B><BR>
(Title of Class)
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">Securities for which there is a reporting obligation pursuant to Section&nbsp;15(d) of the Act.<BR>
<B>None</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate the number of outstanding shares of each of the issuer&#146;s classes of capital or common
stock as of the close of the period covered by the annual report.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>2,002,814,117 Ordinary Shares of Registrant.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark if the registrant is a <FONT style="white-space: nowrap;">well-known</FONT> seasoned issuer, as defined in Rule
405 of the Securities Act.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt">Yes <FONT face="Wingdings">&#254;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No <FONT face="Wingdings">&#111;</FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If this report is an annual or transition report, indicate by check mark if the registrant is
not required to file reports pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of
1934.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt">Yes <FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No <FONT face="Wingdings">&#254;</FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark whether the registrant (1)&nbsp;has filed all reports required to be filed
by Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12&nbsp;months (or
for such shorter period that the registrant was required to file such reports), and (2)&nbsp;has been
subject to such filing requirements for the past 90&nbsp;days.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt">Yes <FONT face="Wingdings">&#254;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No <FONT face="Wingdings">&#111;</FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a <FONT style="white-space: nowrap;">non-accelerated</FONT> filer. See definition of &#147;accelerated filer and large accelerated
filer&#148; in Rule&nbsp;<FONT style="white-space: nowrap;">12b-2</FONT> of the Securities Exchange Act of 1934. (Check one):
</DIV>
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    <TD width="30%">&nbsp;</TD>
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    <TD align="center" valign="top">Large accelerated filer <FONT face="Wingdings">&#254;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Accelerated filer <FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="white-space: nowrap;">Non-accelerated</FONT> filer <FONT face="Wingdings">&#111;</FONT></TD>
</TR>
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</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark which financial statement item the registrant has elected to follow.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt">Item&nbsp;17 <FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item&nbsp;18 <FONT face="Wingdings">&#254;</FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If this is an annual report, indicate by check mark whether the registrant is a shell company
(as defined in Rule&nbsp;<FONT style="white-space: nowrap;">12b-2</FONT> of the Securities Exchange Act of 1934).
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt">Yes <FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No <FONT face="Wingdings">&#254;</FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark whether the registrant has filed all documents and reports required to
be filed by Sections&nbsp;12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt">Yes <FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No <FONT face="Wingdings">&#111;</FONT>
</DIV>


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<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>








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<A name="tocpage"></A>
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<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>TABLE OF CONTENTS</B>
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    <TD nowrap align="center" colspan="2"><U><B>PAGE</B></U></TD>
    <TD>&nbsp;</TD>
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    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
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<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#101">ITEM 1.</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#101">IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS</A></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#102">ITEM 2.</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#102">OFFER STATISTICS AND EXPECTED TIMETABLE</A></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#103">ITEM 3.</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#103">KEY INFORMATION</A></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#104">ITEM 4.</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#104">INFORMATION ON OUR COMPANY</A></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#105">ITEM 4A.</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#105">UNRESOLVED STAFF COMMENTS</A></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#106">ITEM 5.</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#106">OPERATING AND FINANCIAL REVIEW AND PROSPECTS</A></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#107">ITEM 6.</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#107">DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES</A></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#108">ITEM 7.</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#108">MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS</A></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#109">ITEM 8.</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#109">FINANCIAL INFORMATION</A></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#110">ITEM 9.</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#110">THE OFFER AND LISTING</A></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">78</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#111">ITEM 10.</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#111">ADDITIONAL INFORMATION</A></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#112">ITEM 11.</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#112">QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</A></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#113">ITEM 12.</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#113">DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES</A></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#114">ITEM 13.</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#114">DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES</A></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="top">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#115">ITEM 14.</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#115">MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS</A></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#116">ITEM 15.</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#116">CONTROLS AND PROCEDURES</A></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#117">ITEM 16A.</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#117">AUDIT COMMITTEE FINANCIAL EXPERT</A></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">93</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#118">ITEM 16B.</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#118">CODE OF ETHICS</A></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">93</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#119">ITEM 16C.</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#119">PRINCIPAL ACCOUNTANT FEES AND SERVICES</A></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">94</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#120">ITEM 16D.</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#120">EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEE</A></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">94</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="top">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#121">ITEM 16E.</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#121">PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS</A></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">94</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#122">ITEM 17.</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#122">FINANCIAL STATEMENTS</A></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">94</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#123">ITEM 18.</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#123">FINANCIAL STATEMENTS</A></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">95</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#124">ITEM 19.</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#124">EXHIBITS</A></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">95</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" align="left"><A href="#125">SIGNATURES</A></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD colspan="4" align="left"><A href="#126">INDEX TO FINANCIAL
STATEMENTS</A></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>


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<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92925exv1w1.htm">Ex-1.1 Memorandum of Association of STATS ChipPAC Ltd.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92925exv4w28.htm">Ex-4.28 STATS ChipPAC Ltd. Share Option Plan</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92925exv4w30.htm">Ex-4.30 STATS ChipPAC Ltd. Performance Share Plan</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92925exv4w41.htm">Ex-4.41 Subscription Agreement dated June 22, 2006</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92925exv4w42.htm">Ex-4.42 Deed of Indemnity dated June 22, 2006</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92925exv4w43.htm">Ex-4.43 Joint Venture Agreement dated June 22, 2006</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92925exv4w44.htm">Ex-4.44 Asset Sale and Purchase Agreement dated June 22, 2006</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92925exv4w45.htm">EX-4.45 Amendment Number One dated  July 14, 2006 to the Asset Sales & Purchase Agreement dated June 22, 2006</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92925exv4w46.htm">Ex-4.46 Manufacturer's Representative Agreement dated June 22, 2006</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92925exv4w47.htm">Ex-4.47 US$125,000,000 Syndicated Facility Agreement dated August 10, 2006 between STATS ChiPAC Ltd. and Oversea-Chinese Banking Corporation Limited</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92925exv4w48.htm">Ex-4.48 English language translation of Korean language US$25,000,000 Term Loan Agreement dated May 29, 2006 between STATS ChipPAC Korea Ltd. and Hana Bank</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92925exv4w49.htm">Ex-4.49 English language summary of Chinese language NT$1.8 Billion Syndicated Loan Agreement dated March 2, 2004 between Winstek Semiconductor Corporation and Mega Bank</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92925exv4w50.htm">Ex-4.50 English language summary of Chinese language NT$3.6 Billion Syndicated Loan Agreement dated August 18, 2006 between Winstek Semiconductor Corporation and Taishin Bank</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92925exv12w1.htm">Ex-12.1 Certification by CEO pursuant to Section 302 of Sarbanes-Oxley Act of 2002</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92925exv12w2.htm">Ex-12.2 Certification by CFO pursuant to Section 302 of the Sarbanes-Oxley Act 2002</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92925exv13w1.htm">Ex-13.1 Certification by CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92925exv13w2.htm">Ex-13.2 Certification by CFO pursuant to Section 906 of the Sarbanes-Oxley Act 2002</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92925exv15w1.htm">Ex-15.1 Consent of Pricewaterhouse Coopers, Singapore,independent registered public accounting firm</A></FONT></TD></TR>
</TABLE>
</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>


<P align="center" style="font-size: 10pt">i
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>GENERAL INFORMATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;References to &#147;Singapore dollars&#148; and &#147;S$&#148; in this annual report mean Singapore dollars, the
legal currency of the Republic of Singapore. References to &#147;U.S. dollars&#148;, &#147;$&#148; and &#147;US$&#148; mean
United States dollars, the legal currency of the United States. References to &#147;South Korean Won&#148;
and &#147;KRW&#148; mean Korean Republic Won, the legal currency of the Republic of Korea. References to
&#147;Chinese Renminbi&#148; and &#147;RMB&#148; mean Chinese Renminbi, the legal currency of People&#146;s Republic of
China. References to &#147;Malaysian Ringgit&#148; and &#147;MYR&#148; mean Malaysian Ringgit, the legal currency of
Malaysia. References to &#147;New Taiwan dollar&#148; and &#147;NT$&#148; mean New Taiwan dollars, the legal currency
of Taiwan. References to &#147;Japanese yen&#148; or &#147;&#165;&#148; mean Japanese yen, the legal currency of Japan. The
noon buying rate in the City of New York on January&nbsp;31, 2007 was S$1.54 per $1.00 for cable
transfers in Singapore dollars, KRW941.00 per $1.00 for cable transfers in South Korean Won,
RMB7.77 per $1.00 for cable transfers in Chinese Renminbi, MYR3.50 per $1.00 for cable transfers in
Malaysian Ringgit, NT$32.95 per $1.00 for cable transfers in New Taiwan dollars and &#165;121.02 per
$1.00 for cable transfers in Japanese yen, as certified for customs purposes by the Federal Reserve
Bank of New York. For your convenience, unless otherwise indicated, certain amounts in these
currencies have been translated into U.S. dollars based on these exchange rates. Certain amounts
(including percentage amounts) have been rounded for convenience; as a result, certain figures may
not sum to total amounts or equal quotients.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No representation is made that the Singapore dollar, U.S. dollar, South Korean Won, Chinese
Renminbi, Malaysian Ringgit, New Taiwan dollar or Japanese yen amounts shown in this annual report
could have been or could be converted at such rate or at any other rate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In this annual report, unless otherwise specified or the context requires, the terms
&#147;Company&#148;, &#147;combined company&#148;, &#147;STATS ChipPAC&#148;, &#147;we&#148;, &#147;our&#148;, and &#147;us&#148; refer to STATS ChipPAC Ltd.,
a Singapore company, and its consolidated subsidiaries after the consummation of the merger
described herein, the term &#147;STATS&#148; refers to ST Assembly Test Services Ltd, a Singapore company,
and its consolidated subsidiaries prior to the consummation of the merger and the term &#147;ChipPAC&#148;
refers to ChipPAC, Inc., a Delaware corporation, and its consolidated subsidiaries prior to the
consummation of the merger and ChipPAC, Inc. (now known as STATS ChipPAC, Inc. as described below)
as a <FONT style="white-space: nowrap;">wholly-owned</FONT> subsidiary of STATS ChipPAC after the consummation of the merger. On January&nbsp;20,
2005, STATS ChipPAC, Inc. (formerly known as ST Assembly Test Services, Inc.) was merged into
ChipPAC, Inc. The entity surviving the merger was renamed STATS ChipPAC, Inc.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Following the consummation of the merger of STATS and ChipPAC, we have included in our
financial results for the periods presented in this annual report the financial results of ChipPAC
from August&nbsp;5, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since the beginning of fiscal 2005, we have employed quarterly and fiscal year reporting
periods. Our <FONT style="white-space: nowrap;">52-53&nbsp;week</FONT> fiscal year ends on the Sunday nearest to December&nbsp;31. Our fiscal quarters
end on a Sunday and are generally thirteen weeks in length. Our first three quarters of 2006 ended
on March&nbsp;26, June&nbsp;25 and September&nbsp;24, respectively, and our fourth quarter and fiscal year 2006
ended on December&nbsp;31, while our first three quarters of 2005 ended on March&nbsp;27, June&nbsp;26 and
September&nbsp;25, respectively, and our fourth quarter and fiscal year 2005 ended on December&nbsp;25, the
Sunday nearest to the calendar quarter end of each period. Our quarterly periods in the years prior
to 2005 ended on March&nbsp;31, June&nbsp;30, September&nbsp;30 and December&nbsp;31, respectively. Unless otherwise
stated, all years and dates refer to STATS ChipPAC&#146;s fiscal years.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B><FONT style="white-space: nowrap;">FORWARD-LOOKING</FONT> STATEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain of the statements in this annual report on Form <FONT style="white-space: nowrap;">20-F</FONT> are <FONT style="white-space: nowrap;">forward-looking</FONT> statements
that are based on management&#146;s current views and assumptions and involve a number of risks and
uncertainties which could cause actual results to differ materially. These include statements on
our financial condition and results of operations, cash flows, dividends, financing plans, business
strategies, operating efficiencies and synergies, budget, capital and other expenditures,
competitive positions, growth opportunities for existing products, benefits from new technology,
plans or objectives of management, outcome of litigation, industry growth, the impact of regulatory
initiatives, markets for our securities and other statements on underlying assumptions, other than
statements of historical fact, including but not limited to those that are identified by the use of
words such as &#147;anticipates&#148;, &#147;believes&#148;, &#147;estimates&#148;, &#147;expects&#148;, &#147;intends&#148;, &#147;plans&#148;, &#147;predicts&#148;,
&#147;projects&#148; and similar expressions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Factors that could cause actual results to differ include general business and economic
conditions and the state of the semiconductor industry; level of competition; demand for <FONT style="white-space: nowrap;">end-use</FONT>
applications products such as communications equipment and personal computers (PCs); decisions by
customers to discontinue outsourcing of test and packaging services; reliance on a small group of
principal customers; continued success in technological innovations; availability of financing;
pricing pressures including declines in average selling prices;
proposed tender offer by Singapore Technologies Semiconductors Pte Ltd (STSPL), a subsidiary of Temasek Holdings (Private) Limited (Temasek Holdings);
actions that may be taken by the Company or third parties in
connection with or in response to such proposed tender offer; our substantial
</DIV>

<P align="center" style="font-size: 10pt">1
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">level of indebtedness; potential impairment charges; adverse tax and other financial consequences if the
South Korean taxing authorities do not agree with our interpretation of the applicable tax laws; ability to develop and protect our
intellectual property; rescheduling or canceling of customer orders; changes in product mix;
intellectual property rights disputes and litigation; capacity utilization; delays in acquiring or
installing new equipment; limitations imposed by our financing arrangements which may limit our
ability to maintain and grow our business; changes in customer order patterns; shortages in supply
of key components; disruption of our operations; loss of key management or other personnel; defects
or malfunctions in our testing equipment or packages; changes in environmental laws and
regulations; exchange rate fluctuations; regulatory approvals for further investments in our
subsidiaries; significant ownership by Temasek Holdings (Private) Limited (Temasek Holdings) that
may result in conflicting interests with Temasek Holdings and our affiliates; unsuccessful
acquisitions and investments in other companies and businesses; our ability to successfully
integrate the operations of former STATS and ChipPAC and their employees; labor union problems in
South Korea; uncertainties of conducting business in China; natural calamities and disasters,
including outbreaks of epidemics and communicable diseases; and other risks described in &#147;Item&nbsp;3.
Key Information &#151; D. Risk Factors&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You should not unduly rely on such statements. We do not intend, and do not assume any
obligation, to update any industry information or <FONT style="white-space: nowrap;">forward-looking</FONT> statements set forth in this
annual report to reflect subsequent events or circumstances.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>RECENT DEVELOPMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Temasek Holdings&#146; Subsidiary, Singapore Technologies Semiconductors Pte Ltd&#146;s, Tender Offer</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On
March&nbsp;1, 2007, STSPL, a <FONT style="white-space: nowrap;">wholly-owned</FONT> subsidiary of Temasek Holdings, announced its intention to
launch a voluntary conditional cash offer for the remaining ordinary shares and American Depositary
Shares (ADSs) in our Company that STSPL does not already own (the Offer). As of January&nbsp;31, 2007,
STSPL owned approximately 35.56% of our outstanding ordinary shares. The information in the
following paragraph is based on STSPL&#146;s Offer announcement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The offer price will be S$1.75 for each ordinary share and S$17.50 for each ADS in cash. The Offer
will be conditioned upon, among other matters, STSPL receiving acceptance of such number of
ordinary shares and ADSs which, together with all other ordinary shares and ADSs owned, acquired or
agreed to be acquired by STSPL, would represent more than 50% of our outstanding ordinary shares
and ADSs following the close of the Offer. If ordinary shares and ADSs tendered into the Offer
result in STSPL owning at least 90% of our outstanding ordinary shares and ADSs (other than those
owned by STSPL and its related corporations at the commencement of the Offer), STSPL intends to
offer a higher purchase price of S$1.88 per ordinary share or S$18.80 per ADS to all shareholders
who accept the Offer, regardless of when their ordinary shares and ADSs are tendered. The Offer
would also include an offer by STSPL for our outstanding $115,000,000 Convertible Notes due 2008
and $150,000,000 2.50% Convertible Notes due 2008. The offer for the convertible notes is
conditioned on the offer for the ordinary shares and ADSs becoming unconditional in all respects.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">STSPL stated that it will send to our security holders the Offer to Purchase, which will contain
the terms and conditions of the Offer, not earlier than 14&nbsp;days and not later than 21&nbsp;days from the
date of the Offer announcement. STSPL announced that the Offer will remain open for acceptances by
security holders for a period of not less than 20 U.S. business days or 28 calendar days after the
date of posting of the Offer to Purchase, whichever is the longer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On March&nbsp;1, 2007, we announced that our board of directors will appoint an independent financial
adviser to advise the directors of our Company who are regarded as independent for the purposes of
the Offer under the Singapore Code on
<FONT style="white-space: nowrap;">Take-Overs</FONT> and
Mergers (<FONT style="white-space: nowrap;">Take-Over</FONT> Code) (Special Committee). On March&nbsp;3, 2007, our board of directors
formed the Special Committee to review and consider the Offer and
such other strategic alternatives available to the Company as the
Special Committee may deem to be appropriate.  The recommendations to security holders by our Special Committee
and the reasons for those recommendations will be set forth in a circular of our Company (which
will also contain the advice of the independent financial adviser appointed by our Special
Committee) and our Company&#146;s Solicitation/Recommendation Statement on <FONT style="white-space: nowrap;">Schedule&nbsp;14D-9</FONT> filed with the
Securities and Exchange Commission (SEC). Following their
publication, these documents can be obtained without charge at www.sec.gov, www.sgx.com and www.statschippac.com. Our security
holders should read these filings as they will contain important information about the Offer, our
board of director&#146;s recommendations, the advice of the independent financial adviser and other
related matters.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">See &#147;Item&nbsp;5. Operating and Financial Review and Prospects &#151; Temasek Holdings&#146; Subsidiary,
Singapore Technologies Semiconductors Pte Ltd&#146;s, Tender Offer&#148; for a discussion of the impact on
our liquidity and earnings guidance for our first fiscal quarter of 2007.
</DIV>


<DIV align="left">
<A name="101"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 1.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>
<DIV align="left">
<A name="102"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 2.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>OFFER STATISTICS AND EXPECTED TIMETABLE</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>
<DIV align="left">
<A name="103"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 3.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>KEY INFORMATION</B></TD>
</TR>
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>A. Selected Financial Data</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You should read the following selected consolidated financial data in conjunction with our
consolidated financial statements and the related notes and &#147;Item&nbsp;5. Operating and Financial Review
and Prospects&#148; included elsewhere in this annual report. The selected consolidated financial data
as of December&nbsp;25, 2005 and December&nbsp;31, 2006 and for 2004, 2005 and 2006 are derived from our
consolidated financial statements which have been audited by PricewaterhouseCoopers (PwC),
independent registered public accounting firm, and are included in &#147;Item&nbsp;18. Financial Statements&#148;.
The selected consolidated financial data as of December&nbsp;31, 2002, 2003 and 2004 and for 2002 and
2003 are derived from our audited consolidated financial statements, which are not included in
this annual report.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our consolidated financial statements are prepared in accordance with accounting principles
generally accepted in the United States of America (U.S. GAAP).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Following the consummation of the merger of STATS and ChipPAC, we have included in our
financial results for the periods presented in this annual report the financial results of ChipPAC
from August&nbsp;5, 2004. The financial results prior to 2004 reflect the financial results of STATS and
do not include the financial results of ChipPAC.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2002</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18"><B>(In thousands, except per share data and ratios)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Income Statement Data:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">225,738</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">380,691</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">769,121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,157,253</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,616,933</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(247,943</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(328,014</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(643,540</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(968,023</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,290,773</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(22,205</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,677</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">125,581</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">189,230</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">326,160</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Selling, general and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,241</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,849</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,501</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">135,751</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">139,466</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,856</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,295</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,637</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,071</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,446</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Goodwill impairment(1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">453,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equipment impairments(2)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,666</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">2
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2002</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18"><B>(In thousands, except per share data and ratios)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prepaid leases written off</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">764</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Restructuring charges</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">830</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,938</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71,527</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,144</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">555,138</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">162,652</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">171,850</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating income (loss)(3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(93,732</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">533</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(429,557</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,578</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">154,310</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income (expense), net:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest income (expense), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,143</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,209</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(24,386</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(36,215</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(40,415</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Foreign currency exchange gain (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(512</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,634</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,122</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">531</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,578</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity income from equity investee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">152</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other <FONT style="white-space: nowrap;">non-operating</FONT> income (expense), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,419</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,570</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(936</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,076</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">108</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total other income (expense), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,236</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(26,444</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(36,760</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">(41,733</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(95,968</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">528</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(456,001</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,182</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112,577</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax benefit (expense)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,163</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(705</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,894</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,689</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(25,759</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;before minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(88,805</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(177</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(463,895</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(19,871</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">86,818</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(514</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,539</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,828</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,440</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,010</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(89,319</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,716</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(467,723</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(26,311</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">76,808</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)&nbsp;per ordinary share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.09</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.00</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.33</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.01</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.04</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.09</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.00</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.33</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.01</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.04</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)&nbsp;per ADS:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.90</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.02</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(3.27</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.13</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.90</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.02</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(3.27</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.13</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.37</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ordinary shares (in thousands) used in per ordinary
share calculation:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">991,549</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,005,374</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,428,954</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,961,950</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,991,110</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">991,549</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,005,374</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,428,954</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,961,950</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,161,545</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ADS (in thousands) used in per ADS calculation:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99,155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">142,895</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">196,195</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">199,111</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99,155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">142,895</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">196,195</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">216,154</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance Sheet Data:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">167,661</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">313,163</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">227,509</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">224,720</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">171,457</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Working capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">165,851</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">328,583</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">124,028</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250,369</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">227,967</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">721,968</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">993,852</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,271,702</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,393,382</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,458,280</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current installments of obligations under capital leases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,558</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,587</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,091</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,680</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="white-space: nowrap;">Short-term</FONT> borrowings and current installments of
<FONT style="white-space: nowrap;">long-term</FONT> debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,588</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,841</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">174,281</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,542</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,693</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Obligation under capital leases, excluding current
installments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,520</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">812</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,771</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,680</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="white-space: nowrap;">Long-term</FONT> debt, excluding current installments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">218,370</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">358,789</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">642,175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">775,425</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">697,523</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">366,512</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">475,956</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,159,350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,141,652</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,246,150</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Share capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">160,295</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">172,434</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">298,233</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">303,052</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,847,002</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ordinary shares outstanding (in thousands)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">992,115</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,076,620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,944,330</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,976,292</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,002,814</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>We recorded impairment charges of $453,000,000 in 2004 on our goodwill associated with
purchase accounting for the acquisition of ChipPAC.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>We recognized impairment charges of $14,666,000 in 2002 on our equipment.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes <FONT style="white-space: nowrap;">share-based</FONT> compensation expenses of $60,000, $97,000, $658,000 and $743,000 in
accordance with Accounting Principles Board Opinion No.&nbsp;25, &#147;Accounting for Stock Issued to
Employees&#148; (APB 25) in 2002, 2003, 2004 and 2005, respectively, and $13,688,000 in accordance
with Statement of Financial Accounting Standards (SFAS)&nbsp;No.&nbsp;123(R), <FONT style="white-space: nowrap;">&#147;Share-Based</FONT> Payment&#148; in
2006.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">3
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Capitalization and Indebtedness</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Reasons for the Offer and Use of Proceeds</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. Risk Factors</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to the other information and risks described elsewhere in this annual report, our
business is subject to the following risks:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risks Relating to Our Company</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Downturns in the semiconductor industry have adversely affected our operating results and may
continue to adversely affect our operating results.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our results of operations have been and will be significantly affected by conditions in the
semiconductor industry. The market for semiconductors is characterized by:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>rapid technological change;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>evolving industry standards;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>intense competition; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>fluctuations in <FONT style="white-space: nowrap;">end-user</FONT> demand.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The semiconductor industry experienced a significant downturn beginning in the fourth quarter of
2000. This downturn had a significant adverse impact on our sales and financial performance as
customers reduced purchase orders to reflect inventory corrections and lower demand experienced in
their <FONT style="white-space: nowrap;">end-user</FONT> markets. The semiconductor industry started its recovery in late 2002. However, in
late 2004 to early 2005 and in late 2006, we experienced a softening of our business as our
customers corrected their excess inventory positions. Despite the softening of our business in
late 2006, the semiconductor industry outlook in 2007 published by recognized industry research
analysts and associations are projecting growth rates of approximately 7% as compared to 2006.
However, there is no assurance that inventory correction will not continue or resurface in 2007 or
that there will not be a further decline in the industry that will result in a material adverse
effect on our business, financial condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We may not be able to compete successfully in our industry.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The independent semiconductor assembly and test service (SATS)&nbsp;industry is very competitive
and diverse and requires us to be capable of testing increasingly complex semiconductors as well as
bringing the most technologically advanced packages to market as quickly as our competitors. The
industry comprises both large <FONT style="white-space: nowrap;">multi-national</FONT> companies and small niche market competitors. We face
substantial competition from a number of competitors, including, among others, Advanced
Semiconductor Engineering, Inc. and its subsidiaries, Amkor Technology, Inc. and Siliconware Precision Industries Co., Ltd. Their facilities are
primarily located in Asia.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each of these companies has significant manufacturing capacity, financial resources, research
and development operations, marketing and other capabilities and has been in operation for some
time. Such companies have also established relationships with many of our current or potential
customers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also face competition from the internal capabilities and capacity of many of our current
and potential integrated device manufacturers (IDM)&nbsp;customers. Many IDMs have greater financial,
technical and other resources than we have and may rely on internal sources for packaging and test
services for a number of reasons including due to:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>their desire to realize higher utilization of their existing test and packaging capacity;</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">4
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>their unwillingness to disclose proprietary technology;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>their possession of more advanced packaging and testing technologies; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the guaranteed availability of their own packaging and test capacity.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We cannot assure you that we will be able to compete successfully in the future against our
existing or potential competitors or that our customers will not rely on internal sources for test
and packaging services, or that our business, financial condition and results of operations will
not be adversely affected by such increased competition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>A decrease in demand for communications equipment, consumer and <FONT style="white-space: nowrap;">multi-applications,</FONT> or personal
computers, may significantly decrease the demand of our services.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Substantially all of our net revenues are derived from customers who use our test or packaging
services for semiconductors used in communications equipment, consumer and <FONT style="white-space: nowrap;">multi-applications,</FONT> or
personal computers. Any significant decrease in the demand for communications equipment, consumer
and <FONT style="white-space: nowrap;">multi-applications,</FONT> or personal computers may decrease the demand for our services and could
seriously harm our Company. In addition, the declining average selling prices of communications
equipment, consumer and <FONT style="white-space: nowrap;">multi-applications,</FONT> or personal computers places significant pressure on
the prices of the components that are used in these products. If the average selling prices of
communications equipment, consumer and <FONT style="white-space: nowrap;">multi-applications,</FONT> or personal computers continue to
decrease, the pricing pressure on services provided by us may reduce our net revenues and therefore
significantly reduce our gross profit margin.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Decisions by our IDM customers to curtail outsourcing may adversely affect our business.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Historically, we have been dependent on the trend in outsourcing of packaging and test
services by IDMs. Our IDM customers continually evaluate the outsourced services against their own
<FONT style="white-space: nowrap;">in-house</FONT> packaging and test services. As a result, at any time, IDMs may decide to shift some or
all of their outsourced packaging and test services to internally sourced capacity. Any such shift
or a slowdown in this trend of outsourcing packaging and test services is likely to adversely
affect our business, financial condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In a downturn in the semiconductor industry, IDMs may respond by shifting some outsourced
packaging and test services to internally serviced capacity on a <FONT style="white-space: nowrap;">short-term</FONT> basis. This would have
a material adverse effect on our business, financial condition and results of operations,
especially during a prolonged industry downturn.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We depend on a small number of customers for a significant portion of our revenues and any decrease
in sales to any of them could adversely affect our business and results of operations.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are dependent on a small group of customers for substantially all of our net revenues. In
2006, our ten largest customers accounted for 65.3% of our net revenues. Our two largest customers,
Freescale Semiconductor, Inc. and Intel Corporation, each contributed in excess of 10% of our net
revenues and in the aggregate contributed 20.8% of our net revenues in 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although no one customer is expected to account for more than 15% of our Company&#146;s revenues,
we anticipate that our ten largest customers will continue to account for a significant portion of
our net revenues for the foreseeable future. Our ability to retain these and other customers, and
to add new customers, is important to our ongoing success. The loss of one or more key customers,
or reduced demand from any key customers, could have a material adverse effect on our business,
financial condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In line with industry practice, new customers usually require us to pass a lengthy and
rigorous qualification process that can take up to six months at a significant cost to the
customer. As a result, customers are reluctant to qualify new packaging and test service providers
and it may be difficult for us to attract new major customers and/or break into new markets. In
addition, if we fail to qualify packages with potential customers or customers with which we have
recently become qualified do not use our services, then our customer base could become more
concentrated with an even more limited number of customers accounting for a significant portion of
our revenues. Furthermore, we believe that once a semiconductor company has selected a particular
packaging and test company&#146;s services, the semiconductor company generally relies on that vendor&#146;s
packages for specific applications and, to the extent possible, subsequent generations of that
vendor&#146;s packages. Accordingly, it may be difficult to achieve significant sales from a customer
once it selects another vendor&#146;s packaging and test services. See &#147;Item&nbsp;4. Information on Our
Company &#151; B. Business Overview &#151; Customers&#148;.
</DIV>

<P align="center" style="font-size: 10pt">5
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We may not be able to develop or access leading technology which may affect our ability to compete
effectively.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The semiconductor packaging and test markets are characterized by rapid technological change
and increasing complexity. We must be able to offer our customers packaging and test services based
upon the most advanced technology. This requirement could result in significant research and
development expenditures and capital expenditures in the future. We periodically review our
equipment for obsolescence and impairment. If we determine that, due to technological advances,
reduced demand in certain end markets or otherwise, the anticipated future usage of any of our
equipment has been diminished, we will <FONT style="white-space: nowrap;">write-down</FONT> such equipment. Although no <FONT style="white-space: nowrap;">write-down</FONT> of
equipments was made in 2004, 2005 and 2006, we cannot assure you that we would not have to write
down our equipment in the future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we fail to develop advanced test and packaging services or to access those developed by
others in a timely manner, we could lose existing customers or miss potential customers demanding
these advanced services. Developing new technology may result in longer sales cycles and product
implementations, which may cause revenue and operating income to fluctuate or fail to meet
expectations. Also, we would miss the opportunity to benefit from the higher average selling prices
which are derived from newer and emerging packaging and test services. In addition, our choice of
test equipment is important because obtaining the wrong test equipment or failing to understand
market requirements will make us less competitive and will lower our asset utilization. In order to
remain competitive, we must be able to upgrade or migrate our test equipment to respond to changing
technological requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We expect to incur significant capital expenditures in the future and therefore may require
additional financing in the future which may not be available on terms favorable to us, if at all.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our capital expenditures are largely driven by the demand for our services. Our capital
expenditures were $277.7&nbsp;million in 2005 and $348.5&nbsp;million in 2006. In 2007, we expect our
capital expenditures to be approximately $250.0&nbsp;million, depending on business conditions. To grow
our business, we will need to increase our packaging and test capacity, to replace existing
equipment from time to time and to expand our facilities. This will require substantial capital
expenditures for additional equipment and further expenditure to recruit and train new employees.
These expenditures will likely be made in advance of increased sales. We cannot assure you that our
net revenues will increase after these expenditures. Failure to increase our net revenues after
these expenditures could have a material adverse effect on our business, financial condition and
results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may need to obtain additional debt or equity financing to fund our capital expenditures.
Additional debt financing may be required which, if obtained, may:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>limit our Company or its subsidiaries&#146; ability to pay dividends or require us to seek consents for the payment of dividends;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>increase our vulnerability to general adverse economic and industry conditions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>limit our ability to pursue our growth plan;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>require us to dedicate a substantial portion of our cash flow from operations to
payments on our debt, thereby reducing the availability of our cash flow to fund capital
expenditures, working capital and other general corporate purposes; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>limit our flexibility in planning for, or reacting to, changes in our business and our
industry.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We cannot assure you that we will be able to obtain the additional financing on terms that are
acceptable to us or at all.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Our profitability will be affected by average selling prices of packaging and test services that
have experienced pricing pressures and have a tendency to decline.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Decreases in the average selling prices of our packaging and test services can have a material
adverse effect on our profitability. The average selling prices of packaging and test services have
declined historically, with packaging services in particular experiencing severe pricing pressure.
This pricing pressure for packaging and test services is likely to continue. Our ability to
maintain or increase our profitability will continue to be dependent, in large part, upon our
ability to offset decreases in average selling prices by improving production efficiency,
increasing unit volumes packaged and tested, or by shifting to higher margin packaging and test
services. If we are unable to do so, our business, financial condition and results of operations
could be materially adversely affected.
</DIV>

<P align="center" style="font-size: 10pt">6
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We have experienced substantial losses in the past and may continue to do so in the future.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2004, we suffered an operating loss of $429.6&nbsp;million and a net loss of $467.7&nbsp;million. In
2005, we achieved an operating income of $26.6&nbsp;million, but suffered a net loss of $26.3&nbsp;million.
Although we achieved an operating income of $154.3&nbsp;million and a net income of $76.8&nbsp;million in
2006, we cannot assure you that we will not continue to incur operating losses and net losses in
the future due to a variety of factors, including if there is a further decline in the
semiconductor industry.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>The
announcement by Temasek Holdings&#146; subsidiary, STSPL, of a proposed tender offer to purchase
all of our outstanding ordinary shares and ADSs may cause disruptions in our business, which could
have a material adverse effect on our business and operations.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our customers, suppliers or other strategic partners, in response to the announcement by STSPL, a
<FONT style="white-space: nowrap;">wholly-owned</FONT> subsidiary of
Temasek Holdings, of its intention to launch a tender offer to purchase
all of our outstanding ordinary shares and ADSs and certain of our outstanding convertible notes,
as described above under &#147;Recent Developments &#151; Temasek
Holdings&#146; Subsidiary, Singapore
Technologies Semiconductors Pte Ltd&#146;s, Tender Offer&#148;, may terminate or cancel their existing
relationships with us, or delay or defer decisions to enter into or to renew those arrangements,
which could have a material adverse effect on our business and operations. Similarly, our current
and prospective employees may experience uncertainty about their future roles with our Company,
which may adversely affect our ability to attract and retain key management, sales, marketing and
technical personnel.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Litigation may arise in connection with the proposed tender offer by STSPL, which could negatively
impact our business and our results of operations.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Litigation may arise against, among others, our Company and our directors and officers alleging,
among others, breaches of fiduciary duties relating to the proposed tender offer by STSPL. There
can be no assurance as to the outcome of any such litigation (if it arises) and the impact on our
business and results of operations. Any such litigation, with or without merit, could
substantially divert the attention of management and resources in general. In addition, the cost of
defending any such litigation, even if resolved favorably, could be substantial.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Our substantial indebtedness could adversely affect our financial health.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have a substantial amount of indebtedness. As of December&nbsp;31, 2006, we had total
indebtedness of $762.9&nbsp;million, consisting of $365.0&nbsp;million of unsecured senior notes, $318.1
million of unsecured convertible notes (of which $161.5&nbsp;million were senior convertible notes and
$150.0&nbsp;million were subordinated convertible notes), $79.2&nbsp;million of senior secured debt
(including capital lease obligations) and $0.6&nbsp;million of unsecured <FONT style="white-space: nowrap;">short-term</FONT> debt. In addition,
we are permitted to incur additional debt under the terms of our existing debt.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our substantial indebtedness could have a material adverse effect on our business, financial
condition and results of operations by:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>increasing our vulnerability to general adverse economic and industry conditions by
limiting our flexibility in planning for, or reacting to, changes in the business and the
industry in which we operate;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>requiring us to dedicate a substantial portion of our cash flow from operations to
payments on our indebtedness, thus reducing the availability of cash flow to fund working
capital, capital expenditures, research and development efforts and other general corporate
purposes;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>placing us at a competitive disadvantage relative to our competitors that have less leverage; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>limiting, along with the financial and other restrictive covenants in the indebtedness, our ability to borrow additional funds.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, the holders of our various notes may, in certain circumstances, including a
change in control of our Company, in each case as defined in the respective indenture relating to
such notes, require us to redeem all or a portion of the holders&#146; notes. STSPL&#146;s proposed tender
offer for the remaining shares in our Company that STSPL does not already own, as described above
under &#147;Recent Developments &#151; Temasek Holdings&#146; Subsidiary, Singapore Technologies Semiconductors
Pte Ltd&#146;s, Tender Offer&#148;, if consummated, would result in a change in control of our Company as
defined in the indenture relating to our $150.0&nbsp;million of 2.5% convertible subordinated notes due
2008. In such an event, holders of our 2.5% convertible subordinated notes due 2008 will have the
right to require us to repurchase all or a portion of their notes. Further, holders of our $115.0&nbsp;million of zero coupon convertible notes due 2008 may require us to repurchase all or a portion of
the holders&#146; convertible notes on November&nbsp;7, 2007. In any such events, or at maturity of each
series of notes, we may not have sufficient funds or we may not be able to arrange financing on
terms that are acceptable to us or at all or to obtain waivers of prohibitions from lenders under
our other financing arrangements to make the required purchase or redemption. If we do not have
sufficient funds or are unable to obtain adequate financing or waivers to repurchase or redeem such
notes, we will be in default under the terms of those notes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>To service our indebtedness and other potential liquidity requirements we will require a
significant amount of cash. Our ability to generate cash depends on many factors beyond our
control.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our ability to make payments on and to refinance our indebtedness and to fund planned capital
expenditures and research and development efforts will depend on our ability to generate cash in
the future. This, to a certain extent, is subject to general economic, financial, competitive,
legislative, regulatory and other factors that are beyond our control. We believe that our cash
flow from operations together with our existing liquid assets and credit facilities will be
sufficient to meet our cash flow needs for at least the next 12&nbsp;months. However, our business may
not generate sufficient cash flow from operations and future borrowings may not be available to us
in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We recorded an impairment charge of $453.0&nbsp;million to our earnings in 2004 and may be required to
record another significant charge to earnings in the future when we review our goodwill or other
intangible assets for potential impairment.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2006, we had goodwill and other intangible assets of approximately $513.5
million and $41.8&nbsp;million, respectively, which primarily resulted from the accounting of the merger
in 2004 using the purchase accounting method. Under U.S. GAAP, we are required to review our
goodwill and intangible assets for impairment when events or changes in circumstances indicate the
carrying value may not be recoverable. In addition, goodwill and other intangible assets with
indefinite lives are required to be tested for impairment at least annually. We
</DIV>

<P align="center" style="font-size: 10pt">7
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">performed an impairment review and recorded an impairment charge of $453.0&nbsp;million to our earnings in 2004. Our
impairment review of goodwill in 2005 and 2006 did not indicate any impairment. We may be required in the future to
record a significant charge to earnings in our financial statements during the period in which any
impairment of our goodwill or other intangible assets is determined. Such charges will likely have
a significant adverse impact on our results of operations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We could suffer adverse tax and other financial consequences if taxing authorities do not agree
with our interpretation of applicable tax laws.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ChipPAC is our <FONT style="white-space: nowrap;">wholly-owned</FONT> subsidiary. ChipPAC&#146;s corporate structure and operations are
based, in part, on interpretations of various tax laws, including withholding tax, and other
relevant laws of applicable taxing jurisdictions. We cannot assure you that the taxing authorities
will agree with our interpretations or that they will reach the same conclusions. For example, the
South Korean National Tax Service (NTS)&nbsp;has informed ChipPAC that it has made an assessment of
approximately KRW 18.7&nbsp;billion (approximately $19.9&nbsp;million based on the exchange rate as at
January&nbsp;31, 2007) against ChipPAC relating to withholding tax and interest that it asserts should
have been collected on interest paid on a loan from ChipPAC&#146;s Hungarian subsidiary to its South
Korean subsidiary. We believe that no withholding tax on the transaction in question is required under
the prevailing tax treaty. We have appealed this assessment through the NTS&#146;s Mutual Agreement
Procedure (MAP)&nbsp;and believe that such assessment should be overturned. The MAP will terminate on
July&nbsp;3, 2007 if not extended by the NTS. In the event that we are not successful with our appeal,
we estimate that the maximum amount payable including potential interest and local surtax as at
December&nbsp;31, 2006 to be KRW 36.5&nbsp;billion (approximately $38.8&nbsp;million based on the
exchange rate as at January&nbsp;31, 2007). However, our interpretations are not binding on any taxing
authority and, if these foreign jurisdictions were to change or to modify the relevant laws, we
could suffer adverse tax and other financial consequences or the anticipated benefits of ChipPAC&#146;s
corporate structure could be materially impaired. See &#147;Item&nbsp;5. Operating and Financial Review and
Prospects &#151; Liquidity and Capital Resources &#151; Contingencies&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Our intellectual property is important to our ability to succeed in our business but may be
difficult to obtain and protect.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our ability to compete successfully and achieve future growth in net revenues will depend, in
part, on our ability to develop and to protect our intellectual property and the intellectual
property of our customers. We seek to protect proprietary information and <FONT style="white-space: nowrap;">know-how</FONT> through patents,
the use of confidentiality and <FONT style="white-space: nowrap;">non-disclosure</FONT> agreements and limited access to and distribution of
proprietary information. As of January&nbsp;31, 2007, our Company and our various subsidiaries held a
total of approximately 644 issued patents and pending patent applications. Of these, we have
approximately 116 patents granted or allowed by the U.S. Patent and Trademark Office and
approximately 57 patents registered or allowed in Singapore, South Korea and other countries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We cannot assure you that any of our pending applications for patents will be granted, or, if
granted, will not be challenged, invalidated or circumvented or will offer us any meaningful
protection. Further, we cannot assure you that the Asian countries in which we market our products
will protect our intellectual property rights in the same manner or to the same extent as the
United States. Additionally, we cannot assure you that our competitors will not challenge our
rights in such intellectual property, or develop, patent or gain access to similar <FONT style="white-space: nowrap">know-how</FONT> and
technology, or reverse engineer our packaging services, or that any confidentiality and
<FONT style="white-space: nowrap;">non-disclosure</FONT> agreements upon which we rely to protect our trade secrets and other proprietary
information will be adequate protection. The occurrence of any such events could have a material
adverse effect on our business, financial condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have licenses to use third party patents, patent applications and other technology rights,
as well as trademark rights, in the operation of our business. To the extent these licenses are not
perpetual and irrevocable, we believe that these licenses will be renewable under normal or
reasonable commercial terms upon their expiration. However, we may be unable to utilize the
technologies under these licenses if they are not extended or otherwise renewed or if any of these
licenses are terminated by the licensor. Alternatively, if we are able to renew these licenses, we
cannot assure you that they will be renewed on the same terms as currently exist. Any termination
of, or failure to extend or renew, these licenses could cause us to incur substantial liabilities
and to suspend the services and processes that utilize these technologies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We may be subject to intellectual property rights disputes which could materially adversely affect
our business.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our ability to compete successfully will depend, in part, on our ability to operate without
infringing the proprietary rights of others. However, we may not be aware of the intellectual
property rights of others or whether such rights conflict with our rights, or be familiar with the
laws governing such rights in certain countries in which our products and services are or may be
sold. As the number of patents, copyrights and other intellectual property rights in our industry
increases, and as the coverage of these rights increases, we may face more frequent patent and
other intellectual property infringement claims brought by third parties.
</DIV>

<P align="center" style="font-size: 10pt">8
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event that any valid claim is made against us, we could be required to:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>stop using certain processes or other intellectual property;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>cease manufacturing, using, importing or selling infringing packages;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>pay substantial damages;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>develop <FONT style="white-space: nowrap;">non-infringing</FONT> technologies; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>attempt to acquire licenses to use the infringed technology.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is the nature of the semiconductor industry that, from time to time, we may receive
communications alleging that we have infringed intellectual property rights of others. For example,
in February&nbsp;2006, our Company, ChipPAC and STATS ChipPAC (BVI)&nbsp;Limited were named as defendants in
a patent infringement lawsuit filed in United States Federal Court for the Northern District of
California. The plaintiff, Tessera Technologies, Inc. (Tessera), has asserted that semiconductor
chip packaging, specifically devices having Ball Grid Array (BGA) and <FONT style="white-space: nowrap;">multi-chip</FONT> BGA configurations used by the
defendants infringe certain patents of Tessera. Tessera has further asserted that our Company is in
breach of an existing license agreement entered into by Tessera with ChipPAC, which agreement has
been assigned by ChipPAC to our Company. A court determination that our products or processes
infringe the intellectual property rights of others could result in significant liability and/or
require us to make material changes to our products and/or processes. Due to the inherent
uncertainties of the lawsuit, we cannot accurately predict the ultimate outcome and it could result in significant liability and/or injunction and could have a material adverse
effect on the business, financial condition and the results of operations of our Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also, from time to time, receive from customers, requests for indemnification against
pending or threatened infringement claims brought against such customers. The resolution of any future allegation or request for indemnification could have a
material adverse effect on our business, financial condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although we may seek licenses from or enter into agreements with third parties covering the
intellectual property that we are allegedly infringing, we cannot assure you that any such licenses
could be obtained on acceptable terms, if at all. We may also have to commence lawsuits against
companies who infringe our intellectual property rights. Such claims could result in substantial
costs and diversion of our resources.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any of the foregoing could have a material adverse effect on our business, financial condition
and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Our operating results have fluctuated, and may continue to fluctuate, from quarter to quarter,
which may make it difficult to predict our future performance.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our operating results have fluctuated and may continue to fluctuate substantially from quarter
to quarter due to a wide variety of factors, including:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>general economic conditions in the semiconductor industry and the markets addressed by <FONT style="white-space: nowrap;">end-users</FONT> of semiconductors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a shift by IDMs between internal and outsourced test and packaging services;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the seasonality of the semiconductor industry;</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">9
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the <FONT style="white-space: nowrap;">short-term</FONT> nature of our customers&#146; commitments;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the rescheduling or cancellation of large orders;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the timing and volume of orders relative to our capacity;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in capacity utilization;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the erosion of the selling prices of packages;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in our product mix;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the rescheduling, cancellation and timing of expenditures in anticipation of future orders;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>disruptions caused by the installation of new equipment;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the ability to obtain adequate equipment and materials on a timely and <FONT style="white-space: nowrap;">cost-effective</FONT> basis;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any exposure to currency and interest rate fluctuations that may not be adequately covered under our hedging policy;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>weakness in the supply of wafers and substrates;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>loss of key personnel or the shortage of available skilled workers; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in effective tax rates.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of all of these factors, we believe that period to period comparisons of our
operating results are not meaningful, and that using such comparisons to predict our future
performance may not be meaningful. In addition, unfavorable changes in any of the above factors may
adversely affect our business, financial condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>If we are unable to maintain or increase our capacity utilization, our gross margin will be
adversely affected.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of the capital intensive nature of our business, our operations are characterized
by high fixed costs. Consequently, high capacity utilization allows us to maintain higher gross
margins because it enables us to allocate fixed costs over a greater number of units tested and
packaged. Insufficient utilization of installed capacity can have a material adverse effect on our
gross margin. Due to the high level of fixed costs, we suffered substantial gross loss in 2002.
While our capacity utilization has increased since 2003, there can be no assurance that our
capacity utilization will continue to increase or be maintained or that it will not decline and
adversely affect our gross margin.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our ability to maintain or enhance our gross margins will continue to be dependent, in large
part, upon our ability to increase capacity utilization. Capacity utilization may be affected by a
number of factors and circumstances, including:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>overall industry conditions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>installation of new equipment in anticipation of future business;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the level of customer orders;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>operating efficiencies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>mechanical failure;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>disruption of operations due to expansion of operations, introduction of new packages or relocation of equipment;</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">10
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>disruption in supply of raw materials;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in product mix; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>fire or other natural disasters.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We cannot assure you that our capacity utilization will not be materially adversely affected
by future declines in the semiconductor industry, declines in industries that purchase
semiconductors or other factors. Any inability on our part to maintain or increase our capacity
utilization could have a material adverse effect on our business, financial condition and results
of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>If we are unable to obtain packaging and testing equipment in a timely manner or on reasonably
favorable terms and prices, we may be unable to meet customer demand and our revenue may decline.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The semiconductor packaging and test business is capital intensive and requires investment in
expensive capital equipment manufactured by a limited number of suppliers, which are located
principally in the United States, Singapore, Europe, South Korea and Japan. The market for capital
equipment used in semiconductor testing is characterized, from time to time, by intense demand,
limited supply and long delivery cycles. Our operations and expansion plans are highly dependent
upon our ability to obtain a significant amount of such capital equipment from a limited number of
suppliers. If we are unable to obtain certain equipment, such as testers and wire bonders, in a
timely manner, we may be unable to fulfill our customers&#146; orders which would negatively impact our
business, financial condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Generally, we have no binding supply agreements with any of our suppliers and we acquire our
equipment on a purchase order basis, which exposes us to substantial risks. For example, increased
levels of demand for the type of capital equipment required in our business may cause an increase
in the price of such equipment and may lengthen delivery cycles, which could have a material
adverse effect on our business, financial condition and results of operations. In addition, adverse
fluctuations in foreign currency exchange rates, particularly the Japanese yen, could result in
increased prices for certain equipment purchased by us, which could have a material adverse effect
on our business, financial condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We have entered into a number of financing arrangements that impose limitations on our actions
which may limit our ability to maintain and grow our business.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The terms of our 7.5% senior notes due 2010 and 6.75% senior notes due 2011 contain
restrictions applicable to us that limit our ability to, among other things:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>incur additional debt and issue certain preferred stock;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>consolidate or merge with another entity;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>create liens;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>pay dividends, repurchase stock and make other distributions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>prepay subordinated debt;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>make investments and other restricted payments;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>enter into sale and leaseback transactions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>sell assets; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>enter into transactions with affiliates.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The terms of our zero coupon convertible notes due 2008, 1.75% convertible notes due 2007 and
2.5% convertible subordinated notes due 2008 also include one or more of the above restrictions.
As a result of these limitations, we may encounter difficulties obtaining the required
</DIV>

<P align="center" style="font-size: 10pt">11
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">consents from our existing lenders to conduct our business, in particular, to obtain the
necessary financing to maintain or grow our business, on a timely basis or at all. This could have
a material adverse effect on our business, financial condition and results of operations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A breach of any of the covenants or restrictions contained in any of the indentures could
result in an event of default. Such default could allow our debt holders to accelerate the related
debt as well as any other debt to which a <FONT style="white-space: nowrap;">cross-acceleration</FONT> or <FONT style="white-space: nowrap;">cross-default</FONT> provision applies,
and/or to declare all borrowings outstanding hereunder to be due and payable. If our debt is
accelerated, our assets may not be sufficient to repay such debt in full.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Research and development investments may not yield profitable and commercially viable packages or
test services and thus will not necessarily result in increases in revenues for us.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We invest significant resources in our research and development. However, research and
development efforts may not yield commercially viable packages or test services. The qualification
process for new packages and test services is conducted in various stages which may take one or
more years to complete, and during each stage there is a substantial risk that we will have to
abandon a potential package or test service which is no longer marketable and in which we have
invested significant resources. In the event we are able to qualify new packages or test services,
a significant amount of time will have elapsed between our investment in new packages or test
services and the receipt of any related revenues. In addition, from time to time, our customers may
request, and have requested, research and development services relating to the development of
packages and/or services. These customers may not, and generally do not, reimburse us for our
research and development expenses if the developed package or service does not achieve expected
levels of demand or utilization.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We do not have any significant backlog because our customers do not place purchase orders far in
advance, which makes us vulnerable to sudden changes in customer demand.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our customers generally do not place purchase orders far in advance, and our contracts with
major customers do not generally require minimum purchase of our products or services. In addition,
our customers&#146; purchase orders have varied significantly from period to period because demand for
their products is often volatile. As a result, we do not typically operate with any significant
backlog. The lack of a significant backlog makes it difficult for us to forecast our net operating
revenues in future periods and causes our operating results to fluctuate from period to period.
Moreover, our expense levels are based in part on our expectations of future revenue and we may be
unable to adjust costs in a timely manner to compensate for revenue shortfalls. We expect that in
the future our net operating revenues in any quarter will continue to be substantially dependent
upon purchase orders received in that quarter. We cannot assure you that any of our customers will
continue to place orders with us in the future at the same levels as in prior periods. We also
cannot assure you that our customers&#146; orders will be consistent with our expectations when we made
or will make the necessary investments in raw materials, labor and equipment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We generally do not have any <FONT style="white-space: nowrap;">long-term</FONT> supply contracts with our raw materials suppliers and may
not be able to obtain the raw materials required for our business, which could have a material
adverse effect on our business.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We obtain the materials we need for our packaging services from outside suppliers. We purchase
all of our materials on a purchase order basis and have not generally entered into <FONT style="white-space: nowrap;">long-term</FONT>
contracts with our suppliers. If we cannot obtain sufficient quantities of materials at reasonable
prices or if we are not able to pass on higher materials costs to our customers, this could have a
material adverse effect on our business, financial condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We need a controlled environment for our operations and any prolonged inability to maintain a clean
room environment may disrupt our operations and materially adversely affect our business.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our packaging and testing operations take place in areas where air purity, temperature and
humidity are controlled. If we are unable to control our packaging or testing environment, our
packaging or test equipment may become nonfunctional or the tested and packaged semiconductors may
be defective. If we experience prolonged interruption in our operations due to problems in the
clean room environment, this could have a material adverse effect on our business, financial
condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Loss of our key management and other personnel, or an inability to attract such management and
other personnel, could impact our business.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We depend on our key senior management to run our business. We do not maintain &#147;key man&#148; life
insurance on any of our personnel. The loss of these persons could have a material adverse effect
on our business, financial condition and results of operations, particularly if we are
</DIV>

<P align="center" style="font-size: 10pt">12
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">unable to find, relocate and integrate adequate replacements for any of these persons.
Further, in order to develop or grow our business, we will require experienced technical, customer
support, sales and management personnel and other skilled employees. We may be unable to attract or
retain these persons. This could disrupt our operations or materially adversely affect the success
of our business.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>The packaging and testing process is complex and our production yields and customer relationships
may suffer from defects or malfunctions in our testing equipment or defective packages and the
introduction of new packages.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Semiconductor packaging and testing are complex processes that require significant
technological and process expertise. Semiconductor testing involves sophisticated testing equipment
and computer software. We develop computer software which is used to test our customers&#146;
semiconductors. We also develop conversion software programs which enable us to test semiconductors
on different types of testers. Similar to most software programs, these software programs are
complex and may contain programming errors or &#147;bugs&#148;. In addition, the testing process is subject
to operator error by our employees who operate our testing equipment and related software. Any
significant defect in our testing or conversion software, malfunction in our testing equipment or
operator error could reduce our production yields, damage our customer relationships and materially
harm our business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The packaging process is complex and involves a number of precise steps. Defective packages
primarily result from:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>contaminants in the manufacturing environment;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>human error;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>equipment malfunction;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>defective raw materials; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>defective plating services.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These and other factors have, from time to time, contributed to lower production yields. They
may do so in the future, particularly as we expand our capacity or change our processing steps. In
addition, to be competitive, we must continue to expand our offering of packages. Our production
yields on new packages typically are significantly lower than our production yields on our more
established packages.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our failure to maintain high standards or acceptable production yields, if significant and
prolonged, could result in loss of customers, increased costs of production, delays, substantial
amounts of returned goods and claims by customers relating thereto. Any of these problems could
have a material adverse effect on our business, financial condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Liabilities and obligations under certain environmental laws and regulations could require us to
spend additional funds and could adversely affect our business, financial condition and results of
operations.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are subject to a variety of environmental laws and regulations in the countries in which we
have operations, including laws and regulations relating to the use, storage, discharge and
disposal of hazardous materials and the chemical <FONT style="white-space: nowrap;">by-products</FONT> of, and waste water discharges from,
our packaging and testing processes. Furthermore, our activities are also subject to new regulatory
requirements on the environmental impacts of products such as the European Union&#146;s Directive
2002/95/EC on the restriction of the use of certain hazardous substances in electrical and
electronic equipment and other similar legislations in China and certain states in the United
States. As a result of these laws and regulations, we expect that our customers will increasingly
demand products that do not contain these restricted substances, such as lead as an alloy in
soldering material. Such requirements may adversely affect our manufacturing costs by requiring us
to acquire costly equipment or materials or to redesign some of our processes, thereby resulting in
further costs increase from research and development and quality controls. In addition, failures to
meet these demands could materially adversely affect our product sales. We may also be subject to
liability under such laws and regulations for the investigation or cleanup of contamination caused
by, or other damages associated with, the release of hazardous materials in connection with current
or historical operations at our facilities or <FONT style="white-space: nowrap;">off-site</FONT> locations. While we believe that we are
currently in material compliance with such laws and regulations, failure to comply with such laws
and regulations in the future could subject us to liabilities that may have an adverse effect on
our business, financial condition and results of operations. While we believe that we do not face
material liabilities associated with contamination conditions and that in some cases we have
contractual indemnification agreements with predecessors relating to such conditions, should these
predecessors become unable or unwilling to address these conditions, or should other yet
</DIV>

<P align="center" style="font-size: 10pt">13
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">unknown conditions be identified in the future that are not subject to such indemnification
agreements, we could face environmental liabilities that may have an adverse effect on our
business, financial condition and results of operations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Significant fluctuations in exchange rates may affect our business, financial condition and results
of operations.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our financial statements are prepared in U.S. dollars. Our net revenues are generally
denominated in U.S. dollars and operating expenses are generally incurred in U.S. dollars,
Singapore dollars, Japanese yen, South Korean Won, Malaysian Ringgit, Chinese Renminbi and the New
Taiwan dollar. Our capital expenditures are generally denominated in U.S. dollars, Singapore
dollars, South Korean Won, Japanese yen and other currencies. As a result, we are affected by
significant fluctuations in foreign currency exchange rates among the U.S. dollar, the Singapore
dollar, the Japanese yen and other currencies, including the South Korean Won, the Malaysian
Ringgit, the Chinese Renminbi and the New Taiwan dollar.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Our ability to make further investments in our subsidiaries may be dependent on regulatory
approvals.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our subsidiaries may require future <FONT style="white-space: nowrap;">equity-related</FONT> financing, and any capital contributions to
certain of our subsidiaries, including, but not limited to, Winstek Semiconductor Corporation
(Winstek) and our China subsidiaries, may require the approval of the relevant authorities in the
jurisdiction in which the subsidiary is incorporated. The approvals are required from the
investment commissions or similar agency of the particular jurisdiction and relate to any initial
or additional equity investment by foreign entities in local corporations. We may not be able to
obtain any such approval in the future in a timely manner or at all.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We are exposed to certain risks as a result of the significant ownership by Temasek Holdings,
through its <FONT style="white-space: nowrap;">wholly-owned</FONT> subsidiary. Temasek Holdings&#146; interests may conflict with your interests.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of January&nbsp;31, 2007, Temasek Holdings, through its <FONT style="white-space: nowrap;">wholly-owned</FONT> subsidiary, STSPL, beneficially owned approximately 35.56% of our
outstanding ordinary shares. Temasek Holdings, a private limited company incorporated in Singapore,
is <FONT style="white-space: nowrap;">wholly-owned</FONT> by the Minister for Finance (Incorporated) of Singapore, a body corporate
constituted by the Minister for Finance (Incorporation) Act (Cap. 183). As a result, Temasek
Holdings has significant influence over matters requiring the approval of our shareholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Matters that typically require the approval of our shareholders include, among other things:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the election of directors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the merger or consolidation of our Company with any other entity;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any sale of all or substantially all of our assets; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the timing and payment of dividends.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The actions of Temasek Holdings and STSPL, particularly through the election of directors and
subsequent selection of management by those directors, can affect our strategic decisions, our
legal and capital structure and our <FONT style="white-space: nowrap;">day-to-day</FONT> operations. This concentration of ownership may also
delay, deter or prevent acts that would result in a change of control, which may be against the
interests of holders of our ADSs and ordinary shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;1, 2007, STSPL announced its intention to launch a voluntary conditional cash offer for the remaining
ordinary shares and ADSs in our Company that STSPL does
not already own. See &#147;Recent Developments &#151; Temasek Holdings&#146; Subsidiary, Singapore Technologies Semiconductors
Pte Ltd&#146;s, Tender Offer&#148; above. If the tender offer is consummated, STSPL&#146;s ownership of our outstanding
ordinary shares and ADSs will increase to the extent of the ordinary shares and ADSs tendered and accepted
in the offer.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We may have conflicts of interest with our affiliates which may not be resolved in our favor.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have certain contractual and other business relationships and may engage in material
transactions with the Government of Singapore and companies within the Temasek Holdings group,
including Chartered Semiconductor Manufacturing Ltd. (Chartered), which is one of our customers, and with our joint venture with China Resources Logic Limited (CR Logic).
Although all new material related party transactions generally will require the approval of the
audit committee of our Board of Directors and in certain circumstances may also require separate
approval of a majority of our Board of Directors, circumstances may arise in which the interests of
our affiliates may conflict with the interests of our other shareholders. In addition, Temasek
Holdings and their affiliates make investments in various companies. They have invested in the
past, and may invest in the future, in entities that compete with us. For example, affiliates of
Temasek Holdings have investments in United Test &#038; Assembly Center Ltd, a <FONT style="white-space: nowrap;">Singapore-based</FONT> provider
of

</DIV>

<P align="center" style="font-size: 10pt">14
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">semiconductor packaging and testing services for semiconductor logic, radio frequency (RF),
<FONT style="white-space: nowrap;">application-specific</FONT> integrated circuits (ASICs) and memory products. In the context of negotiating
commercial arrangements with affiliates, conflicts of interest have arisen in the past and may
arise, in this or other contexts, in the future. We cannot assure you that any such conflicts of
interest will be resolved in our favor.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We may not be successful in our acquisitions and investments in other companies and businesses.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From time to time, we may make acquisitions of, or investments in, other companies or
businesses. In June&nbsp;2006, we entered into a strategic joint venture with CR Logic for the assembly and test of select products in Wuxi, China, in connection with
which we acquired a 25% shareholding in Micro Assembly Technologies Limited (MAT)&nbsp;with CR Logic
owning a 75% interest. MAT wholly owns Wuxi CR <FONT style="white-space: nowrap;">Micro-Assembly</FONT> Technology Ltd. (ANST), an assembly
and test company based in Wuxi, China. In November&nbsp;2005, we invested in a new facility in Song
Jiang, China to provide 200 millimeter (mm) gold bumping services as part of our strategy to service the high
growth liquid crystal display (LCD)&nbsp;driver semiconductor market. In October&nbsp;2005, we also invested
in a new facility in Taiwan to provide 300mm wafer electroplated solder bumping services as part of
our strategy to provide turnkey services for advanced <FONT style="white-space: nowrap;">flip-chip</FONT> packaging applications. In August
2004, we completed our merger with ChipPAC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The success of any acquisitions and investments depends on a number of factors, including:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to identify suitable opportunities for investment or acquisition;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to finance any future acquisition or investment on terms acceptable to us or at all;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>whether we are able to reach an acquisition or investment agreement on terms that are satisfactory to us or at all;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the extent to which we are able to exercise control over the acquired company;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the economic, business or other strategic objectives and goals of the acquired company compared to those of our Company; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to successfully integrate the acquired company or business with our business.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we are unsuccessful in our acquisitions and investments, our financial condition may be
materially adversely affected and we may be unable to realize the anticipated results or synergies
from these acquisitions or investments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We may be unable to integrate our operations successfully and may not realize the full anticipated
benefits of the combination of STATS and ChipPAC.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may not be successful in integrating the businesses of STATS and ChipPAC. Integrating the
two companies&#146; operations and personnel is a complex process. The integration may not be completed
rapidly and may not achieve the anticipated benefits of the combination of STATS and ChipPAC. The
successful integration of the two companies&#146; businesses will require, among other things, the
following:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>integration of the two companies&#146; products and services, sales and marketing,
information and software systems and other operations;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>retention and integration of management and other employees;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>achievement of the expected cost savings;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>coordination of ongoing and future research and development efforts and marketing activities;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>retention of existing customers of both companies and attraction of additional customers;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>retention of strategic partners of each company and attraction of new strategic partners;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>developing and maintaining uniform standards, controls, procedures and policies;</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">15
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>minimization of disruption of the combined company&#146;s ongoing business and distraction of its management; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>limiting expenses related to integration.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The successful integration of STATS and ChipPAC will involve considerable risks and may not be successful. These risks include:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the impairment of relationships with employees, customers and business partners;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to attract and retain key management, sales, marketing and technical personnel;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a delay in, or cancellation of, purchasing decisions by current and prospective customers and business partners;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the potential disruption of the combined company&#146;s ongoing business and distraction of its management; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the difficulty of incorporating acquired technology and rights into the products and service offerings of the combined company.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may not succeed in addressing these risks or any other problems encountered in connection
with the combination of STATS and ChipPAC. The diversion of the attention of management and any
difficulties encountered in the process of combining STATS and ChipPAC could cause the disruption
of, or a loss of momentum in, the activities of the combined company&#146;s business. Further, the
process of combining ChipPAC&#146;s business with STATS&#146; business could negatively affect employee
morale and STATS&#146; ability to retain some key STATS and ChipPAC employees after the merger. If the
anticipated benefits of the merger are not realized or the combined company is unsuccessful in
addressing the risks related to the integration, the combined company&#146;s business, financial
condition and results of operations may be negatively impacted.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>If we encounter future labor problems, we may fail to deliver our products in a timely manner,
which could adversely affect our revenues and profitability.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The employees at our Icheon, South Korea facility are represented by the STATS ChipPAC Korea
Labor Union and are covered by collective bargaining and wage agreements. The wage agreement is
renewed every year, and the collective bargaining agreement, which covers basic union activities,
working conditions and welfare programs, among other things, is renewed every other year. The wage
agreement was renewed in 2006 and is effective through April&nbsp;30, 2007. The collective bargaining
agreement was renewed in 2005 and is effective through April&nbsp;30, 2007. As of January&nbsp;31, 2007,
approximately 67% of our South Korean employees were represented by the STATS ChipPAC Korea Labor
Union. We cannot assure you that issues with the labor union or other employees will be resolved
favorably for us in the future, that we will not experience significant work stoppages in future
years or that we will not record significant charges related to those work stoppages.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>With our operations conducted in a limited number of facilities, a fire, flood or other calamity at
one of our facilities could adversely affect us.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We conduct our packaging and testing operations at a limited number of facilities. Significant
damage or other impediments to any of these facilities, whether as a result of fire, weather,
disease, civil strife, industrial strikes, breakdowns of equipment, difficulties or delays in
obtaining materials and equipment, natural disasters, terrorist incidents, industrial accidents or
other causes could temporarily disrupt or even shut down our operations, which would have a
material adverse effect on our business, financial condition and results of operations. For
example, our operations in South Korea, Taiwan and China are vulnerable to regional typhoons that
can bring with them destructive winds and torrential rains, which can in turn cause plant closures,
power supply, telecommunications and transportation interruptions. In addition, some of the
processes that we utilize in our operations place us at risk of fire and other damage. For example,
highly flammable gases are used in the preparation of wafers holding semiconductor devices for
<FONT style="white-space: nowrap;">flip-chip</FONT> packaging. While we maintain insurance policies for various types of property, casualty
and other risks, which we consider to be adequate, we do not carry insurance for all the above
referred risks and with regard to the insurance we do maintain, we cannot assure you that it would
be sufficient to cover all of our potential losses.
</DIV>


<P align="center" style="font-size: 10pt">16
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>New laws and regulations, currency devaluation and political instability in countries in which we
operate, particularly in South Korea, China, Malaysia and Taiwan could make it more difficult for
us to operate successfully.</I></B>
</DIV>




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A significant portion of our unit shipments are sent out to and substantially all of our
packaging and test facilities are located in Singapore, South Korea, China, Malaysia and Taiwan. In
addition, we believe that the end markets for certain of our key customers are located in Asia. The
following are some of the risks inherent in doing business internationally:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>regulatory limitations imposed by foreign governments;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>fluctuations in currency exchange rates;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>political, military and terrorist risks;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>disruptions or delays in shipments caused by customs brokers or government agencies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>unexpected changes in regulatory requirements, tariffs, customs, duties and other trade barriers;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>difficulties in staffing and managing foreign operations; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>potentially adverse tax consequences resulting from changes in tax laws.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">There can be no assurance that economic, political or legal developments in any of these countries
would not have a material adverse effect on our business, financial condition and results of
operations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Conducting business in China involves uncertainties and there can be no assurances that the
intended benefits from our new China facility will be realized.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are expanding our facilities in China to include additional buildings next to our existing
facility in Qing Pu, Shanghai. The expansion will increase floor space by approximately 500,000
square feet and is near completion. Many legal, operational and financial risks may prevent us
from realizing our intended benefits in China in connection with our investment in the facility in
China. These risks include:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>economic and political uncertainties in China;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>local infrastructure problems, such as electrical power interruptions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>transportation difficulties that may be encountered in receiving supplies and/or in shipping finished products by land or by air;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an unwillingness or hesitancy on the part of customers to qualify their products in the new facilities;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an inability to attract and retain sufficient and qualified engineering and management talent and resources;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>measures which may be introduced to control inflation or deflation;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>continuing fluctuations in the value of the Chinese Renminbi currency; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>modifications to fiscal, banking or monetary policies to reduce the rate of future growth in China.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Because a significant portion of Winstek&#146;s business and operations, our 300mm&nbsp;wafer
bumping facility, the production facilities of many of our suppliers and customers and providers of
complementary semiconductor manufacturing services are located in Taiwan, a severe earthquake could
severely disrupt their normal operations and adversely affect our earnings.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Taiwan is susceptible to earthquakes. For example, on March&nbsp;31, 2002, Taiwan experienced a
severe earthquake that caused significant property damage and loss of life, particularly in central
Taiwan. This earthquake damaged production facilities and adversely affected the operations of many
companies involved in the semiconductor and other industries. Our 52% owned subsidiary, Winstek,
experienced no structural damage to its facilities and no damage to its machinery and equipment as
a result of this earthquake. There were, however, interruptions to our production schedule
primarily as a result of power outage caused by the earthquake. Recently, on December&nbsp;26, 2006,
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">tremors from an earthquake near the southern tip of Taiwan caused casualties, property damage
and also damaged several undersea cables, disrupting internet and telecommunications across various
parts of Asia. There were no major disruptions to operations at Winstek and our 300mm wafer
bumping facility. The production facilities of many of our suppliers and customers and providers
of complementary semiconductor manufacturing services, including foundries, are located in Taiwan.
If our customers are affected, it could result in a decline in the demand for our testing and
packaging services. If suppliers and providers of complementary semiconductor manufacturing
services are affected, our production schedule could be interrupted or delayed. As a result, a
major earthquake in Taiwan could severely disrupt the normal operation of business, in particular
Winstek&#146;s and our 300mm wafer bumping business, and may have a material adverse effect on our
business, financial condition and results of operations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Outbreaks of epidemics and communicable diseases in China and other parts of Asia may disrupt our
business operations, causing us to lose customers and revenue.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In early 2003, China and certain other countries, largely in Asia, experienced the spread of
the Severe Acute Respiratory Syndrome (SARS)&nbsp;virus. The World Health Organization and several
countries issued travel warnings against international travel to China and several other Asian
nations during the period of the alert. China reported a number of cases of SARS in April&nbsp;2004.
More recently, the avian influenza viruses have been a health threat in many countries across Asia.
There can be no assurance that the SARS virus, avian influenza viruses and/or different or even
more virulent viruses will not make a <FONT style="white-space: nowrap;">re-appearance</FONT> in the future. If such an outbreak were to
occur in Singapore, South Korea, China, Malaysia or Taiwan, and if the outbreak were to be
prolonged, uncontrolled and/or associated with high mortality, our operations could be severely
impacted, such as through facility closures and the imposition of other emergency measures, any of
which would have a material adverse effect on our business, financial condition and results of
operations. Furthermore, any outbreak in any of our premises or manufacturing facilities could
result in our management and employees being quarantined and our operations being required to be
suspended.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risks Relating to Our Ordinary Shares and ADSs</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>The trading price of our ordinary shares and our ADSs has been and may continue to be volatile.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The trading price of our ordinary shares and our ADSs has been and may continue to be subject
to large fluctuations. Our ordinary share price and our ADS share price may increase or decrease in
response to a number of events and factors, including:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>quarterly variations in operating results;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in financial estimates and recommendations by securities analysts;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the operating and stock price performance of other companies in our industry;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>developments affecting us, our customers or our competitors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in government regulation;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in general economic conditions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in accounting principles; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>other events or factors described in this annual report.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This volatility may adversely affect the price of our ordinary shares and our ADSs, regardless
of our operating performance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Singapore law contains provisions that could discourage a <FONT style="white-space: nowrap;">take-over</FONT> of our Company.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Securities and Futures Act, Chapter&nbsp;289 of Singapore and the <FONT style="white-space: nowrap;">Take-Over</FONT>
Code contain certain provisions that may delay, deter or prevent a future
<FONT style="white-space: nowrap;">take-over</FONT> or change in control of our Company. Any person acquiring an interest (either on his or
her own or together with parties acting in concert with him or her) in 30% or more of our voting
shares must extend a <FONT style="white-space: nowrap;">take-over</FONT> offer for the remaining voting shares in accordance with the
provisions of the <FONT style="white-space: nowrap;">Take-Over</FONT> Code. A <FONT style="white-space: nowrap;">take-over</FONT> offer is also required to be made if
</DIV>

<P align="center" style="font-size: 10pt">18
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">a person holding (either on his or her own or together with parties acting in concert with him
or her) between 30% and 50% (both inclusive) of our voting shares acquires (either on his or her
own or together with parties acting in concert with him or her) additional voting shares
representing more than 1% of our voting shares in any <FONT style="white-space: nowrap;">six-month</FONT> period. These provisions may
discourage or prevent certain types of transactions involving an actual or threatened change of
control of our Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Our public shareholders may have more difficulty protecting their interests than they would as
shareholders of a corporation incorporated in the United States.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our corporate affairs are governed by our Memorandum and Articles of Association and by the
laws governing corporations incorporated in Singapore. The rights of our shareholders and the
responsibilities of our management and the members of our Board of Directors under Singapore law
may be different from those applicable to a corporation incorporated in the United States. For
example, controlling shareholders of U.S. corporations have fiduciary duties to minority
shareholders while controlling shareholders in Singapore corporations are not subject to such
duties. Therefore, our public shareholders may have more difficulty in protecting their interests
in connection with actions taken by our management, members of our Board of Directors or our
controlling shareholder than they would as shareholders of a corporation incorporated in the United
States.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>It may be difficult for you to enforce any judgment obtained in the United States against us or our
affiliates.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Company is a limited liability company incorporated under the laws of Singapore. Some of
our directors and a majority of our senior management reside outside the United States. In
addition, a majority of our assets and the assets of those persons are located outside the United
States. As a result, it may be difficult to enforce in the United States any judgment obtained in
the United States against us or any of these persons, including judgments based upon the civil
liability provisions of the United States securities laws. In addition, in original actions brought
in courts in jurisdictions located outside the United States, it may be difficult for shareholders
to enforce liabilities based upon United States securities laws. We have been advised that
judgments of U.S. courts based on the civil liability provisions of the federal securities laws of
the United States may not be enforceable in Singapore courts. We have also been advised that there
is doubt as to whether Singapore courts will enter judgments in original actions brought in
Singapore courts based solely upon the civil liability provisions of the federal securities laws of
the United States.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>The Singapore securities market is relatively small and more volatile than markets in the United
States and may cause the market price of our ordinary shares and our ADSs to fluctuate.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Singapore Exchange Securities Trading Limited <FONT style="white-space: nowrap;">(SGX-ST)</FONT> is relatively small and more
volatile than stock exchanges in the United States and certain other European countries. As of
December&nbsp;31, 2006, there were 539 companies listed on the Main Board of the <FONT style="white-space: nowrap;">SGX-ST</FONT> and the
aggregate market capitalization of listed equity securities of these companies was approximately
S$579.8&nbsp;billion. For the year ended December&nbsp;31, 2006, the annualized aggregate trading value on
the <FONT style="white-space: nowrap;">SGX-ST</FONT> (including shares traded on the Central Limit Order Book (CLOB)&nbsp;International trading
system) was approximately S$291.2&nbsp;billion. The relatively small market capitalization of, and
trading volume on, the <FONT style="white-space: nowrap;">SGX-ST</FONT> may cause the market price of securities of Singapore companies,
including our ordinary shares and, in turn, our ADSs, to fluctuate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Future sales, or perceived sales, of our ordinary shares or our ADSs by our Company or existing
shareholders could cause the price of our ordinary shares and our ADSs to decline.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales of our ordinary shares or our ADSs in the public market, or the perception that these
sales could occur, could cause the market price of ordinary shares and our ADSs to decline. These
sales, or the perception that these sales could occur, also might make it more difficult for us to
sell securities in the future at a time or at a price that we deem appropriate. All of our
outstanding shares are freely transferable without restriction in Singapore and in the United
States (in the form of ADSs), except that the shares owned by our affiliates, including Temasek
Holdings and STSPL, may only be sold in the United States if they registered or if they qualified
for an exemption from registration, including pursuant Rule&nbsp;144 under the Securities Act of 1933,
as amended (Securities Act).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Your voting rights with respect to the ADSs are limited by the terms of the deposit agreement for
the ADSs.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders may exercise voting rights with respect to the ordinary shares represented by
ADSs only in accordance with the provisions of the deposit agreement relating to the ADSs. There
are no provisions under Singapore law or under our Articles of Association that limit ADS holders&#146;
ability to exercise their voting rights through the depositary with respect to the underlying ordinary shares. However, there are practical limitations upon the ability of ADS
holders to exercise their voting rights due to the additional procedural steps involved in
communicating with
</DIV>


<P align="center" style="font-size: 10pt">19
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">such holders. For example, our Articles of Association require us to notify our
shareholders at least 14&nbsp;days in advance of any annual general meeting unless a special resolution
is to be passed at that meeting, in which case at least 21&nbsp;days&#146; notice must be given. Our ordinary
shareholders will receive notice directly from us and will be able to exercise their voting rights
by either attending the meeting in person or voting by proxy.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ADS holders, by comparison, will not receive notice directly from us. Rather, in accordance
with the deposit agreement, we will provide the notice to the depositary, which will in turn, as
soon as practicable thereafter, mail to holders of ADSs:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the notice of such meeting;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>voting instruction forms; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a statement as to the manner in which instructions may be given by holders.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To exercise their voting rights, ADS holders must then instruct the depositary how to vote
their shares. Because of this extra procedural step involving the depositary, the process for
exercising voting rights will take longer for ADS holders than for holders of ordinary shares. ADSs
for which the depositary does not receive timely voting instructions will not be voted at any
meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as described in this annual report, holders of ADSs will not be able to exercise voting rights
attaching to the ADSs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>The ability of holders of ADSs to participate in any rights offering of our Company is limited,
which may cause dilution to their holdings.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may, from time to time, distribute rights to our shareholders, including rights to acquire
securities under the deposit agreement relating to the ADSs. The depositary will not offer rights
to holders in any jurisdictions unless both the rights and the securities to which such rights
relate are either exempt from registration under the applicable securities laws of such
jurisdictions or are registered in accordance with the provisions of such laws. However, we are
under no obligation to file a registration statement with respect to any such rights or underlying
securities or to endeavor to cause such a registration statement to be declared effective.
Accordingly, holders of our securities may be unable to participate in rights offerings by us and
may experience dilution of their holdings as a result.
</DIV>
<DIV align="left">
<A name="104"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 4.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>INFORMATION ON OUR COMPANY</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>A. History and Development of Our Company</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;STATS ChipPAC Ltd. was incorporated in Singapore as a limited liability company on October&nbsp;31,
1994 and began operations in January&nbsp;1995.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February&nbsp;2000, we completed our initial public offering. Our ordinary shares are listed on
<FONT style="white-space: nowrap;">SGX-ST</FONT> <FONT style="white-space: nowrap;">(SGX-ST:</FONT> STATSChP) and, our ADSs are quoted on the NASDAQ Stock Market (Nasdaq)
(NASDAQ: STTS). Our registered office is at No.&nbsp;5, Yishun Street 23, Singapore 768442, Republic
of Singapore, and our telephone and facsimile numbers at that address is (65)&nbsp;6824 7888 and (65)
6720 7829, respectively. Our principal executive offices are located at 10 Ang Mo Kio Street 65,
<FONT style="white-space: nowrap;">#05-17/20</FONT> Techpoint, Singapore 569059, Republic of Singapore. Our website address is:
<I>www.statschippac.com. </I>Information contained on our website does not constitute a part of this
annual report. Our agent for service in the United States is the current Company Secretary of STATS
ChipPAC, Inc., located at 47400 Kato Road, Fremont, CA 94538, United States of America; Telephone:
1 <FONT style="white-space: nowrap;">(510)&nbsp;979-8000;</FONT> Facsimile: 1 <FONT style="white-space: nowrap;">(510)&nbsp;979-8001.</FONT> We are headquartered in Singapore and our global
operations are mainly carried out in Singapore, South Korea, China, Malaysia, Taiwan, United
States, United Kingdom, the Netherlands and Japan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On August&nbsp;5, 2004, we completed our merger with ChipPAC, which resulted in ChipPAC becoming
our <FONT style="white-space: nowrap;">wholly-owned</FONT> subsidiary. In connection with the merger, we changed our name from ST Assembly
Test Services Ltd to STATS ChipPAC Ltd. For information concerning the merger of our Company with
ChipPAC, see &#147;Item&nbsp;10. Additional Information &#151; C. Material Contracts&#148;, and elsewhere in this
annual report.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our capital expenditures in 2004, 2005 and 2006 amounted to $270.8&nbsp;million, $277.7&nbsp;million and
$348.5&nbsp;million, respectively. Our capital expenditures are largely driven by the demand for our
services, primarily to increase our packaging and testing capacity, to replace packaging
</DIV>

<P align="center" style="font-size: 10pt">20
</DIV>

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\
<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">and testing equipment from time to time, and to expand our facilities. Depending on business
conditions, we expect our capital expenditures to be approximately $250.0&nbsp;million in 2007 as our
capital expenditure spending continues to be targeted at demand we see from our customers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For a more detailed discussion of our capital expenditures and financing for such capital
expenditures, see &#147;Item&nbsp;5. Operating and Financial Review and Prospects &#151; Liquidity and Capital
Resources&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;1, 2007, STSPL announced its intention to launch a voluntary conditional cash offer for
the remaining ordinary shares and ADSs in our Company that STSPL does not already own. See &#147;Recent
Developments &#151; Temasek Holdings&#146; Subsidiary, Singapore Technologies Semiconductors Pte Ltd&#146;s,
Tender Offer&#148; above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Business Overview</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a leading service provider of semiconductor packaging design, bump, probe, assembly,
test and distribution solutions. We have the scale to provide a comprehensive range of
semiconductor packaging and test solutions to a diversified global customer base servicing the
computing, communications, consumer, automotive and industrial markets. Our services include:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Packaging services: </I>providing leaded, power, array, memory card and wafer level
<FONT style="white-space: nowrap;">chip-scale</FONT> packages to customers with a broad range of packaging solutions and full backend
turnkey services for a wide variety of electronics applications. We also provide
redistribution layers (RDL), integrated passive device (IPD), and wafer bumping services
for <FONT style="white-space: nowrap;">flip-chip</FONT> and wafer level <FONT style="white-space: nowrap;">chip-scale</FONT> packages. As part of customer support on packaging
services, we also offer package design, electrical, mechanical and thermal simulation,
measurement and design of <FONT style="white-space: nowrap;">lead-frames</FONT> and laminate substrates;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Test services: </I>including wafer probe and final testing, on a diverse selection of test
platforms, covering the major test platforms in the industry. We have expertise in testing
a broad variety of semiconductors, especially <FONT style="white-space: nowrap;">mixed-signal</FONT> and <FONT style="white-space: nowrap;">high-performance</FONT> digital
devices. We also offer <FONT style="white-space: nowrap;">test-related</FONT> services such as <FONT style="white-space: nowrap;">burn-in</FONT> process support, reliability
testing, thermal and electrical characterization, dry pack and tape and reel; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I><FONT style="white-space: nowrap;">Pre-production</FONT> and <FONT style="white-space: nowrap;">post-production</FONT> services: </I>such as package development, test software
and related hardware development, warehousing and drop shipment services.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have a leadership position in providing advanced packages, such as stacked die,
<FONT style="white-space: nowrap;">System-in-Package</FONT> (SiP) and <FONT style="white-space: nowrap;">flip-chip,</FONT> as well as BGA packages and wafer level <FONT style="white-space: nowrap;">chip-scale</FONT> packages.
We are a leader in <FONT style="white-space: nowrap;">high-volume</FONT> assembly, test and distribution of discrete and analog power
packages.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are also a leader in testing <FONT style="white-space: nowrap;">mixed-signal</FONT> semiconductors or semiconductors combining the
use of analog and digital circuits in a chip. <FONT style="white-space: nowrap;">Mixed-signal</FONT> semiconductors are used extensively in
<FONT style="white-space: nowrap;">fast-growing</FONT> communications applications. We have strong expertise in testing a wide range of
<FONT style="white-space: nowrap;">high-performance</FONT> digital devices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have been successful in attracting new customers with our packaging and test capabilities
and then expanding our relationship with such customers to provide full turnkey solutions tailored
to their needs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are headquartered in Singapore and our manufacturing facilities are strategically located
in Singapore, South Korea, China, Malaysia and Taiwan (which includes our 52% owned subsidiary,
Winstek). We also have test <FONT style="white-space: nowrap;">pre-production</FONT> facilities in the United States. We market our services
through our direct sales force located across the globe in Singapore, South Korea, China, Malaysia,
Taiwan, the United States, the United Kingdom, the Netherlands and Japan. With an established
presence in the countries where strategic semiconductor markets are located, we are in close
proximity to the major hubs of wafer fabrication which allows us to provide customers with
<FONT style="white-space: nowrap;">fully-integrated,</FONT> <FONT style="white-space: nowrap;">multi-site,</FONT> <FONT style="white-space: nowrap;">end-to-end</FONT> packaging and test services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Our Industry</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Semiconductors are critical components used in an increasingly wide variety of applications
such as computer systems, communications equipment and systems, automobiles, consumer products and
industrial automation and control systems. As the performance of electronic systems has improved
and their size and cost have decreased, the use of semiconductors in these applications has grown
significantly.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The semiconductor industry is highly cyclical mainly due to the cyclicality of demand in the
markets of the products that use semiconductors. This is significantly exacerbated by the capital
intensive nature of the semiconductor industry and the time required to set up new capacity that
results in periods of high capacity utilization when demand is robust, followed by periods of
underutilization and accelerated price erosion when new capacities are commissioned and demand
growth slows.
</DIV>

<P align="center" style="font-size: 10pt">21
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Historically, IDMs conducted most of the semiconductor manufacturing process in their own
facilities, outsourcing only the <FONT style="white-space: nowrap;">lower-technology</FONT> aspects of the process and keeping advanced or
proprietary technology <FONT style="white-space: nowrap;">in-house.</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fabless semiconductor companies, which concentrated their efforts and resources on the design,
marketing and sale of semiconductors, emerged in the <FONT style="white-space: nowrap;">mid-1980s.</FONT> Fabless companies outsource
virtually every step of the production process &#151; fabrication, packaging and testing &#151; to
independent companies, allowing them to utilize the latest production, packaging and test
technologies without committing significant amounts of capital and other resources to
manufacturing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The demand for quick delivery to market of increasingly smaller semiconductors with greater
functionality, which may be used in a wide array of electronic applications, has led to increased
requirements for technical expertise and capital spending in the semiconductor production process.
In addition to fabless companies, IDMs outsource packaging and test requirements as a means of
obtaining <FONT style="white-space: nowrap;">cost-effective</FONT> access to backend <FONT style="white-space: nowrap;">state-of-the-art</FONT> technology and a faster time to
market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Historically, outsourced semiconductor manufacturing services have grown faster than the
semiconductor market as a whole. We believe that the reduced investments in packaging and test
capacity by semiconductor manufacturers will better position outsource providers to capture a
greater percentage of future volume levels.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The semiconductor industry experienced a significant downturn beginning in the fourth quarter of
2000. This downturn had a significant adverse impact on our sales and financial performance as
customers reduced purchase orders to reflect inventory corrections and lower demand experienced in
their <FONT style="white-space: nowrap;">end-user</FONT> markets. The semiconductor industry started its recovery in late 2002. However, in
late 2004 to early 2005 and in late 2006, we experienced a softening of our business as our
customers corrected their excess inventory positions. Despite the softening of our business in
late 2006, the semiconductor industry outlook in 2007 published by recognized industry research
analysts and associations are projecting growth rates of approximately 7% as compared to 2006. We expect the SATS market to grow at a faster pace than the semiconductor industry as a
whole and we believe that we are well positioned to benefit from the growing outsourcing trend and
from our strategic positioning in the higher growth communication, computing and consumer markets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2002, our net revenues increased 54.8% over 2001 to $225.7&nbsp;million. In 2003, our net
revenues grew by 68.6% over 2002 to $380.7&nbsp;million. In 2004, our net revenues grew further by
102.0% to $769.1&nbsp;million. In 2005, our net revenues grew by 50.5% over 2004 to $1,157.3&nbsp;million
primarily due to our acquisition of ChipPAC and a return to growth in the semiconductor industry
coupled with a trend towards increased outsourcing of test and packaging. In 2006, our net
revenues grew by 39.7% over 2005 to $1,616.9&nbsp;million. We continue to expect that the cyclicality
of the semiconductor industry will impact our results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Semiconductor Manufacturing Process</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The production of a semiconductor is a complex process that requires increasingly
sophisticated engineering and manufacturing expertise. The production process can be broadly
divided into three primary stages:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>wafer fabrication, including wafer probe;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>assembly of bare semiconductors, or die, into finished semiconductors (referred to as &#147;assembly&#148; or &#147;packaging&#148;); and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>final testing of assembled semiconductors.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Wafer Fabrication. </I>The wafer fabrication process begins with the generation of a mask defining
the circuit patterns for the transistors and interconnects layers that will be formed on the raw
silicon wafer. The transistors and other circuit elements are formed by repeating a series of
process steps where photosensitive material is deposited onto the wafer. The material is then
exposed to light through the mask in a photolithography process and the unwanted material is
removed through an etching process, leaving only the desired circuit pattern on the wafer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Wafer Probe. </I>Wafer probe is a process whereby each individual die on the wafer is electrically
tested in order to identify the operable semiconductors for assembly.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Assembly. </I>The assembly process packages the semiconductor to protect it, facilitate its
integration into electronic systems and enable the dissipation of heat. In the assembly process,
the wafer is diced into individual dies that are then attached to a substrate with an epoxy
adhesive.
</DIV>

<P align="center" style="font-size: 10pt">22
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Typically leads on the substrate are then connected by extremely fine gold wires to the
input/output (I/O) terminals on the die through the use of automated equipment known as &#147;wire
bonders&#148;. Finally, each die is encapsulated in a molding compound, thus forming the package.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Final Testing. </I>Final testing is conducted to ensure that the packaged semiconductor meets
performance specifications. Final testing involves using complex processes that require the use of
sophisticated testing equipment and customized software programs to electrically test a number of
attributes of assembled semiconductors, including functionality, speed, predicted endurance, power
consumption and electrical characteristics.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Our Strengths and Strategy</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our goal is to strengthen our position as a leading global provider of a full range of
semiconductor packaging and test services. The key elements of our strengths and strategy include
the following:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Leverage our broad portfolio of packaging and test services to provide full turnkey solutions.</I>
We offer one of the broadest portfolios of comprehensive <FONT style="white-space: nowrap;">end-to-end</FONT> packaging and test services in
the semiconductor industry. Increasingly, our customers are looking for supply chain semiconductor
manufacturing solutions from <FONT style="white-space: nowrap;">value-added</FONT> design to packaging, test and delivery to their designated
locations. We intend to leverage our strong packaging and test capabilities to provide a full
turnkey solution consisting of integrated packaging, testing and direct shipment to end customers.
We believe that the scale and scope of our technical capabilities and global reach will enable us
to provide our customers with seamless <FONT style="white-space: nowrap;">cost-effective</FONT> solutions that will simplify their supply
chain management.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Leverage our established presence in the major hubs of wafer fabrication. </I>We have
manufacturing facilities located in Singapore, South Korea, China, Malaysia and Taiwan and test
<FONT style="white-space: nowrap;">pre-production</FONT> facilities in the United States. We intend to leverage our strategic proximity to
the major hubs of wafer fabrication to provide customers with <FONT style="white-space: nowrap;">fully-integrated,</FONT> <FONT style="white-space: nowrap;">multi-site,</FONT>
<FONT style="white-space: nowrap;">end-to-end</FONT> packaging and test services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Capitalize on our research and development capabilities to drive accelerated growth. </I>We have
over 250 employees in our research and development department which focuses on developing advanced
technologies to meet our customers&#146; needs. We believe this will enable us to capture potential
opportunities and accelerate our growth.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Continue to cultivate our strong customer relationships. </I>We have a broad and diversified
customer base that includes most of the world&#146;s leading semiconductor companies across the
<FONT style="white-space: nowrap;">fast-growing</FONT> communications, computing and power markets. No single customer accounted for more
than 15% of our Company&#146;s net revenues for 2006. We seek to strengthen these relationships and
build new relationships by providing our customers with an integrated supply chain solution.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Continue to focus on <FONT style="white-space: nowrap;">high-quality</FONT> customer service. </I>Our customers demand increasingly high
levels of service. Our close interactions with our customers enable us to better anticipate and
meet their requirements on a timely basis. We focus on developing and delivering to our customers,
semiconductor designs that are developed, packaged, tested and delivered on time and as specified
to any of their global locations. Our flexible manufacturing model allows us to better address
periodic, <FONT style="white-space: nowrap;">product-specific</FONT> capacity constraints that negatively affect smaller players. We have
implemented information technology platforms to enable the seamless integration of our customers&#146;
systems into ours, to enable them to obtain <FONT style="white-space: nowrap;">real-time</FONT> information on their works in progress and
thereby facilitate their production planning processes. We believe that offering <FONT style="white-space: nowrap;">high-quality</FONT>
customer service is critical to attracting and retaining leading semiconductor companies as our
customers. We intend to continue to foster a <FONT style="white-space: nowrap;">service-oriented</FONT> and <FONT style="white-space: nowrap;">customer-focused</FONT> environment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Capitalize on our financial position. </I>Our financial strength provides us with financial
resources and flexibility to invest in customers&#146; anticipated needs and withstand the downturns of
industry cycles. We intend to capitalize on our financial position to continue to make prudent
investments in research and development efforts even through downturns in the semiconductor
industry and be better positioned to take advantage of potential opportunities right at the start
of an upturn cycle.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Our Services</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We offer semiconductor packaging and test services to the semiconductor industry for
applications in communications, computing, consumer, automotive and industrial end markets. We
offer full backend turnkey services from wafer probe to final test and drop ship. The services we
offer are customized to the needs of our individual customers. In 2006, 73.8% of our net revenues
were derived from packaging services and 26.2% of our net revenues were derived from test and other
services.
</DIV>

<P align="center" style="font-size: 10pt">23
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the percentage of net revenues by packaging product group and
testing and other services for the periods indicated. Our data for 2004 includes the data for
ChipPAC from August&nbsp;5, 2004 and our data for 2005 and 2006 includes the data for ChipPAC for the
full period.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Year Ended</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR>
<TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Packaging &#151; array</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">40.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">50.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">55.5</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Packaging &#151; leaded</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Test and other services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Packaging Services</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We offer a broad range of leaded, power and advanced array packages designed to provide
customers with a full range of packaging solutions and full backend turnkey services for a wide
variety of electronics applications. Packaging serves to protect the die and facilitate electrical
connection and heat dissipation. As part of customer support on packaging services, we also offer
complete package design, electrical and thermal simulation, measurement and design of <FONT style="white-space: nowrap;">lead-frames</FONT>
and substrates. Our two key types of packaging services, leaded and array, contributed
approximately 18.3% and 55.5%, respectively, of our net revenues in 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Leaded Packaging. </I>&#147;Leaded&#148; or <FONT style="white-space: nowrap;">&#147;lead-frame&#148;</FONT> package is the most widely used package type and is
used in almost every electronic application, including automobiles, household appliances, desktop
and notebook computers and telecommunications. Leaded packages have been in existence since
semiconductors were first produced and are characterized by a semiconductor die encapsulated in a
plastic mold compound with metal leads surrounding the perimeter of the package. With leaded
packages, the die is attached to a lead-frame (a flat lattice of leads) and very fine gold wires
are bonded (welded)&nbsp;to the chip and then welded to the leads to provide the interconnect. The chip
is then encapsulated in plastic to form a package, with the ends of the <FONT style="white-space: nowrap;">lead-frame</FONT> leads protruding
from the edges of the package to enable connection to a printed circuit board. Specific packaging
customization and improvements are continually being engineered to improve electrical and thermal
performance, shrink package sizes and enable <FONT style="white-space: nowrap;">multi-chip</FONT> capability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Standard <FONT style="white-space: nowrap;">Lead-frame</FONT> Packages. </I>Our standard <FONT style="white-space: nowrap;">lead-frame</FONT> packages are used in a variety of
applications, including mobile phones, notebook computers and networking systems. We focus on
<FONT style="white-space: nowrap;">high-performance,</FONT> thin profile and near <FONT style="white-space: nowrap;">chip-scale</FONT> <FONT style="white-space: nowrap;">lead-frame</FONT> packages.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table summarizes our standard lead-frame packages:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Package Format</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>of I/Os</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Typical Applications</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Plastic Dual <FONT style="white-space: nowrap;">In-line</FONT> Package<BR>
(PDIP)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">8-40</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="white-space: nowrap;">Lead-frame</FONT> package of low pin
countwith <FONT style="white-space: nowrap;">two-side</FONT> leads and
<FONT style="white-space: nowrap;">plated-through-hole</FONT> (PTH)
technology
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Automotive electronics, power
management, audio and remote
control</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Small Outline Integrated Circuit<BR>
(SOIC)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">8-32</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="white-space: nowrap;">Lead-frame</FONT> package of low pin
count with <FONT style="white-space: nowrap;">two-side</FONT> leads, and
a surface mount technology
(SMT)&nbsp;designed for logic,
linear, digital and
<FONT style="white-space: nowrap;">read-only-memory</FONT> devices
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Automotive electronics, power
management, audio and remote
control</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Plastic Leaded Chip Carrier<BR>
(PLCC)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">20-84</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Traditional <FONT style="white-space: nowrap;">lead-frame</FONT> package
designed for applications that
do not have space constraints
and do not require a high
number of interconnects
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Personal computers (PCs),
access equipment and multimedia</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">24
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Package Format</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>of I/Os</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Typical Applications</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Micro
Small outline Package<br>(MSOP)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">8-10</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="white-space: nowrap;">Lead-frame</FONT> package of very low pin count with thickness below
1.0mm designed for logic,
analog and <FONT style="white-space: nowrap;">mixed-signal</FONT> devices
such as analog and operation
amplifiers, controllers and drivers,
logic, memory and RF/wireless devices
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mobile phone, mass storage, multimedia and Personal Digital
Assistant (PDA)</TD>
</TR>

<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Shrink Small Outline Package<BR>
(SSOP)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">36-56</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Traditional <FONT style="white-space: nowrap;">lead-frame</FONT> package
designed for logic, analog and
<FONT style="white-space: nowrap;">mixed-signal</FONT> devices such as
Flash, SRAM, EPROM, EEPROM and
DRAM
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">PCs, mass storage and multimedia</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Thin Shrink Small Outline <BR>
Package (TSSOP)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">8-56</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Traditional <FONT style="white-space: nowrap;">lead-frame</FONT> package
with thickness below 1.0mm
designed for logic, analog and
<FONT style="white-space: nowrap;">mixed-signal</FONT> devices such as
Flash, SRAM, EPROM, EEPROM and
DRAM
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mobile phone, mass storage,
multimedia and PDA</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Thin Small Outline Package<BR>(TSOP)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">28-56</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Traditional <FONT style="white-space: nowrap;">lead-frame</FONT> package
with <FONT style="white-space: nowrap;">two-side</FONT> leads, and a SMT
designed for memory,
RF/wireless, logic, linear and
automotive devices
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">PCs, portable electronics,
networking equipment and
automotive electronics</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Thin Quad Flat Package (TQFP)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">32-128</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Advanced QFP with thickness of
1.0mm for use in low profile,
space constrained applications
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mobile phone, mass storage and
multimedia</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Low Quad Flat Package (LQFP)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">32-208</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Advanced QFP with thickness of
1.4mm for use in low profile,
space constrained applications
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mobile phone, mass storage and
multimedia</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Metric Quad Flat Package (MQFP)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">44-240</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Traditional QFP designed for
ASICs, field programmable gate
arrays (FPGAs) and digital
signal processors (DSPs)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Access/Local Area Network (LAN)
equipment, multimedia and mass
storage</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Enhanced <FONT style="white-space: nowrap;">Lead-frame</FONT> Packages. </I>Our enhanced <FONT style="white-space: nowrap;">lead-frame</FONT> packages are similar in design to our
standard <FONT style="white-space: nowrap;">lead-frame</FONT> packages but are generally thinner and smaller and have advanced thermal and
electrical characteristics which are necessary for many of the <FONT style="white-space: nowrap;">leading-edge</FONT> semiconductors designed
for communications applications.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe we are a leader in offering chip stack technology that provides the flexibility of
stacking up to seven dies in a single package to improve package performance and functionality
while reducing overall package size and cost. These solutions provide us with a significant
competitive advantage when servicing clients who need to reduce the form factor of their devices
while increasing product functionality, for instance in mobile handheld and phone applications.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table summarizes our enhanced <FONT style="white-space: nowrap;">lead-frame</FONT> packages:
</DIV>

<P align="center" style="font-size: 10pt">25
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Package Format</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>of I/Os</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Typical Applications</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Quad Flat <FONT style="white-space: nowrap;">No-Lead</FONT> (QFN)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">4-88</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="white-space: nowrap;">Lead-frame</FONT> based plastic encapsulated <FONT style="white-space: nowrap;">chip-scale</FONT> package in single mold cavity format (punch singulated) or molded array format (saw singulated)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mobile phone, PDA, Global Positioning System (GPS)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Dual Row Quad Flat <FONT style="white-space: nowrap;">No-Lead</FONT><BR>
<FONT style="white-space: nowrap;">(QFN-dr)</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">4-156</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">QFN version with staggered dual
row leads offers higher I/O
counts.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mobile phone, PDA, GPS</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Bumped Chip Carrier (BCC)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">16-84</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="white-space: nowrap;">Lead-frame</FONT> based near <FONT style="white-space: nowrap;">chip-scale</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mobile phone, PDA, GPS</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Dual Row Bumped Chip Carrier<BR>(BCCs)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">16-116</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BCC version with staggered dual
row leads offers higher I/O
counts.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mobile phone, PDA, GPS</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="white-space: nowrap;">Lead-frame</FONT> <FONT style="white-space: nowrap;">Chip-scale</FONT> Packages<BR>
(LFCSPs)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">8-64</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="white-space: nowrap;">Lead-frame</FONT> based near <FONT style="white-space: nowrap;">chip-scale</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mobile phone, PDA, GPS</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Exposed Pad Low Quad Flat <BR>
Package <FONT style="white-space: nowrap;">(LQFP-ep)</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">48-216</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Thermally enhanced QFP with 30% greater thermal dissipation than MQFP
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Access/Wide Area Network
(WAN)/LAN equipment and
PC/graphics, high disk drive
(HDD)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Exposed Pad Thin Quad Flat <BR>
Package <FONT style="white-space: nowrap;">(TQFP-ep)</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">32-100</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Thermally enhanced TQFP with 30% greater thermal dissipation than TQFP
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Access/WAN/LAN equipment,
PC/graphics, HDD, PDA, GPS and
mobile phone</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Exposed <FONT style="white-space: nowrap;">Drop-in</FONT> Heat Sink Quad<BR>Flat Package <FONT style="white-space: nowrap;">(MQFP-ed)</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">128-240</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Thermally enhanced QFP with 60% greater thermal dissipation than MQFP
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Access/WAN/LAN equipment and
PC/graphics</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="white-space: nowrap;">Drop-in</FONT> Heat Sink Quad Flat <BR>
Package <FONT style="white-space: nowrap;">(MQFP-d)</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">64-208</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Thermally enhanced QFP with 30% greater thermal dissipation than MQFP
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Access/WAN/LAN equipment and
PC/graphics</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Exposed Pad Thin Shrink Small<BR>Outline Package <FONT style="white-space: nowrap;">(TSSOP-ep)</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">16-38</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Thermally enhanced TSSOP with 30% greater thermal dissipation than TSSOP
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mobile phone, mass storage
multimedia and PDA</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Stacked Die Quad Flat Package<BR><FONT style="white-space: nowrap;">(LQFP-SD)</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">32-208</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Compact multiple die designed for space constrained applications
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mobile phone, PDA, GPS, disk
drive and multimedia</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Stacked Die Exposed Pad Low <BR>
Quad Flat Package<BR>
<FONT style="white-space: nowrap;">(LQFP-ep-SD)</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">32-216</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Thermally enhanced <FONT style="white-space: nowrap;">LQFP-SD</FONT>
designed for space constrained
applications with thickness of
1.4mm and greater thermal
dissipation than <FONT style="white-space: nowrap;">LQFP-SD</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">PC, mobile phone, PDA, GPS,
disk drive, MP3, pagers and
consumer electronics</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Stacked Die Exposed Pad Thin<BR>Quad Flat Package<BR>
<FONT style="white-space: nowrap;">(TQFP-ep-SD)</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">32-100</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Thermally enhanced with
multiple die TQFP designed for
space constrained applications
with thickness of 1.0mm and
greater thermal dissipation
than
<FONT style="white-space: nowrap;">LQFP-SD</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">PC, mobile phone, PDA, GPS,
disk drive, MP3 and consumer
electronics</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">26
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Power Packaging. </I>Power semiconductors are used in a variety of <FONT style="white-space: nowrap;">end-markets,</FONT> including
telecommunications and networking systems, computers and computer peripherals, consumer
electronics, electronic office equipment, automotive systems and industrial products. These end
markets increasingly depend upon power regulation and control in the trend toward smaller devices
and longer operating times. Packaging manufacturers are left to contend with shrinking chip
geometries owing to continued emphasis upon greater mobility and portability. Power semiconductors
typically involve higher current and voltage levels than memory, logic and microprocessor devices.
The high current involved in switching high voltages on and off and the phase control of
alternating current (AC)&nbsp;signals result in considerable power dissipated internally that produces
heat. Thus our power packages are designed in such a way as to conduct the resultant heat away from
the chip as power is dissipated, preventing the power device from being destroyed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Power package assembly is somewhat different from assembly of <FONT style="white-space: nowrap;">non-power</FONT> integrated circuit as
it employs special solder die attach and heavy aluminum wire bonding machines. Higher current
levels of power semiconductors likewise require larger diameter aluminum and gold wire than
<FONT style="white-space: nowrap;">non-power</FONT> integrated circuits to carry the load. Our facility in Malaysia maintains a vast array of
these special machines needed for power semiconductor assembly and test.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Array Packaging. </I>Array substrate based packaging represents one of the fastest growing areas
in the semiconductor packaging industry and is used primarily in computing platforms, networking,
<FONT style="white-space: nowrap;">hand-held</FONT> consumer products, wireless communications devices, personal digital assistants, video
cameras, home electronic devices such as DVDs and home video game machines.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Benefits of array packaging over leaded packaging include:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>smaller size;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>greater pin count, or number of connections to the printed circuit board;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>greater reliability;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>higher power dissipation;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>better electrical signal integrity; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>easier attachment to a printed circuit board.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;BGA technology was first introduced as a solution to problems associated with the increasingly
high lead counts required for advanced semiconductors used in applications such as portable
computers and wireless telecommunications. As the number of leads surrounding the integrated
circuit increased, high lead count packages experienced significant electrical shorting problems.
The BGA technology solved this problem by effectively creating leads on the bottom surface of the
package in the form of small bumps or solder balls. In a typical BGA, the semiconductor die is
placed on top of a plastic or tape laminate substrate rather than a <FONT style="white-space: nowrap;">lead-frame.</FONT> The die is
connected to the circuitry in the substrate by a series of fine gold wires that are bonded to the
top of the substrate near its edges. On the bottom of the substrate is a grid of solder balls that
connect the packaged device to a printed circuit board. These balls can be evenly distributed
across the entire bottom surface of the package, allowing greater distance between the individual
balls. For the highest lead count devices, the BGA format can be manufactured less expensively and
requires less delicate handling.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our BGA are typically used in semiconductors that require enhanced performance, including
DSPs, microprocessors and microcontrollers, ASICs, FPGAs, memory and PC chipsets. Our BGA typically
have between 16 and 900 balls.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Several of these packages have been developed as <FONT style="white-space: nowrap;">chip-scale</FONT> packages (CSPs). The emphasis of
these packages is on low profile, small footprint and lightweight characteristics. These are ideal
for medium <FONT style="white-space: nowrap;">pin-count</FONT> applications which require dense arrays in very small package sizes such as
<FONT style="white-space: nowrap;">hand-held</FONT> wireless equipment, mobile base stations and digital photography.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We supply our customers with substantially the entire family of BGA packaging services offered
in the marketplace today, including:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Standard BGA. </I>Standard BGA packaging has a grid array of balls on the underside of the
integrated circuit, and is used in <FONT style="white-space: nowrap;">high-performance</FONT> applications, like PC chipsets, graphic
controllers and DSPs. A BGA generally has greater than 100 pins.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">27
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I><FONT style="white-space: nowrap;">Chip-scale.</FONT> </I><FONT style="white-space: nowrap;">Chip-scale</FONT> packaging includes all packages where the package is less than
1.2 times the size of the silicon die. <FONT style="white-space: nowrap;">Chip-scale</FONT> BGA is a substrate (laminate or
<FONT style="white-space: nowrap;">tape)-based</FONT> package that is designed for memory devices and other medium pin count
semiconductors and requires dense ball arrays in very small package sizes, like wireless
telephones and personal digital assistants, video cameras, digital cameras and pagers.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I><FONT style="white-space: nowrap;">System-in-Package.</FONT> </I>SiP is a family of <FONT style="white-space: nowrap;">chip-scale-packages</FONT> that contain several
semiconductor dies along with passive components such as resistors, capacitors and
inductors in one package. Dies can be either stacked on top of each other or side by side.
This technology allows greater functionality in the same package footprint and thickness
without significant cost increase. These packages are used in wireless handsets, consumer
products and mobile computing applications.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I><FONT style="white-space: nowrap;">Chip-scale</FONT> Module Packaging (CSMP). </I>CSMP is an advanced SiP solution which features a
modular architecture that integrates mixed IC technologies and a wide variety of IPD such
as resistors, capacitors, inductors, filters, Balanced Unbalanced (BALUNs) and
interconnects directly onto a silicon substrate. The result is a high performance system
level solution, which provides a significant reduction in die size, weight, number of
interconnections and system board space requirements, and can be used for many
applications.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I><FONT style="white-space: nowrap;">Flip-chip</FONT> BGA. </I><FONT style="white-space: nowrap;">Flip-chip</FONT> BGA packaging, in which the silicon die is directly attached
to the substrate using gold or solder bumps instead of wire bonds, provides the most dense
interconnect with the highest electrical and thermal performance. <FONT style="white-space: nowrap;">Flip-chip</FONT> BGA technology
is used in a wide array of applications ranging from consumer products to highly
sophisticated ASICs, PC chipsets, graphics and memory packages.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;While we believe that <FONT style="white-space: nowrap;">flip-chip</FONT> BGA represents the next generation of BGA packaging
technology, we believe that standard BGA and <FONT style="white-space: nowrap;">chip-scale</FONT> BGA packaging will experience long life
cycles as have many of our leaded packaging solutions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our array packages, including CSPs, are described below:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Package Format</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>of I/Os</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Typical Applications</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Land Grid Array (LGA)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">8-200</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Laminate substrate based
package with plastic
overmolded encapsulation.
Unlike a standard <FONT style="white-space: nowrap;">flip-chip</FONT>
BGA, second level interconnect
is achieved on the LGA by
connecting &#147;lands&#148; on the
package directly onto the
printed circuit board through
solder <FONT style="white-space: nowrap;">re-flow</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mobile phone, wireless RF,<BR>
analog, ASIC, memory chip</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="white-space: nowrap;">Flip-chip</FONT> Low Profile Fine<BR>Pitch BGA (fcLFBGA)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">49-144</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">CSP BGA with <FONT style="white-space: nowrap;">Flip-chip/bump</FONT>
interconnect, instead of wire
bonding
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mobile phone, WAN/LAN equipment</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="white-space: nowrap;">Flip-chip</FONT> BGA (fcBGA)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">225-1152</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BGA with <FONT style="white-space: nowrap;">Flip-Clip/bump</FONT>
interconnect instead of wire
bonding
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">DSP, ASIC, FPGA</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Tape based Very Thin Fine <BR>
Pitch BGA <FONT style="white-space: nowrap;">(VFBGA-T)</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">81-169</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Thin CSP BGA (&#060;1.0mm)
characterized by <FONT style="white-space: nowrap;">flex-tape</FONT>
substrate for high density
circuits
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mobile phone, PDA and
multimedia</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Stacked Die Low Profile Fine<BR>Pitch BGA <FONT style="white-space: nowrap;">(LFBGA-SD)</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">72-409</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Compact multiple die designed
for space sensitive
applications. Capability to
stack up to seven dies in one
package
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mobile phone, PDA and
multimedia</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Tape Enhanced Plastic base<BR>BGA (TBGA)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">208-792</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BGA characterized by a
<FONT style="white-space: nowrap;">flex-tape</FONT> substrate mounted on
a copper heatspreader. This
package has a high thermal dissipation
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">WAN/LAN equipment and base
station</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">28
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Package Format</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>of I/Os</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Typical Applications</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Enhanced BGA (EBGA)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">159-1140</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">High pin count, <FONT style="white-space: nowrap;">thermally-enhanced</FONT><BR>
BGA suitable for high power<BR>
applications which utilize<BR>
heat sinks for thermal<BR>
dissipation
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">WAN/LAN equipment and base
station</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Low Profile Fine Pitch BGA<BR>(LFBGA)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">16-450</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Smaller and thinner BGA
designed for applications
which are space constrained
and require electrical
performance
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mobile phone, PDA, GPS and
multimedia</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Plastic Ball Grid Array<BR>
(PBGA)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">169-1152</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Electrically enhanced BGA<BR>
package designed for high I/O<BR>
replacement
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Access/LAN equipment,
PC/graphics and base station</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Thin Fine Pitch BGA<BR>
(TFBGA)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">41-280</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">CSP BGA characterized by a<BR>
thin core laminate substrate
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mobile phone, PDA and
multimedia</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Exposed <FONT style="white-space: nowrap;">Drop-in</FONT> Heat <BR>
Spreader Plastic BGA<BR>
<FONT style="white-space: nowrap;">(PBGA-H)</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">208-841</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Thermally Enhanced PBGA with<BR>
20% greater thermal<BR>
dissipation than PBGA
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Access/LAN/PC/graphics and
base station equipment</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Multi Chip Module Plastic <BR>
BGA <FONT style="white-space: nowrap;">(PBGA-MC)</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">80-600</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BGA integrated with two or<BR>
more multiple die within a<BR>
PBGA
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Access/LAN/PC/graphics and
base station equipment</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="white-space: nowrap;">Package-in-Package</FONT> (PiP)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">40-450</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="white-space: nowrap;">Three-dimensional</FONT> package
stacking fully tested packaged
chips and bare chips in a CSP
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">PC, mobile phone, PDA, MP3,
base station modems, memory
cards and consumer electronics</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="white-space: nowrap;">Package-on-Package</FONT> (PoP)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="white-space: nowrap;">128-700</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="white-space: nowrap;">Three-dimensional</FONT> package<BR>
stacking multiple fully tested<BR>
separate packages
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">PC, mobile phone, PDA, MP3,
base station modems, memory
cards and consumer electronics</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In response to ongoing government regulation and the industry trend towards environmentally
friendly products, our packaging operations introduced a &#147;green&#148; molding compound and set up a
dedicated <FONT style="white-space: nowrap;">lead-free</FONT> pure tin plating machine for leadframe based products since 2001.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2004, we announced the offering of <FONT style="white-space: nowrap;">lead-free</FONT> and &#147;green&#148; material options for our entire
package portfolio. These <FONT style="white-space: nowrap;">lead-free</FONT> and &#147;green&#148; packages are qualified with enhanced moisture
sensitivity level to withstand the higher reflow temperature at board packaging that is required
for <FONT style="white-space: nowrap;">lead-free</FONT> solders, complying with current Joint Electron Device Engineering Council and Japan
Electronics &#038; Information Technology Industries Association standards for <FONT style="white-space: nowrap;">lead-free</FONT> reflow profile
with a peak temperature of 260 degrees Celsius. Our green initiative is developed in accordance
with a number of international standards including the European Commission&#146;s Directive on Waste
from Electrical and Electronic Equipment and Restriction on Hazardous Substances.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In response to industry trends toward fine line and space wafer fabrication technology, we
have improved our fine pitch wire bonding capability to handle up to 40 micron <FONT style="white-space: nowrap;">in-line</FONT> bond pad
pitch and 50/25 micron staggered bond pitch. We have also established complete handling and
packaging processes for gallium arsenide (GaAs) semiconductors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Wafer Process Services. </I>As part of our efforts to be a total turnkey packaging and test
solutions provider for <FONT style="white-space: nowrap;">high-end</FONT> products, including products requiring wafer bumping, probe and
<FONT style="white-space: nowrap;">flip-chip</FONT> packaging and test solutions, we introduced <FONT style="white-space: nowrap;">Flex-On-Cap</FONT> (FOC)&nbsp;wafer bumping services,
with and without redistribution layers (RDL)&nbsp;for 150mm and 200mm wafers in 2003 and we started to
offer 300mm wafer electroplated solder bumping services in 2005. In 2006, we set up a new facility
to provide 200mm gold bumping services as part of our strategy to service the high growth LCD
driver semiconductor market.
</DIV>

<P align="center" style="font-size: 10pt">29
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Test Services</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We provide our customers with semiconductor test services for a number of device types,
including <FONT style="white-space: nowrap;">mixed-signal,</FONT> digital logic, memory, power and radio frequency devices. Semiconductor
testing measures and ensures the performance, functionality and reliability of a packaged device,
and requires knowledge of the specific applications and functions of the devices being tested. In
order to enable semiconductor companies to improve their <FONT style="white-space: nowrap;">time-to-market,</FONT> streamline their
operations and reduce costs, there has been an increasing trend toward outsourcing both packaging
and test services. We have capitalized on this trend by enhancing our test service capabilities.
Our test revenue was $422.7&nbsp;million in 2006, compared to $322.0&nbsp;million in 2005. The increase of
31.3% reflected effects of the growth in the semiconductor industry coupled with a trend towards
increased outsourcing of test services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We offer wafer probe and final testing on many different platforms, covering the major test
platforms in the industry. Wafer probe is the step immediately prior to the packaging of
semiconductors and involves electrical testing of the processed wafer for defects. Wafer probe
services require similar expertise and testing equipment to that used in final testing. We probe
wafers at either ambient or elevated temperature in accordance with our customer&#146;s test
requirement. Wafers are probed either as bumped or <FONT style="white-space: nowrap;">un-bumped</FONT> wafers. For bumped wafers, we can
probe both peripheral or array bumped wafers. We believe this wafer probe capability is very
important to customers who require <FONT style="white-space: nowrap;">known-good-die</FONT> for <FONT style="white-space: nowrap;">flip-chip</FONT> packaging.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Final testing involves using sophisticated test equipment and <FONT style="white-space: nowrap;">device-specific</FONT> software
programs to electrically test a number of attributes of packaged semiconductors for functionality
and performance in accordance with a test plan or test list. The test plan or test list varies from
device to device and customer to customer. For final testing, we have either gravity feed handlers
or <FONT style="white-space: nowrap;">pick-and-place</FONT> handlers. We also offer strip testing for <FONT style="white-space: nowrap;">mixed-signal</FONT> and RF applications. We
believe strip testing offers some advantages over the conventional method, including allowing large
numbers of devices to be tested at the same time, improved first pass yield, a more effective and
efficient handling of smaller form factor devices and increased overall throughput.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to test the capability of a semiconductor device, our customers generally will
provide us with their proprietary test programs and specify the test equipment to run those
programs. Our customers at times may consign their test equipment to us. Alternatively, our
customers may engage us to develop the test program and test hardware required to test their
device. The devices to be tested are placed into a <FONT style="white-space: nowrap;">socket-custom</FONT> load board by an automated
handling system, which is connected to the test equipment, which then tests the devices using
software programs developed and supplied by our customers or by us. The cost of any specific test
and the time required to conduct it, ranging from a few milliseconds to several seconds, varies
depending on the complexity of the semiconductor device and the customer&#146;s test program.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have invested in <FONT style="white-space: nowrap;">state-of-the-art</FONT> testing equipment that allows us to test a broad variety
of semiconductors, especially the more complex testing of <FONT style="white-space: nowrap;">mixed-signal</FONT> and <FONT style="white-space: nowrap;">high-performance</FONT> digital
devices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="white-space: nowrap;"><I>Mixed-signal Testing. </I></FONT>We test a variety of <FONT style="white-space: nowrap;">mixed-signal</FONT> semiconductors, including those used
in communications applications such as network routers, switches and interface cards; broadband
products such as cable modem <FONT style="white-space: nowrap;">set-top</FONT> boxes; and for wireless telecommunications products such as
cellular phones, base stations, wireless local area network (WLAN)&nbsp;and
<I>Bluetooth</I><FONT style="font-variant: SMALL-CAPS"><SUP style="font-size: 85%; vertical-align: text-top">tm</SUP></FONT> devices, personal computers and consumer applications.
<I>Bluetooth</I><FONT style="font-variant: SMALL-CAPS"><SUP style="font-size: 85%; vertical-align: text-top">tm</SUP></FONT> is a technology that enables short range wireless communication
between different electronic appliances. We are a member of the <I>Bluetooth</I><FONT style="font-variant: SMALL-CAPS"><SUP style="font-size: 85%; vertical-align: text-top">tm</SUP></FONT>
Special Interest Group. We also test <FONT style="white-space: nowrap;">mixed-signal</FONT> semiconductors for computers and consumer
components including audio devices, <FONT style="white-space: nowrap;">CD-ROM,</FONT> hard disk drive controllers, DVD players and game
consoles.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Digital Testing. </I>We test a variety of digital semiconductors, including <FONT style="white-space: nowrap;">high-performance</FONT>
semiconductors used in PCs, disk drives, modems and networking systems. Specific digital
semiconductors tested include DSPs, FPGAs, microcontrollers, central processing units (CPUs), bus
interfaces, digital ASICs and application specific standard products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Memory Testing. </I>We provide wafer probe services covering a limited type of memory devices
including static and <FONT style="white-space: nowrap;">non-volatile</FONT> memories.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="white-space: nowrap;"><I>Test-Related Services. </I></FONT>We offer a variety of other <FONT style="white-space: nowrap;">value-added</FONT> <FONT style="white-space: nowrap;">test-related</FONT> services,
including:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="white-space: nowrap;"><I>Burn-in process support. </I></FONT><FONT style="white-space: nowrap;">Burn-in</FONT> is the process of electrically stressing
semiconductors, usually at high temperature and voltage, for a period of time long enough
to cause the failure of marginal semiconductors. During <FONT style="white-space: nowrap;">burn-in</FONT> process support, we perform
an analysis of <FONT style="white-space: nowrap;">burn-in</FONT> rejects in order to determine the cause of failure.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">30
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Reliability testing. </I>Reliability testing is the process of testing a semiconductor to
evaluate its life span. It is performed on a sample of devices that have passed final
testing.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Thermal and electrical characterization. </I>Thermal and electrical characterization is the
process of testing a semiconductor for performance consistency under thermal and electrical
stress.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Dry pack. </I>Dry pack is the process of baking the semiconductors in order to prevent the
failure of any semiconductors due to exposure to moisture during shipping. We &#147;dry pack&#148;
many of our packaged integrated circuits in specially sealed, environmentally secure
containers.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Tape and reel. </I>Many electronic assembly lines utilize &#147;tape and reel&#148; methods in which
semiconductors are placed into a pocket tape to enable faster attachment to the printed
circuit board. We offer a service in which we ship packaged and tested devices on a tape
and reel mechanism, in a tray or in a tube in accordance with our customer&#146;s <FONT style="white-space: nowrap;">post-test</FONT>
requirements.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I><FONT style="white-space: nowrap;">Pre-production</FONT> and <FONT style="white-space: nowrap;">Post-production</FONT> Services</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have developed and enhanced our <FONT style="white-space: nowrap;">pre-production</FONT> and <FONT style="white-space: nowrap;">post-production</FONT> services to provide a total
solution for our customers. Our <FONT style="white-space: nowrap;">pre-production</FONT> services for packaging include package development,
and for testing include software and hardware development. Our <FONT style="white-space: nowrap;">wholly-owned</FONT> subsidiary, STATS
ChipPAC Test Services, Inc. in Milpitas, California, which is in Silicon Valley, delivers an
extended range of <FONT style="white-space: nowrap;">high-end</FONT> <FONT style="white-space: nowrap;">pre-production</FONT> test services to new and existing customers. STATS
ChipPAC Test Services, Inc. commenced operations in January&nbsp;2002 and provides test hardware and
software development services, <FONT style="white-space: nowrap;">pre-production</FONT> volume testing services, tester rentals and a unique
<FONT style="white-space: nowrap;">customer-to-lab-to-factory</FONT> relay for fast production offloads and capacity coordination. At our
customers&#146; request, certain finished and piloted test programs are transferred to our <FONT style="white-space: nowrap;">high-volume</FONT>
manufacturing facilities in Asia for full production release. STATS ChipPAC Test Services, Inc.
operates as a microcosm of our <FONT style="white-space: nowrap;">high-volume</FONT> Asian operations; it operates similarly configured
testing systems and handling equipment to ensure transfers to our manufacturing facilities in Asia
for subsequent volume production ramps are seamless. In December&nbsp;2002, STATS ChipPAC Test
Services, Inc. acquired the San Diego test facility from Conexant Systems Inc. for cash and in
connection with the acquisition, assumed certain liabilities associated with the San Diego
facility. STATS ChipPAC Test Services, Inc. began operations immediately in the San Diego facility
and offers the same range of <FONT style="white-space: nowrap;">high-end</FONT> preproduction test services that are offered in its
facilities in Silicon Valley. We also provide <FONT style="white-space: nowrap;">post-production</FONT> drop shipment services for our
customers.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Package Development</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our package development group interacts with customers early in the design process to optimize
package design and manufacturability including through selection, design and development of the
appropriate package, <FONT style="white-space: nowrap;">lead-frame</FONT> or substrate for that device by simulating the semiconductor&#146;s
performance and <FONT style="white-space: nowrap;">end-use</FONT> environment. For each project, our engineers create a design strategy in
consultation with each customer to address the customer&#146;s requirements, package attributes, design
guidelines and previous experience with similar products. After a design is finished, we provide
<FONT style="white-space: nowrap;">quick-turn</FONT> prototype services. By offering package design and prototype services, we can reduce our
customer&#146;s development costs, accelerate <FONT style="white-space: nowrap;">time-to-volume</FONT> production and ensure that new designs can
be properly packaged at a reasonable cost. We offer these services at our facilities in Singapore,
South Korea, China, Taiwan and the United States.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Test Software and Hardware Development</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We work closely with our customers to provide sophisticated software engineering services,
including test program development, platform conversion, <FONT style="white-space: nowrap;">multi-site</FONT> conversion, test optimization
and strip testing implementation. Generally, testing requires customized software to be developed
for each particular semiconductor device. Software is typically provided by the customer. We also
provide test development services where we will develop a total test solution for the customer. The
test development process is divided into five phases. We will first create a test plan based on the
customer&#146;s specifications. Once the test plan is approved by the customer, we create the
engineering designs and develop the layout for the test fixtures, generate the <FONT style="white-space: nowrap;">check-plot</FONT> for the
customer and, upon the customer&#146;s approval, proceed to hardware fabrication. In conjunction with
hardware fabrication, we develop the test program and convert all simulation vectors to the desired
tester format. Once the test program is developed, we debug the program, the hardware and the
device. We then correlate the software and hardware with the bench data provided by the customer.
Thereafter, we perform device characterization to enable our customer to understand the device
performance over different voltage and temperature ranges. This enables the customer to determine
the optimum conditions for their device performance and also to achieve optimum test yield.
</DIV>

<P align="center" style="font-size: 10pt">31
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In some cases, test program and hardware provided by the customer may be converted by us for
use on one or more of our tester platforms. Once a test program has been converted, we correlate
the test software and hardware using the correlation units or devices provided by the customer.
Upon the customer&#146;s approval of the results of the correlation of the test software and hardware,
actual production testing begins. On an <FONT style="white-space: nowrap;">on-going</FONT> basis, a dedicated group of our product engineers
will then assist our customers in collecting and analyzing the test results and develop engineering
solutions to improve their test robustness and production efficiency. We offer these services at
our facilities in Singapore and the United States.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Warehousing and Drop Shipment Services</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to enable semiconductor companies to improve their <FONT style="white-space: nowrap;">time-to-market</FONT> and reduce supply
chain and handling costs, we offer warehousing and drop shipment services in which we ship packaged
semiconductor devices directly to our customers&#146; <FONT style="white-space: nowrap;">end-customers.</FONT> We either directly bill our
customers for the cost of drop shipment or incorporate this into the price of our services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Research and Development</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our research and development efforts are focused on developing new packages, design, assembly
and test services and technologies required by our existing customers and that are necessary to
attract new customers. We have invested considerable resources and we are among the leaders in new
product and technology development. Our expenditures for research and development in 2004, 2005 and
2006 were $17.6&nbsp;million, $26.1&nbsp;million and $30.4&nbsp;million, respectively. As of January&nbsp;31, 2007, we
employed over 250 dedicated professionals for packaging and test development. We consider this a
core element of our total service offering and expect to continue to invest significant resources
in research and development.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Packaging Services</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have established a dedicated group of engineers whose primary focus is the development and
improvement of materials and process technology as well as development of new and advanced
packages. We work closely with our existing customers to better understand their immediate and
future packaging needs. As a result, we focus our packaging research and development efforts in
part on developing packages tailored to their individual requirements. Our <FONT style="white-space: nowrap;">web-based</FONT> proprietary
design and performance characterization provides the shortest <FONT style="white-space: nowrap;">time-to-market</FONT> with predictable
performance. These efforts take place at our package design development centers located in
Singapore, South Korea, Malaysia and the United States.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have a number of advanced packages under development to support our customers&#146; needs for
<FONT style="white-space: nowrap;">high-performance</FONT> packages. Our development roadmap includes <FONT style="white-space: nowrap;">flip-chip</FONT> technology and comprises
<FONT style="white-space: nowrap;">build-up</FONT> substrate, wafer bumping and passive integration technology components. <FONT style="white-space: nowrap;">Flip-chip</FONT>
technology can be used in both low pin count as well as high pin count packages and is particularly
suitable for devices that require more than 1,000 interconnects in a relatively small die. <FONT style="white-space: nowrap;">Build-up</FONT>
substrates deliver even higher interconnect density without compromising thermal and electrical
performance. We believe <FONT style="white-space: nowrap;">flip-chip</FONT> packages will find increasing application in <FONT style="white-space: nowrap;">high-end</FONT>
communications equipment such as switches, routers, PC chipsets, advanced memory buffer chips and
<FONT style="white-space: nowrap;">high-end</FONT> graphic processors. Furthermore, we have built capabilities to provide SiP solutions for
the radio frequency, wireless and cellular markets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also have next generation CSPs both under development and in qualification which
incorporate <FONT style="white-space: nowrap;">lead-frame,</FONT> laminate and tape technologies, along with multiple die stacking
capabilities. The emphasis in the development of such packages is the integration of more silicon
chips in the same <FONT style="white-space: nowrap;">low-profile,</FONT> small footprint and light weight package. This requires development
of many enabling technologies in order to thin and stack dies in very low profile packages. We
continually seek to develop and improve stacked die, stacked packages or <FONT style="white-space: nowrap;">three-dimensional</Font> packages
such as <FONT style="white-space: nowrap;">Package-in-Package</FONT> (PiP) and <FONT style="white-space: nowrap;">Package-on-Package</FONT> (PoP) to meet customer needs. These
packages are used particularly in <FONT style="white-space: nowrap;">hand-held</FONT> wireless communications equipment and are extremely
useful for all <FONT style="white-space: nowrap;">hand-held</FONT> devices including PC, mobile phones, PDA, base station modems, <FONT style="white-space: nowrap;">base-band</FONT>
circuits and memories. We continue to develop total SiP solutions to meet market demand for next
generation devices with higher levels of integration, increased functionality and compact sizes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, we continue to increase our support functions for thermal, electrical, stress and
package to board level reliability characterization. We offer a full range of thermal simulation
and actual testing for all of our existing packages and packages under development. We have a full
service reliability laboratory that can stress test assembled semiconductors. In conjunction with
local institutes and laboratories, we can also perform board level reliability testing of surface
mount assembled packages.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the past three years, we developed and introduced a number of new packages, including:
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Lead free <FONT style="white-space: nowrap;">Flip-Chip</FONT> Land Grid Array (fcLGA);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="white-space: nowrap;">Chip-scale</FONT> Module Package <FONT style="white-space: nowrap;">(LFBGA-CSMP,</FONT> fcLGA-CSMP, <FONT style="white-space: nowrap;">QLP-CSMP);</FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Low profile, Fine pitch BGA with Heatspreader <FONT style="white-space: nowrap;">(LFBGA-H);</FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Dual Row Leadframe CSP <FONT style="white-space: nowrap;">(LFCSP-dr);</FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>0.4mm Leadframe CSP;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Power Leadframe CSP;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Stacked Die Leadframe CSP;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Dual Row Quad Leadless Package <FONT style="white-space: nowrap;">(QLPp-dr);</FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Molded <FONT style="white-space: nowrap;">multi-die</FONT> <FONT style="white-space: nowrap;">chip-scale</FONT> package family with the following <FONT style="white-space: nowrap;">chip-stack</FONT> combinations in
package profile thickness ranging from 0.8 to 1.4mm (LF/TF/VFBGA):</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="white-space: nowrap;">Two-chip</FONT> stack, same chip size;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="white-space: nowrap;">Three-chip</FONT> stack, &#147;pyramid stack&#148;;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="white-space: nowrap;">Three-chip</FONT> stack with the two chip same size;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="white-space: nowrap;">Four-chip</FONT> stack, &#147;pyramid stack&#148;;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="white-space: nowrap;">Four-chip</FONT> stack with two chips same size;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="white-space: nowrap;">Five-chip</FONT> stack, &#147;pyramid stack&#148;;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="white-space: nowrap;">Five-chip</FONT> stack with three chips same size;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="white-space: nowrap;">Six-chip</FONT> stack, &#147;pyramid stack&#148;;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="white-space: nowrap;">Six-chip</FONT> stack with three chips same size; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="white-space: nowrap;">Seven-chip</FONT> stack with four chips same size;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="white-space: nowrap;">Lead-frame</FONT> <FONT style="white-space: nowrap;">chip-scale</FONT> package (LFCSPtm);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Stacked Die Bumped Chip Carrier package (BCC&#043;&#043; <FONT style="white-space: nowrap;">-SD2);</FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="white-space: nowrap;">&#147;Gigabit-Green-Gold-to-Gold&#148;</FONT> <FONT style="white-space: nowrap;">flip-chip</FONT> interconnection package family of CSPs and BGAs (G4TM);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Higher thermal performance PBGA with embedded heatslug <FONT style="white-space: nowrap;">(PBG-H);</FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Thermally enhanced ball grid array family with integrated passive components <FONT style="white-space: nowrap;">(PBGA-H-SiP);</FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Stacked Die <FONT style="white-space: nowrap;">System-in-Package</FONT> PBGA <FONT style="white-space: nowrap;">(PBGA-SiP-SD);</FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="white-space: nowrap;">Flip-Chip</FONT> Multi Package Module family module <FONT style="white-space: nowrap;">(fcBGA-MP);</FONT></TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">33
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="white-space: nowrap;">Flip-Chip</FONT> BGA with High Lead bumping <FONT style="white-space: nowrap;">(fcBGA-Hi</FONT> Lead);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Enhanced BGA with Multi Cavity <FONT style="white-space: nowrap;">(EBGA-MC);</FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="white-space: nowrap;">Flip-Chip</FONT> on <FONT style="white-space: nowrap;">lead-frame</FONT> substrate (fcLFCSPs);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="white-space: nowrap;">Package-in-Package</FONT> (PiP) stacking &#151; <FONT style="white-space: nowrap;">LFBGA-PiPs;</FONT> PiPm;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="white-space: nowrap;">Package-on-Package</FONT> (PoP) &#151; <FONT style="white-space: nowrap;">LFBGA-PoP;</FONT> <FONT style="white-space: nowrap;">VFBGA-PoP;</FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Stacked Die <FONT style="white-space: nowrap;">System-in-Package</FONT> Multi Package Module &#151; <FONT style="white-space: nowrap;">TFLGA-SiP-SD2-MP;</FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Stacked Die <FONT style="white-space: nowrap;">System-in-Package</FONT> LGA &#151; <FONT style="white-space: nowrap;">VFLGA-SiP-SD4;</FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Bond on Chip Fine Ball Grid Array &#151; <FONT style="white-space: nowrap;">TFBGA-BOC;</FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Stacked Die Bond on Chip Fine Ball Grid Array &#151; <FONT style="white-space: nowrap;">TFBGA-BOC-SD2;</FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Extremely Thin Fine Ball Grid Array (XFBGA);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Extremely Thin Fine Land Grid Array (XFLGA);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="white-space: nowrap;">Flip-Chip</FONT> Quad Leadless Package (fcQLPp);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Stacked Die Thin Small Outline Package <FONT style="white-space: nowrap;">(TSOP-SD7);</FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Thin Internal Stack Module (Thin ISM);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Stack Die <FONT style="white-space: nowrap;">Package-on-Package</FONT> &#151; <FONT style="white-space: nowrap;">LFBGA-PoPt-SD5;</FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="white-space: nowrap;">Flip-Chip</FONT> Stacked Die Fine Ball Grid Array &#151; <FONT style="white-space: nowrap;">fcTFBGA-SD2;</FONT> <FONT style="white-space: nowrap;">fcLFBGA-SD2;</FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Flip-Chip System-in-Package BGA with 160 um Bump Pitch &#151; fcBGA-SiP-SS2 with 160 um Bump Pitch;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Extremely thin Quad Flat <FONT style="white-space: nowrap;">No-Lead</FONT> &#151; XQFN;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Multi Pad Quad Flat <FONT style="white-space: nowrap;">No-Lead</FONT> &#151; Multi Pad QFNs;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>0.4mm pitch Quad Flat <FONT style="white-space: nowrap;">No-Lead</FONT> <FONT style="white-space: nowrap;">(punch-singulated);</FONT> and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Memory Card Format &#151; <FONT style="white-space: nowrap;">SD-SiP-SD5;</FONT> MS Micro; rsMMC/MMC.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will continue to develop and introduce advanced packaging that meets the requirements of
our customers.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Test Services</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We focus on developing new technologies, software and processes to enhance efficiency and
reliability and to shorten test times. These include <FONT style="white-space: nowrap;">multi-site</FONT> testing, strip testing, test
program optimization and hardware improvements designed to permit improved utilization of existing
test equipment. When necessary we also design and build specialized equipment that is not available
from outside vendors. Our test development center is an important part of our research and
development efforts and is utilized to develop and debug test software prior to production,
complete test software conversions and offer our customers continuous access to our development
capabilities. Our test development center is located in Singapore.
</DIV>

<P align="center" style="font-size: 10pt">34
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Customers</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our customers include some of the largest semiconductor companies in the world. We seek to
diversify and broaden our customer base. In 2004, 2005 and 2006, our ten largest customers
accounted for 67.0%, 69.7% and 65.3%, respectively, of our net revenues. In 2006, our two largest
customers, Freescale Semiconductor, Inc. and Intel Corporation, each contributed in excess of 10%
of our net revenues and in the aggregate contributed 20.8% of our net revenues. We anticipate that
customer concentration will decrease as our business grows with an increase in engagements from a
large number of customers comprising our existing customer base and the addition of new customers
with whom we have already become qualified or with whom we are currently undergoing qualification.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth, for the periods indicated, the percentage of net revenues
derived from packaging and test of semiconductors used in communications, personal computers and
other applications. Our data for 2004 includes the data for ChipPAC from August&nbsp;5, 2004 and our
data for 2005 and 2006 includes the data for ChipPAC for the full period.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Year Ended</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Communications</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">60.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">55.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">56.7</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Personal computers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer, <FONT style="white-space: nowrap;">multi-applications</FONT>
and others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our customers are located around the world. We report geographic distribution of revenue based
on the location of our customers&#146; headquarters which is not indicative of shipment destination or
end market for our services. The following table details, for the periods indicated, the percentage
of net revenues received from the United States, Europe and Asia. Our data for 2004 includes the
data for ChipPAC from August&nbsp;5, 2004 and our data for 2005 and 2006 includes the data for ChipPAC
for the full period.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Year Ended</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">United States of America</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">77.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">76.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">73.2</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Europe</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Asia</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general, we believe the factors that our customers take into account in choosing their
packaging and test service providers include the ability of the provider to provide packaging and
test services for a wide range of semiconductor devices and the close proximity of the packaging
and test house to their wafer fabrication plant. Close proximity between the wafer foundry and the
packaging and test house enhances overall communication, simplifies supply chain logistics and
results in increased yield.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Semiconductor companies require packaging and test service providers to undergo a
qualification process before selecting them as their packager or tester. The qualification process
for a packaging service company is a lengthy and rigorous process that typically takes three to six
months, and typically costs the customer approximately $250,000 to $300,000. In the case of a test
service company, the test company must, in addition to ensuring that the requisite tester platform
is used, have the requisite production engineering expertise to pass a highly specialized and
rigorous test qualification process. The test qualification process typically takes one to two
months where the test house already has the tester technology and three to six months where the
tester technology is a new test platform, and typically costs the customer approximately $20,000 to
$100,000. Once a primary packager or tester has been selected, that packager or tester gains
insight into its customer&#146;s business operations and an understanding of its products as part of the
overall working relationship. The packaging and test service providers&#146; familiarity with the
customer&#146;s requirements and accordingly, their ability to better meet those requirements, combined
with the pressures of a semiconductor company to meet the <FONT style="white-space: nowrap;">time-to-market</FONT> demands of its customers,
help to assure continuity of relationship with their providers. We have been successful in
attracting new customers because we are one of only a few independent packaging and test companies
that offers full turnkey packaging, test and distribution services for a broad portfolio of
packages in strategic manufacturing locations.
</DIV>

<P align="center" style="font-size: 10pt">35
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Sales and Marketing</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We market our services through direct sales forces strategically located at centers in close
proximity to our customers, in Singapore, South Korea, China, Malaysia, Taiwan, the United States,
the United Kingdom, the Netherlands and Japan. Our account managers, applications engineers,
customer service representatives and sales support personnel form teams that focus on specific
customers or geographic regions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Customers generally deliver rolling six month forecasts and release production die to us in
daily or weekly increments for packaging, test and distribution. These <FONT style="white-space: nowrap;">near-term</FONT> forecasts guide us
as to anticipated volumes, but provide no meaningful backlog statistics. Substantially all of our
materials inventory is purchased based on customer forecasts. We carry relatively low levels of
<FONT style="white-space: nowrap;">work-in-progress</FONT> and finished goods inventory.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our marketing efforts focus on creating a brand awareness and familiarity with our advanced
device packaging technologies and an understanding of our <FONT style="white-space: nowrap;">end-user</FONT> market applications in wireless
handset and PDA graphics, PC chipsets, wireless LAN, <I>Bluetooth</I><SUP style="font-size: 85%; vertical-align: text-top">TM </SUP>, flash memory,
storage and networking. We market our leadership in <FONT style="white-space: nowrap;">three-dimensional</FONT> advanced packaging and test
technology, distribution and our ability to supply a broad line of packaging and test services to
the semiconductor industry. We target engineers and executive level decision makers through a
direct sales force, the delivery of &#147;white papers&#148; at industry conferences, mailings of technical
brochures and newsletters, advertisements in trade journals and our website.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Pricing Policy</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Test services are priced competitively against the market and vary principally on the type of
tester used and length of tester CPU time used, typically referred to as test time on <FONT style="white-space: nowrap;">per-second</FONT>
basis. The price of test time is a function of tester platform and hardware configuration, which
are usually determined by our customers based on the function and complexity of a particular
semiconductor device. In general, the test time for a complex semiconductor device will be longer
than a less complex semiconductor device. Wafer probe pricing is determined by similar factors. Any
reduction in test time resulting from optimization of test program or optimum hardware
configuration will mean savings for our customers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Packaging services are priced competitively against the market and vary depending on such
factors as package complexity and material cost. Design costs are not material but when incurred
may be charged to a customer separately under <FONT style="white-space: nowrap;">non-recurring</FONT> engineering cost or built into the unit
price.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Customer Service</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We place strong emphasis on quality customer service. Our broad service offerings, dedicated
customer account teams and commitment to finding solutions to our customers&#146; needs and problems
have enabled us to develop important relationships with many of our customers. We have implemented
an information technology architecture that seeks to achieve our objective of creating a virtual
manufacturing environment for our customers and making it easier for them to work with us. Our
system includes Business to Business links to some of our customers&#146; systems and an internet
portal, the mySTATSChipPAC portal, which may be directly accessed by our customers. These features
enable our customers to obtain <FONT style="white-space: nowrap;">real-time</FONT> information on our <FONT style="white-space: nowrap;">works-in-progress,</FONT> inventory and
shipment status, as well as other information relating to our operations. Our system also includes
a design collaboration system that enables us to engage the customer at the design stage for ease
of working collaboratively on design changes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Suppliers</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Raw Materials</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our packaging operations depend upon obtaining adequate supplies of raw materials on a timely
basis. The principal materials used in our packaging process are <FONT style="white-space: nowrap;">lead-frames</FONT> or laminate
substrates, gold wire, molding compound, epoxy, tubes and trays. The prices of <FONT style="white-space: nowrap;">lead-frames,</FONT> laminate substrates, gold wire, molding compound, epoxy, tubes and trays tend to be volatile. We purchase materials based on the
regular monthly forecasts of our customers. Our customers are generally responsible for most or all
of the costs of unique materials that we purchase but do not use, particularly those <FONT style="white-space: nowrap;">lead-frames</FONT>
and substrates that are ordered on the basis of <FONT style="white-space: nowrap;">customer-supplied</FONT> forecasts. We manage inventory
with automated materials management processes using enterprise resource planning systems. We work
closely with our primary materials suppliers to ensure the timely availability of materials
supplies, and we are not dependent on any one supplier for a substantial portion of our materials
requirements. The materials we procure are normally available and we are able to meet our
production requirements from multiple sources through new materials qualifications, periodic
negotiation and placement of written purchase orders. We typically combine our global requirements
into centrally negotiated agreements to gain economies of scale in procurement and more significant
volume
</DIV>

<P align="center" style="font-size: 10pt">36
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">discounts. We generally do not have <FONT style="white-space: nowrap;">long-term</FONT> supply contracts with our supplier. However,
should materials become scarce, we would look to enter into <FONT style="white-space: nowrap;">long-term</FONT> supply agreements with key
suppliers. The major suppliers of our substrate material are located in South Korea, Japan and
Taiwan.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Equipment</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our operations and expansion plans depend on us being able to obtain an adequate supply of
packaging and test equipment on a timely basis. We work closely with our major equipment suppliers
to ensure that equipment meets our performance specifications and is delivered on time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With the exception of a few key suppliers that provide reserved equipment delivery slots and
price discount structures, we have no binding supply agreements with any of our suppliers. A
reserved equipment delivery slot is one which allows us to obtain an accelerated delivery of the
equipment over and above the delivery schedule previously committed to by the supplier. We acquire our
packaging and test equipment on a purchase order basis. Increased
levels of demand for the type of capital equipment required in our business may cause an
increase in the price and lengthen delivery cycles.
Typically, price discounts are offered for volume purchases. We leverage our large volume of orders for
testers, probers, handlers and other equipment with our equipment suppliers to secure favorable
terms for our equipment purchases, including pricing and accelerated delivery times. A
portion of our equipment is held under capital lease. The unavailability of new test or packaging
equipment, the failure of such equipment or other equipment acquired by us to operate in accordance
with our specifications or requirements or delays in the delivery of such equipment, could delay
implementation of our expansion plans and could materially and adversely affect our business,
financial condition and results of operations. See &#147;Item&nbsp;3. Key Information &#151; D. Risk Factors &#151;
Risks Relating to Our Company &#151; If we are unable to obtain packaging and testing equipment in a
timely manner or on reasonably favorable terms and prices, we may be unable to meet customer demand
and our revenue may decline&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Packaging Equipment. </I>The primary equipment used in packaging includes die saw, die attach,
wire bonders and mold systems. Certain of our wire bonders allow for interchangeability between
<FONT style="white-space: nowrap;">lead-frame</FONT> and array packages. We purchase die attach and wire bonders from major international
manufacturers, including Kulicke &#038; Soffa Industries, Inc., Shinkawa Ltd, ASM Technology and Unaxis
(formerly known as ESEC S.A.). As of January&nbsp;31, 2007, we operated an aggregate of 3,845 wire
bonders. We purchase mold systems from major international manufacturers, including , Asahi
Engineering Co Ltd, <FONT style="white-space: nowrap;">Dai-Ichi</FONT> Seiko Co Ltd. and Towa Corporation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Testing Equipment. </I>Testing equipment is one of the most critical components of the wafer
probing and device testing process. We generally seek to maintain testers from different vendors
with similar functionality and the ability to test a variety of different semiconductors. In
general, certain semiconductors can only be tested on a limited number of specially configured
testers. Our major suppliers of testing equipment are Teradyne, Inc., Verigy Ltd. and LTX
Corporation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of January&nbsp;31, 2007, we operated 959 testers, comprising 693 <FONT style="white-space: nowrap;">mixed-signal</FONT> testers, 138
digital testers, 108 memory testers and 20 discrete power testers. In certain cases where a
customer has specified testing equipment that is not widely applicable to other products that we
test, we have required that the customer provide the equipment on a consignment basis. Of the 959
testers, 183 are on consignment from customers. In addition to testing equipment, we maintain a
variety of other types of equipment, such as automated handlers and probers (with special handlers
for wafer probing), scanners, reformers and PC workstations for use in software development.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Quality Control</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We maintain a team of quality control staff comprising engineers, technicians, inspection
specialists and other employees whose responsibilities are to monitor our packaging and test
processes to ensure high quality. Our quality assurance systems impose strict process controls,
statistical <FONT style="white-space: nowrap;">in-line</FONT> monitors, supplier control, data review and management, quality controls and
corrective action systems. Our <FONT style="white-space: nowrap;">in-house</FONT> laboratory is equipped with advanced analytical tools and
provides the necessary equipment and resources for our research and development and engineering
staff to continuously enhance product quality and process improvement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our packaging and test operations are undertaken in clean rooms where air purity, temperature
and humidity are controlled. To ensure the stability and integrity of our operations, we maintain
clean rooms at our facilities that meet U.S. Federal 209E class 1,000, 10,000 and 100,000
standards.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our packaging and test operations in Singapore are ISO 9000, ISO 14001, TS16949 and OHSAS
18001 certified. Our facilities located in Icheon, South Korea, Shanghai, China and Kuala Lumpur,
Malaysia are ISO 14001, ISO 9001 and TS16949 certified. In addition, both of our facilities in
Kuala Lumpur, Malaysia, and Icheon, South Korea are OHSAS 18001 certified; and our Shanghai, China,
facility is expected to achieve OHSAS 18001 accreditation in the third quarter of 2007. ISO 9000 is
an international standard on the requirements for production of
</DIV>

<P align="center" style="font-size: 10pt">37

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">quality products and services. It also sets forth quality management systems for product
design, product development, installation and servicing. TS16949 is a quality management system
that addresses the specific production needs of automotive customers. ISO 14001 is an international
standard on environmental management systems to ensure environmental protection and prevention of
pollution in balance with <FONT style="white-space: nowrap;">socio-economic</FONT> needs while OHSAS 18001 is the standard for implementation
of an occupational health and safety management system (OHSMS).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Competition</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The independent SATS industry is very competitive and highly fragmented. In order to compete,
we must offer <FONT style="white-space: nowrap;">state-of-the-art</FONT> testing services and bring the most technologically advanced
packages to market as quickly as our competitors and at comparable prices. Packaging and test
services are provided by both large <FONT style="white-space: nowrap;">multi-national</FONT> companies and small niche market competitors. We
face substantial competition from a number of competitors, whose facilities are primarily located
in Asia.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our primary competitors and their primary locations are as follows:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Advanced Semiconductor Engineering, Inc. &#151; South Korea, Taiwan, Malaysia, Hong Kong and the United States;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Amkor Technology, Inc. &#151; South Korea, Japan, Taiwan, China, the Philippines and the United States;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>ASE Test Limited &#151; South Korea, Taiwan, Malaysia, Hong Kong and the United States; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Siliconware Precision Industries Co., Ltd. &#151; Taiwan.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each of these companies has significant packaging capacity, financial resources, research and
development operations, marketing and other capabilities, as well as some degree of operating
experience. These companies also have established relationships with many large semiconductor
companies, which are current or potential customers of ours.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also compete with the internal capabilities and capacity of many of our current and
potential IDM customers. Many IDMs have greater financial and other resources than we do and may
rely on internal sources for packaging and test services for reasons including:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>their desire to realize higher utilization of their existing packaging or test capacity;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>their unwillingness to disclose proprietary technology;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>their possession of more advanced packaging or testing technologies; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the guaranteed availability of their own packaging or test capacity.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The principal elements of competition in the independent semiconductor packaging industry
include variety of packages offered, price, location, available capacity, cycle time, engineering
capability, technical competence, customer service and flexibility. In the area of test services,
we compete on the basis of quality, cycle time, pricing, location, available capacity, software
development, engineering capability, technical competence, customer service and flexibility. We
believe that we compete favorably in these areas.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, we also compete in the independent testing market with smaller niche companies,
which offer limited services and compete principally on the basis of engineering capability,
location and available capacity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Intellectual Property</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our ability to develop and provide advanced packaging technologies and designs for our
customers depends in part on our proprietary <FONT style="white-space: nowrap;">know-how,</FONT> trade secrets and other patented and
<FONT style="white-space: nowrap;">non-patented</FONT> technologies, which we either own or license from third parties. We have licenses to
use numerous third party patents, patent applications and other technology rights, as well as
trademark and other intellectual property rights, in the operation of our business. We believe that
the material licenses should be renewable under normal or reasonable commercial terms once they
expire.
</DIV>

<P align="center" style="font-size: 10pt">38
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our ability to compete successfully and achieve future growth in net revenues will depend, in
part, on our ability to develop and to protect our intellectual property and the intellectual
property of our customers. We seek to protect proprietary information and <FONT style="white-space: nowrap">know-how</FONT> through patents,
the use of confidentiality and <FONT style="white-space: nowrap">non-disclosure</FONT> agreements and limited access to and distribution of
proprietary information. As of January&nbsp;31, 2007, our Company and our various subsidiaries held a
total of approximately 644 issued patents and pending patent applications. Of these, we have
approximately 116&nbsp;patents granted or allowed by the U.S.&nbsp;Patent and Trademark Office and
approximately 57&nbsp;patents registered or allowed in Singapore, South Korea and other countries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;When we are aware of intellectual property of others that may pertain to or affect our
business, we attempt to either avoid processes protected by existing patents, or <FONT style="white-space: nowrap">cross-license</FONT> or
otherwise obtain certain process or package technologies. In addition, we execute confidentiality
and <FONT style="white-space: nowrap">non-disclosure</FONT> agreements with our customers and consultants and limit access to and
distribution of our proprietary information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our ability to compete successfully and achieve future growth will rely in part on the
technological skills and innovation of our personnel and our ability to develop, maintain and
protect proprietary technologies. The departure of any of our key management or technical personnel
or the breach of their confidentiality and <FONT style="white-space: nowrap">non-disclosure</FONT> obligations or our failure to achieve our
intellectual property objectives or avoid infringement could have a material adverse effect on our
business, financial condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February&nbsp;2006, our Company, ChipPAC and STATS ChipPAC (BVI)&nbsp;Limited were named as
defendants in a patent infringement lawsuit filed in United States Federal Court for the Northern
District of California. The plaintiff, Tessera, has asserted that semiconductor chip packaging,
specifically devices having BGA and <FONT style="white-space: nowrap">multi-chip</FONT> BGA configurations used by the defendants infringe
certain patents of Tessera. Tessera has further asserted that our Company is in breach of an
existing license agreement entered into by Tessera with ChipPAC, which agreement has been assigned
by ChipPAC to our Company. We believe that we have a meritorious defense to the claims and intend
to defend the lawsuit vigorously. A court determination that our
products or processes infringe the intellectual property rights of
others could result in significant liability and/or require us to
make material changes to our products and/or processes. Due to the inherent uncertainties of the lawsuit, we cannot
accurately predict the ultimate outcome and it could result in
significant liability and/or injunction and could have a material adverse effect on the business, financial condition
and the results of operations of our Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
also, from time to time, receive from customers request for
indemnification against pending or threatened infringement claims
brought against such customers. The resolution of any future
allegation or request for indemnification could have a material
adverse effect on our business, financial condition and results of
operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our primary
registered trademark and trade name are &#147;STATSChipPAC&#148;. We also own or are
licensed to use other trademarks.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Insurance</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
maintain insurance policies covering losses, including losses due to business interruption
and losses due to fire, which we consider to be adequate. Our insurance policies cover our
buildings, machinery and equipment. The policies are subject to deductibles and exclusions that
result in our retention of a level of risk. Significant damage to our production facilities,
whether as a result of fire or other causes, would have a material adverse effect on our business,
financial condition and results of operations. We are not insured against the loss of any of our
key personnel.
</DIV>

<P align="center" style="font-size: 10pt">39
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Environmental Matters and Compliance</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our manufacturing operations use many chemicals, gases and other hazardous substances and also
generate gaseous, liquid and solid wastes. We are subject to regulatory requirements on, and
potential liabilities of the environmental aspects of manufacturing processes arising under laws
and regulations governing, among other things, the use, storage, discharge and disposal of
chemicals, air and water discharges as well as monitoring and remediation of soil and groundwater
contamination. These environmental aspects are identified and managed in a proactive and systematic
way via the ISO 14001 standard to which four of our manufacturing facilities are certified. We
regularly send samples of emissions and wastes to third party accredited laboratories for analysis
to ensure our compliance with the environmental laws and regulations that apply to us. We believe
that we are in substantial compliance with all current environmental laws and regulations
applicable to our operations and facilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Furthermore, our activities are subject to new regulatory requirements on the environmental
impacts of products such as the European Union&#146;s Directive 2002/95/EC on the restriction of the use
of certain hazardous substances in electrical and electronic equipment and other similar
legislations in China and certain states in the United States. As a result of these laws and
regulations, we expect that our customers will increasingly demand products that do not contain
these restricted substances, such as lead as an alloy in soldering material. Such requirements may
adversely affect our manufacturing costs by requiring us to acquire costly equipment or materials
or to redesign some of our processes, thereby resulting in further costs increase from research and
development and quality controls. In addition, failures to meet these demands could materially
adversely affect our product sales.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Corporate Structure</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The diagram below summarizes our corporate structure. We may from time to time make
acquisitions of, or investments in, other companies or businesses.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><IMG src="u92925u9292506.gif" alt="(FLOW CHART)">
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">Note:</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>In June&nbsp;2006, we entered into a strategic joint venture with CR Logic for the assembly and
test of select products in Wuxi, China, in connection with which we acquired a 25%
shareholding in MAT with CR Logic owning a 75% interest. MAT wholly owns ANST, an assembly
and test company based in Wuxi, China.</TD>
</TR>

</TABLE>




<P align="center" style="font-size: 10pt">40
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. Property, Plants and Equipment</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our packaging and test network comprises 12 facilities throughout Asia and the United States.
The following chart provides information regarding our facilities. For information on the aggregate
capacity of our facilities in terms of the number of wire bonders and testers we operate, see &#147;&#151;
B. Business Overview &#151; Suppliers &#151; Equipment&#148;. Our utilization rates for equipment for 2004, 2005
and 2006 were 69%, 72% and 75%, respectively.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="25%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="24%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="36%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Area</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Property/Location(1)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(Sq. Feet)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Functions/Services</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Principal Packaging or Services Provided</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Yishun, Singapore(2)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">594,036</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Turnkey packaging and test
services, research and
development, warehousing
services, and drop shipment
services
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Test services, including mixed-signal and
high performance testing, wafer sort and
probe, traditional and advanced leaded and
array packaging including BGA, <FONT style="white-space: nowrap">flip-chip</FONT>
packaging, wafer level packaging and CSP
and drop shipment services</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Icheon, South Korea
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">587,273</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Turnkey packaging and test
services, research and
development, warehousing
services, and drop shipment
services
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Advanced array packaging such as stacked
die, SiP and <FONT style="white-space: nowrap">flip-chip</FONT>, standard array
packaging such as BGA and CSP and test
services</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kuala Lumpur, Malaysia(3)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">488,448</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Turnkey packaging and test
services, research and
development, warehousing
services, and drop shipment
services
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Advanced lead frame packages such as LFCSP
and BCC, discrete power packages, and test
services</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Qing Pu, Shanghai, China(4)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">421,748</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Turnkey packaging and test
services, research and
development, warehousing
services, and drop shipment
services
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Packaging of leaded packages, CSP, BGA,
memory card, wafer probe, test and
distribution services</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="white-space: nowrap">Hsin-Chu</FONT> Hsien, Taiwan(5)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">217,258</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Test services, research and
development, warehousing
services, and drop shipment
services
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Test development, final test, wafer probe
and distribution services</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Fremont, California, United <BR>
States
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">56,320</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sales, marketing, administration and research
and development
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sales, marketing, administration and
design review services</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Milpitas, California, United <BR>
States
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">34,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Test facility and sales office
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sales, marketing, administration, design
and test engineering services</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Ang Mo Kio, Singapore
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">31,261</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate executive,
administrative, sales and
marketing and finance office
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate administration and finance,
sales and marketing</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">San Diego, California, <BR>
United States(6)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">20,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Test facility
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Test engineering services</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Song Jiang, Shanghai, China
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">15,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">LCD driver, IC bumping and
assembly turnkey services
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Gold bumping, Circuit probe (CP)&nbsp;testing,
<FONT style="white-space: nowrap;">Chip-on-glass</FONT> (COG)&nbsp;assembly and
<FONT style="white-space: nowrap;">Chip-on-flex</FONT> (COF)&nbsp;assembly for LCD driver
IC</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">41
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="25%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="24%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="36%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Area</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Property/Location(1)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(Sq. Feet)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Functions/Services</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Principal Packaging or Services Provided</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Tempe, Arizona, United States
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">9,300</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Package design, research and
development and sales office
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sales, marketing, administration, design
and characterization services</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="white-space: nowrap">Hsin-Chu</FONT> Hsien, Taiwan
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">7,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Solder bump services for<BR>
<FONT style="white-space: nowrap">flip-chip</FONT> assembly
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Eutectic/<FONT style="white-space: nowrap">High-lead</FONT><FONT style="white-space: nowrap">/Lead-free</FONT> solder bump<BR>
for 300mm wafers</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>We lease all of our facilities except where otherwise noted.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>We own the production assets but lease the land from the statutory housing development board
of the Government of Singapore under a long-term lease with an initial term expiring in March
2026 with an option to renew.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>We own the building and improvements and lease the land from the State Government of
Malaysia, but the land and all buildings on the land will revert to the lessor upon the
expiration of the <FONT style="white-space: nowrap">long-term</FONT> lease in 2086.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>We own the building and improvements and lease the land, but the land and all buildings on
the land will revert to the lessor upon the expiration of the <FONT style="white-space: nowrap">long-term</FONT> lease in 2044. Our
investment of approximately $53.6&nbsp;million to expand our existing facility in Qing Pu,
Shanghai, by adding new buildings next to it, is near completion. The addition of the new
buildings will increase the total floor space indicated above by approximately 500,000 square
feet.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>Winstek owns the land and building, which is subject to mortgages and certain other security
interests.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(6)</TD>
    <TD>&nbsp;</TD>
    <TD>Situated within the campus of Conexant Systems Inc.</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In addition, we purchased a building together with the land in 2006 in Icheon City, South Korea for
approximately $14.3&nbsp;million. The refurbishment works on the building are expected to be completed
in various stages throughout 2007 and 2008. The amount of the
expenditures and the timing of the refurbishment work will depend on
market conditions. The building has a total floor space of approximately
199,000 square feet and is expected to accommodate turnkey packaging and test services upon
completion.
</DIV>

<DIV align="left">
<A name="105"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 4A.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>UNRESOLVED STAFF COMMENTS</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None.
</DIV>
<DIV align="left">
<A name="106"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 5.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>OPERATING AND FINANCIAL REVIEW AND PROSPECTS</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following discussion
of our business, financial condition and results of operations should
be read in conjunction with our consolidated financial statements and the related notes included
elsewhere in this annual report. This discussion contains <FONT style="white-space: nowrap">forward-looking</FONT> statements that reflect
our current views with respect to future events and financial performance. Our actual results may
differ materially from those anticipated in these <FONT style="white-space: nowrap">forward-looking</FONT> statements as a result of certain
factors, such as those set forth under &#147;Item&nbsp;3. Key Information &#151; D. Risk Factors&#148; and elsewhere
in this annual report. Our consolidated financial statements are reported in U.S.&nbsp;dollars and have
been prepared in accordance with U.S.&nbsp;GAAP. Since the beginning of fiscal 2005, we have employed
quarterly and fiscal year reporting periods. Our <FONT style="white-space: nowrap;">52-53&nbsp;week</FONT> fiscal year ends on the Sunday nearest
to December&nbsp;31. Our fiscal quarters end on a Sunday and are generally thirteen weeks in length. Our
first three quarters of 2006 ended on March&nbsp;26, June&nbsp;25 and September&nbsp;24, respectively, and our
fourth quarter and fiscal year 2006 ended on December&nbsp;31, while our first three quarters of 2005
ended on March&nbsp;27, June&nbsp;26 and September&nbsp;25,
respectively, and our fourth quarter and fiscal year 2005
ended on December&nbsp;25, the Sunday nearest to the calendar quarter end of each period. Unless
otherwise stated, all years and dates refer to STATS ChipPAC&#146;s fiscal years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Overview</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a leading service provider of semiconductor packaging design, assembly, test and
distribution solutions. We have the skill to provide a comprehensive range of semiconductor
packaging and test solutions to a diversified global customer base servicing the computing,
communications, consumer, automotive and industrial markets.
</DIV>

<P align="center" style="font-size: 10pt">42
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In August&nbsp;2004, we completed the merger with ChipPAC, Inc. which resulted in ChipPAC, Inc.
becoming a <FONT style="white-space: nowrap">wholly-owned</FONT> subsidiary of STATS. The merger was accounted for using the purchase
method. Under the purchase method of accounting, the cost of approximately $1.1&nbsp;billion to acquire
ChipPAC, including transaction costs, was allocated to ChipPAC&#146;s net assets based on their
respective estimated fair values. The excess of the purchase price over the estimated fair values
of the net assets acquired was recorded as goodwill. The financial results for the periods
presented in this annual report reflect the financial results of STATS for the full periods and the
financial results of ChipPAC from August&nbsp;5, 2004. As a result, changes in our operating results in
2005 compared with 2004 are due generally to the acquisition of ChipPAC and the inclusion of
ChipPAC&#146;s operating results from August&nbsp;5, 2004. Further, because ChipPAC&#146;s operating results have
not been included for the full year 2004, and in any case for the reasons mentioned in &#147;Item&nbsp;3. Key
Information &#151; D. Risk Factors &#151; Risks Relating to Our Company &#151; Our operating results have
fluctuated, and may continue to fluctuate, from quarter to quarter, which may make it difficult to
predict our future performance&#148; and elsewhere in this annual report, the period to period
comparisons of our operating results are not meaningful and you should not use such comparisons to
predict our future performance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Temasek Holdings&#146; Subsidiary, Singapore Technologies Semiconductors Pte Ltd&#146;s, Tender Offer</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
March&nbsp;1, 2007, STSPL, a wholly-owned subsidiary of Temasek Holdings, announced its intention to
launch a voluntary conditional cash offer for the remaining ordinary shares and ADSs in our Company
that STSPL does not already own (the Offer). As of January&nbsp;31, 2007, STSPL owned approximately
35.56% of our outstanding ordinary shares. The information in the following paragraph is based on
STSPL&#146;s Offer announcement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The offer price will be S$1.75 for each ordinary share and S$17.50 for each ADS in cash. The Offer
will be conditioned upon, among other matters, STSPL receiving acceptance of such number of
ordinary shares and ADSs which, together with all other ordinary shares and ADSs owned, acquired or
agreed to be acquired by STSPL, would represent more than 50% of our outstanding ordinary shares
and ADSs following the close of the Offer. If ordinary shares and ADSs tendered into the Offer
result in STSPL owning at least 90% of our outstanding ordinary shares and ADSs (other than those
owned by STSPL and its related corporations at the commencement of the Offer), STSPL intends to
offer a higher purchase price of S$1.88 per ordinary share or S$18.80 per ADS to all shareholders
who accept the Offer, regardless of when their ordinary shares and ADSs are tendered. The Offer
would also include an offer by STSPL for our outstanding $115,000,000 Convertible Notes due 2008
and $150,000,000 2.50% Convertible Notes due 2008. The offer for the convertible notes is
conditioned on the offer for the ordinary shares and ADSs becoming unconditional in all respects.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;STSPL stated that it will send to our security holders the Offer to Purchase, which will contain
the terms and conditions of the Offer, not earlier than 14&nbsp;days and not later than 21&nbsp;days from the
date of the Offer announcement. STSPL announced that the Offer will remain open for acceptances by
security holders for a period of not less than 20 U.S. business days or 28 calendar days after the
date of posting of the Offer to Purchase, whichever is the longer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;1, 2007, we announced that our board of directors will appoint an independent financial
adviser to advise the directors of our Company who are regarded as independent for the purposes of
the Offer under the <FONT style="white-space: nowrap">Take-Over</FONT> Code (Special Committee). On March&nbsp;3, 2007, our board of directors
formed the Special Committee to review and consider the Offer and
such other strategic alternatives available to the Company as the
Special Committee may deem to be appropriate. The recommendations to security holders by our Special Committee
and the reasons for those recommendations will be set forth in a circular of our Company (which
will also contain the advice of the independent financial adviser appointed by our Special
Committee) and our Company&#146;s Solicitation/Recommendation Statement on <FONT style="white-space: nowrap">Schedule&nbsp;14D-9</FONT> filed with the
SEC. Following their publication, these documents can be obtained without charge at <FONT style="white-space: nowrap">www.sec.gov</FONT>, <FONT style="white-space: nowrap">www.sgx.com</FONT> and
<FONT style="white-space: nowrap">www.statschippac.com</FONT>. Our security holders should read these filings as they will contain
important information about the Offer, our board of director&#146;s recommendations, the advice of the independent financial adviser and other related
matters.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We expect to incur significant expenses in investment banking, legal and other fees and use
significant amounts of internal resources in connection with the
matters described above. It is not possible to accurately
predict the amount of money or internal resources that will be required in connection with the
these matters. Due to the additional costs expected to be incurred in
connection with these matters, we may not be
able to achieve the net income and net income per ADS guidance for the first fiscal quarter of 2007
that we had provided in our earnings release on January&nbsp;25,
2007. Further, while we are dealing with these matters, we may not be able to provide any guidance on our future quarterly results of
operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Factors Affecting Our Results of Operations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Cyclicality of the Semiconductor Industry</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our results of operations are influenced by the state of the global semiconductor industry
which is highly cyclical. The semiconductor industry experienced a significant downturn beginning in the
fourth quarter of 2000. This downturn had a significant adverse impact on our sales and financial
performance as customers reduced purchase orders to reflect inventory corrections and lower demand
experienced in their <FONT style="white-space: nowrap">end-user</FONT> markets. The semiconductor industry started its recovery in late
2002. However, in late 2004 to early 2005 and in late 2006, we experienced a softening of our
business as our customers corrected their excess inventory positions. Despite the softening of our
business in late 2006, the semiconductor industry outlook in 2007 published by recognized industry
research analysts and associations are projecting growth rates of approximately 7% as compared to
2006. We expect the SATS market to grow at a faster pace than the semiconductor industry as a
whole and we believe that we are well positioned to benefit from the growing outsourcing trend and
from our strategic positioning in the higher growth communication, computing and consumer markets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2002, our net revenues increased 54.8% over 2001 to $225.7&nbsp;million. In 2003, our net
revenues grew by 68.6% over 2002 to $380.7&nbsp;million. In 2004, our net revenues grew further by
102.0% to $769.1&nbsp;million. In 2005, our net revenues grew by 50.5% over 2004 to $1,157.3&nbsp;million
primarily due to our acquisition of ChipPAC and a return to growth in the semiconductor industry
coupled with a trend towards increased outsourcing of test and packaging and in 2006, our net
revenues grew by 39.7% over 2005 to $1,616.9&nbsp;million. We continue to expect that the cyclicality
of the semiconductor industry will impact our results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Declining Prices. </I>The semiconductor industry is characterized by price erosion which can have
a material adverse effect on our revenues and gross margins, particularly when coupled with
declining capacity utilization. Prices of our products at a given level of technology decline over
the product life cycle, commanding a premium in the earlier stages and declining towards the end of
the cycle. To maintain our profitability, we offset decreases in average selling prices by
improving our capacity utilization rates and production efficiency, or by shifting to higher margin
test and packaging services. In addition, we continue to develop and offer test and packaging
services which command higher margins. We expect average selling prices to fluctuate depending on
our product mix in any given period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cost of Revenues. </I>Our results of operations are generally affected by the <FONT style="white-space: nowrap">capital-intensive</FONT>
nature of our business. Our cost of revenues include depreciation expense, attributed overhead such
as facility rental, operating costs and property taxes and insurance, cost of labor and materials
and cost of leasing equipment. Our fixed costs comprised largely the expenses related to our test
and packaging equipment. Depreciation of our equipment and machinery is generally provided on a
<FONT style="white-space: nowrap">straight-line</FONT> basis over their estimated useful lives of eight years. We routinely review the
remaining estimated useful lives of our equipment and machinery to determine if such lives should
be adjusted due to changes in technology, production techniques and our customer base. However, due
to the nature of our operations, which may include sudden changes in demand in the end markets, and
due to the fact that certain equipment are dedicated to specific customers, we may not be able to
accurately anticipate declines in the utility of our equipment and machinery. Consequently,
impairment charges on our equipment and machinery may be necessary in the future. Our variable
costs comprised cost of materials, payroll and operating supplies. The cost of our packaging
services will typically include a higher proportion of variable costs compared to test services.
Our variable costs may be subject to various global economic factors such as gold prices, oil
prices and fluctuations in foreign exchange rates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Capacity Utilization. </I>Increases or decreases in capacity utilization can have a significant
effect on gross profit margins since the unit cost of test and packaging services generally
decreases as fixed charges, such as depreciation expense and equipment leasing costs, are allocated
over a larger number of units. We have experienced a significant decrease in the capacity
utilization of our facilities in 2001 as a result of the downturn
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">in the semiconductor industry. Our capacity utilization has improved year over year from 2002
to 2006 as the semiconductor industry has been returning to growth. Our ability to manage our gross
profit margins will continue to depend in part on our ability to effectively manage our capacity
utilization.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Goodwill and Intangible Assets. </I>As of December&nbsp;31, 2006, we had goodwill and other intangible
assets of approximately $513.5&nbsp;million and $41.8&nbsp;million, respectively, which primarily resulted
from the accounting of the merger in 2004 using the purchase accounting method.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Goodwill is recorded when the cost of an acquisition exceeds the fair market value of the net
tangible and identifiable intangible assets acquired. Goodwill and <FONT style="white-space: nowrap">indefinite-lived</FONT> intangible
assets are tested for impairment at least annually. These tests are performed more frequently
whenever events or changes in circumstances indicate that the carrying value may not be
recoverable. Impairment losses are recorded when the carrying amount of goodwill and intangible
assets exceeds their respective implied fair values. We performed an impairment review at the end
of 2004 and recorded an impairment charge of $453.0&nbsp;million to our results of operations in 2004 on
our goodwill associated with the acquisition of ChipPAC, with determination of fair value
supplemented by independent appraisal using a combination of discounted cash flows and market
multiples methodologies. We believed that the decline in the fair values of the ChipPAC reporting
units in 2004 were primarily due to:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>longer than expected slow-down in the industry beginning late 2004 as customers
corrected excess inventory position. This reduction in demand, coupled with the competitive
pressures in the testing and packaging business, affected our <FONT style="white-space: nowrap">short-term</FONT> earnings
expectation; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a revision of the industry outlook beyond 2005 compared to the time the merger was
announced.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2005 and 2006, we completed our annual test for impairment and determined that the fair
value of the reporting units exceeds their carrying value, and therefore goodwill was not impaired.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may be required in the future to record a significant charge to earnings in our financial
statements during the period in which any impairment of our goodwill or other intangible assets is
determined. Should an impairment be determined to have occurred, such impairment losses are
recorded as a part of income from continuing operations and this will likely have a significant
adverse effect on our results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See &#147;Item&nbsp;3. Key Information &#151; D. Risk Factors &#151; Risks Relating to Our Company &#151; We
recorded an impairment charge of $453.0&nbsp;million to our earnings in 2004 and may be required to
record another significant charge to earnings in the future when we review our goodwill or other
intangible assets for potential impairment&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Critical Accounting Policies</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe the following accounting policies are critical to our business operations and the
understanding of our results of operations. Our preparation of our financial statements requires us
to make estimates and assumptions that affect the reported amount of assets and liabilities,
disclosure of contingent assets and liabilities at the date of its financial statements and the
reported amounts of revenues and expenses during the reporting period. If actual results differ
significantly from the estimates and assumptions, there could be a material adverse effect on our
financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Revenue Recognition, Allowance For Doubtful Debts, Trade Discounts and Allowances and Sales
Returns</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We derive revenue primarily from wafer probe and bumping, packaging and testing of
semiconductor integrated circuits. Net revenues represent the invoiced value of services rendered,
net of returns, trade discounts and allowances, and excluding goods and services tax.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenue is recognized when there is evidence of an arrangement, fees are fixed or
determinable, collectibility is reasonably assured, the service has been rendered, the revenue to
be recognized is billable under the terms of the arrangement and not contingent upon completion of
undelivered services, and, where applicable, delivery has occurred and risk of loss has passed to
the customer. Such policies are consistent with the provisions in the SEC&nbsp;Staff Accounting Bulletin No.&nbsp;104, &#147;Revenue Recognition in Financial Statements&#148;.
</DIV>

<P align="center" style="font-size: 10pt">44
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our sales arrangement include probe, bumping, packaging or test services sold on a standalone
basis, as well as <FONT style="white-space: nowrap;">multiple-element</FONT> arrangements where probe, bumping, packaging, test, and in some
cases, <FONT style="white-space: nowrap;">pre-production</FONT> and <FONT style="white-space: nowrap;">post-production</FONT> services are provided together. The allocation of revenue
to each unit of accounting based on fair value, determined by reference to prices of services sold
on a standalone basis, is critical judgment and estimate. Changes in the determination of the
allocation could impact the timing of such revenue.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We generally do not take ownership of customer supplied semiconductors as these materials are
sent to us on a consignment basis. Accordingly, the value of the customer supplied materials is
neither reflected in revenue nor in cost of revenue.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We make estimates of the collectibility of our accounts receivable. We review the accounts
receivable on a periodic basis and make specific allowance when there is doubt as to the
collectibility of individual accounts. In evaluating the collectibility of individual receivable
balances, we consider the age of the balance, the customer&#146;s historical payment history, its
current creditworthiness and current economic trends. We believe that we adequately manage our
credit risk through our credit evaluation process, credit policies, and credit control and
collection procedures. Additional allowances may be required in the future if the financial
condition of our customers or general economic conditions deteriorate. Our actual uncollectible
accounts have not historically been significantly different from our estimates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Similarly, we make estimates of potential sales returns and discounts which we allow for
volume purchases and early payments as a deduction from gross revenue based on our historical
experience and expectations of our customers&#146; ultimate purchase levels and payment timing. Actual
revenues may differ from our estimates if future customer purchases or payment timing differ from
our estimates, which may happen as a result of changes in general economic conditions, market
demand for our customers&#146; products, or desire by our customers&#146; interest in achieving payment
timing discounts. Our actual returns and discounts have not historically been significantly
different from our estimates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Valuation of Inventory</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The valuation of inventory requires us to estimate obsolete or excess inventory as well as
inventory that are not of saleable quality. The determination of obsolete or excess inventory
requires us to estimate the future demand from our customers within specific time horizons,
generally six months or less. The estimates of future demand that we use in the valuation of
inventories are the forecasts provided by our customers. If our inventory for specific customer
forecast is greater than actual demand, we may be required to record additional inventory reserves,
which would have a negative impact on our gross margin.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our inventories are stated at the lower of cost, determined on the weighted average basis, and
market value, as estimated by us. Cost is generally computed on a standard cost basis, based on
normal capacity utilization, with unrecoverable costs arising from underutilization of capacity
expensed when incurred.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Depreciation and Amortization</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our operations are capital intensive and we have significant investment in testing and
packaging equipment. We depreciate our property, plant and equipment based on our estimate of the
period that we expect to derive economic benefits from their use. Our estimates of economic useful
lives are set based on historical experience, future expectations and the likelihood of
technological obsolescence arising from changes in production techniques or in market demand for
the use of our equipment and machinery. However, business conditions, underlying technology and
customers&#146; requirements may change in the future which could cause a change in the useful lives.
Any change in useful lives could have a significant effect on our future operating results.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the third quarter of 2004, following the consummation of the merger, we adopted ChipPAC&#146;s
policy to depreciate equipment and machinery on a straight line basis over eight years. The impact
of this change was depreciation savings of $23.7&nbsp;million in 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our decision to change the estimated useful lives of the packaging and test equipment was
based on the following:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>expected economic life of assets;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>equipment&#146;s potential <FONT style="white-space: nowrap;">re-use</FONT> among product lines;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>historical experience for equipment in our factories;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>prevailing industry practice; and</TD>
</TR>

</TABLE>
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>consultation with equipment manufacturers.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that our principal competitors depreciate their packaging assets over periods of
six to eight years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Valuation of Property, Plant and Equipment</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We review property, plant and equipment for impairment whenever events or changes in market
conditions indicate that the carrying amounts may not be recoverable. Management judgment is
critical in assessing whether events have occurred that may impact the carrying value of property,
plant and equipment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Recoverability of assets to be held and used is measured by a comparison of the carrying
amount of the asset to the future undiscounted net cash flows expected to be generated from the
asset. If the carrying amount of the asset exceeds the future undiscounted net cash flows, such
assets are considered to be impaired and an impairment charge is recognized for the amount that the
carrying value of the asset exceeds its fair value. In determining the fair value of equipment and
machinery, we consider offers to purchase such equipment and expected future discounted cash flows.
Due to the nature of our business, which may include sudden changes in demand in the end markets,
and due to the fact that certain equipment is dedicated to specific customers, we may not be able
to anticipate declines in the utility of our equipment and machinery. Generally, we consider
consecutive quarterly utilization rate declines or projected utilization deterioration as principal
factors for our impairment review. Consequently, additional impairment charges may be necessary in
the future and this could have a significant negative impact on our future operating results.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We did not record any impairment charges in 2004, 2005 and 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Deferred Tax Asset</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We record a deferred tax asset when we believe that it is more likely than not that the
deferred tax asset will be realized. The deferred tax effects of the tax losses, unutilized capital
allowances carried forward and temporary differences arising primarily from property, plant and
equipment are recognized because they are expected to be offset against future taxable income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In assessing the realizability of deferred tax assets, we consider whether it is more likely
than not that some portion or all of the deferred tax assets will not be realized. The ultimate
realization of deferred tax assets is dependent upon the generation of future taxable income during
the periods in which those temporary differences become deductible. We consider the scheduled
reversal of deferred tax liabilities, projected future taxable income and tax planning strategies
in making this assessment. Based upon the level of historical taxable income and projections for
future taxable income over the periods in which the deferred tax assets are deductible, the
assessment will be made if it is more likely than not that the deferred tax assets will realized.
The amount of the deferred tax asset considered realizable could be reduced in the near term if
estimates of future taxable income during the carry forward period differ materially from current
estimates. In the event that we are not able to realize the deferred tax assets, an adjustment to
the deferred tax asset would be charged to income in the period such determination was made which
would result in a reduction of our net income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For a discussion of significant items in deferred tax asset, see &#147;Note 14. Income Taxes&#148; of
our consolidated financial statements included in &#147;Item&nbsp;18. Financial Statements&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Valuation of Goodwill</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We review goodwill for impairment annually and whenever events or changes in circumstances
indicate the carrying value of an asset may not be recoverable. We determine the fair value based
on a weighting of income and market approaches. Under the income approach, we calculate the fair
value of a reporting unit based on the present value of estimated future cash flows. Under the
market approach, we estimate the fair value based on market multiples of revenue or earnings for
comparable companies. If the fair value of the reporting unit exceeds the carrying value of the net
assets assigned to that unit, goodwill is not impaired and we are not required to perform further
testing. If the carrying value of the net assets assigned to the reporting unit exceeds the fair
value of the reporting unit, then we must perform the second step of the impairment test in order
to determine the implied fair value of the reporting unit&#146;s goodwill. If the carrying value of a
reporting unit&#146;s goodwill exceeds its implied fair value, then we record an impairment loss equal
to the difference.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Determining the fair value of a reporting unit is judgmental in nature and involves the use of
significant estimates and assumptions. These estimates and assumptions include revenue growth rates
and operating margins used to calculate projected future cash flows, <FONT style="white-space: nowrap">risk-adjusted</FONT>
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">discount rates, future economic and market conditions, and determination of appropriate market
comparables. We base our fair value estimates on assumptions we believe to be reasonable but that
are unpredictable and inherently uncertain. Actual future results may differ from those estimates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We performed an impairment review of the goodwill associated with the acquisition of ChipPAC
at the end of 2004, with the determination of fair value supplemented by independent appraisal and
recorded an impairment charge of $453.0&nbsp;million to our results of operations in 2004. In 2005 and
2006, we completed our annual test for impairment and determined that the fair value of the
reporting units exceeds their carrying value, and therefore goodwill was not impaired.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Results of Operations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the composition of revenue by product group and test services
as a percentage of net revenues:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Packaging &#151; array</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">40.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">50.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">55.5</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Packaging &#151; leaded</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Test and other services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total net revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth certain data as a percentage of net revenues for the periods
indicated:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total net revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Selling, general and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Goodwill impairment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Restructuring charges</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(55.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income (expense), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.6</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.6</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.6</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(60.8</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.3</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4.8</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Year Ended December&nbsp;31, 2006 Compared to Year Ended December&nbsp;25, 2005</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Net Revenues</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We derive revenues primarily from test and packaging of array and leaded packages. Net
revenues were $1,616.9&nbsp;million in 2006, an increase of 39.7% compared to $1,157.3&nbsp;million in 2005.
The increase was primarily due to a continued growth in the semiconductor industry, coupled with a
continuing trend towards increased outsourcing of test and packaging in 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our packaging revenue in 2006 increased 43.0% to $1,194.3&nbsp;million compared to 2005. Unit
volumes of our total packaging in 2006 were 39.4% higher compared to 2005 and contributed to an
increase of $332.8&nbsp;million in revenue. The average selling prices for our services have generally
decreased over product life cycles. Our ability to maintain or increase our average selling price
will continue to be dependent upon our ability to selectively increase pricing and shift to higher
margin packaging and test services. Average selling prices per pin for packaging services in 2006
increased 2.2% compared to 2005, primarily due to changes in product mix, and contributed to an
increase of $18.2&nbsp;million in revenue. Revenue from test and other services in 2006 increased 31.3%
to $422.7&nbsp;million compared to 2005.
</DIV>

<P align="center" style="font-size: 10pt">47
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2006, revenue contribution from the communications market increased 1.5% over 2005, and
represented 56.7% of our revenues in 2006, compared to 55.2% of our revenues in 2005. The revenue
from the communications market remained relatively strong with continued demand for more complex,
higher functionality mobile phone and infrastructure products. Revenue contribution from consumer,
<FONT style="white-space: nowrap">multi-applications</FONT> and other markets in 2006 increased 1.3% over 2005, and represented 24.6% of our
revenues in the 2006. Revenue contribution from personal computers market in 2006 decreased 2.8%
over 2005 and represented 18.7% of our revenues in 2006. We expect to continue to depend on the
communications, consumer and <FONT style="white-space: nowrap">multi-applications</FONT>, and personal computers market for substantially
all of our net revenues.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Gross Profit</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross profit in 2006 was $326.2&nbsp;million, an increase of $136.9&nbsp;million compared to $189.2
million in 2005. Gross profit as a percentage of net revenues was 20.2% in 2006, compared to 16.4%
in 2005. Gross profit in 2006 include $6.0&nbsp;million of share-based compensation expense related to
share options and employee share purchase rights under SFAS 123(R) which reduced gross margin by
0.3% during the year. In 2006, gross profit improved primarily as a result of better operating
leverage, improved product mix, continued cost control measures and higher overall average selling
price, partially offset by higher depreciation from our larger capital asset base and an increase
in cost of materials. Overall equipment utilization was approximately 75% in 2006 compared to 72%
in 2005. Our cost of revenues consist principally of fixed costs such as depreciation and leasing
expenses and variable costs such as direct and indirect labor, materials and overhead expenses. We
continue to experience higher cost as a result of external global economic factors such as higher
substrate, gold and oil prices which affected our cost of materials and the adverse effect of the
strengthening of the Singapore dollar, South Korean Won, Chinese Renminbi and Malaysian Ringgit
against the U.S. dollar when compared to 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Selling, General and Administrative</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling, general and administrative expenses were $139.5&nbsp;million in 2006, an increase of 2.7%
compared to $135.8&nbsp;million in 2005. As a percentage of net revenues, selling, general and
administrative expenses were 8.6% in 2006 compared to 11.7% in 2005. The increase in selling,
general and administrative expenses in 2006 was primarily a result of higher <FONT style="white-space: nowrap">share-based</FONT>
compensation expense, higher payroll expenses resulting from additional headcount, increased cost
of general business support for our overall business growth and higher <FONT style="white-space: nowrap">Sarbanes-Oxley</FONT> Act
compliance related expenses, partially offset by certain intangible assets related to the merger of
former STATS and ChipPAC becoming fully amortized. In 2006, <FONT style="white-space: nowrap">share-based</FONT> compensation expense was
$6.1&nbsp;million under SFAS 123(R) compared to $0.7&nbsp;million under APB&nbsp;25 in 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Research and Development</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and development expenses were $30.4&nbsp;million in 2006 compared to $26.1&nbsp;million in
2005, an increase of $4.4&nbsp;million. Research and development expenses increased primarily due to an
increase in headcount and the inclusion of <FONT style="white-space: nowrap">share-based</FONT> compensation expense of $1.6&nbsp;million under
SFAS&nbsp;123(R) in 2006. As a percentage of net revenues, research and development expenses were 1.9%
in 2006 compared to 2.3% in 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Restructuring Charges</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the third quarter of 2006 and the first quarter of 2005, certain restructuring plans were
executed to realign our organization and reduce operating costs to better align our expenses with
revenues, which resulted in a total reduction in workforce of 556 and 88 employees, respectively,
related to the restructuring. Severance and related charges of $1.9&nbsp;million and $0.8&nbsp;million were
incurred and expensed in the third quarter of 2006 and the first quarter of 2005, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Goodwill Impairment</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As required by U.S. GAAP, we performed our annual test for impairment in 2006 and 2005, and
determined that the fair value of the reporting units exceeded their carrying value, and therefore
goodwill was not impaired.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Net Interest Income (Expense)</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net interest expense was $40.4&nbsp;million in 2006 compared to $36.2&nbsp;million in 2005. Interest
income was $5.4&nbsp;million in 2006 compared to $6.4&nbsp;million in 2005. The decrease in interest income
in 2006 was primarily due to a decrease in cash equivalents and marketable securities held by us
compared to 2005.
</DIV>

<P align="center" style="font-size: 10pt">48
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense was $45.8&nbsp;million in 2006 compared to $42.6&nbsp;million in 2005. The increase in
interest expense was primarily due to a full year of interest on the $150.0&nbsp;million 7.5% senior
notes due 2010 in 2006 compared to approximately half year of interest in 2005 as the notes were
issued in July&nbsp;2005 and an increase in foreign loans of $12.0&nbsp;million in South Korea and $50.3
million in Taiwan. The increase was partially offset by the reduction in interest expense as a
result of our redemption and repurchase of $168.5&nbsp;million (out of $200.0&nbsp;million) aggregate
principal amount of our 1.75% convertible notes due 2007, a repurchase of $50.0&nbsp;million aggregate
principal amount of our 8.0% convertible subordinated notes due 2011 and repayment of <FONT style="white-space: nowrap">short-term</FONT>
and <FONT style="white-space: nowrap">long-term</FONT> debts in South Korea and <FONT style="white-space: nowrap">long-term</FONT> debts in Taiwan. Total outstanding
<FONT style="white-space: nowrap">interest-bearing</FONT> debt was $762.9&nbsp;million and $821.7&nbsp;million as of December&nbsp;31, 2006 and December
25, 2005, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Foreign Currency Exchange Gain (Loss)</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net foreign currency exchange gain or (loss)&nbsp;was $(1.6) million in 2006 compared to $0.5
million in 2005. The <FONT style="white-space: nowrap">non-cash</FONT> losses in 2006 were due primarily to the fluctuations of the exchange
rate between the U.S.&nbsp;dollar and the Singapore dollar, the South Korean Won and the Chinese
Renminbi.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Other <FONT style="white-space: nowrap">Non-Operating</FONT> Income (Expense)</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net other non-operating income was $0.1&nbsp;million in 2006 compared to net other <FONT style="white-space: nowrap">non-operating</FONT>
(expense)&nbsp;of $(1.1) million in 2005. The fluctuation resulted from the <FONT style="white-space: nowrap">write-off</FONT> of capitalized
debt issuance cost of $1.7&nbsp;million from the repurchase and redemption of our 1.75% convertible
notes due 2007 in 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Income Tax Expense</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have recorded a valuation allowance to reduce deferred tax assets to the amount we believe
is more likely than not to be realized. In the event that deferred tax assets would be realizable
in the future in excess of the net recorded amount, an adjustment to the deferred tax asset would
increase income in the period such determination was made. Our consolidated income tax expense was
$25.8&nbsp;million in 2006 compared to $9.7&nbsp;million in 2005 based on the mix of tax rates and taxable
income across the various jurisdictions in which we do business. Our primary tax jurisdictions are
Singapore, South Korea, China, Malaysia, Taiwan and the United States of America.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Year Ended December&nbsp;25, 2005 Compared to Year Ended December&nbsp;31, 2004</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Net Revenues</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net revenues were $1,157.3&nbsp;million in 2005, an increase of 50.5% compared to $769.1&nbsp;million in
2004. The increase was primarily due to our acquisition of ChipPAC (ChipPAC&#146;s results of operations
were consolidated from August&nbsp;5, 2004) and a return to growth in the semiconductor industry coupled
with a trend towards increased outsourcing of test and packaging. Following our merger, revenue
attributable to ChipPAC&#146;s operations has had a relatively larger impact on our packaging revenue
than on our test revenue.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our packaging revenue in 2005 increased 76.7% to $835.3&nbsp;million compared to 2004. Unit volumes
of our total packaging increased 76.4% in 2005 compared to 2004, and contributed to an increase of
$426.4&nbsp;million in revenue. Average selling prices for our services have generally declined over
product life cycles. Average selling prices per pin for packaging services in 2005 decreased 7.2%,
compared to 2004, primarily due to changes in product mix, and contributed to a decrease of $63.9
million in revenue. We experienced increased demand for our <FONT style="white-space: nowrap">three-dimensional</FONT> packaging, FBGA and
PBGA packaging in 2005. Test revenue in 2005 increased 8.9% to $322.0&nbsp;million compared to 2004. Our
increase in test revenue from our acquisition of ChipPAC was partially offset by declining average
selling prices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2005, revenue from the communications market decreased by 4.9% over 2004, and contributed
55.2% of our net revenues in 2005 compared to 60.1% of our net revenues in 2004. The revenue from
the communications market remained relatively strong with continued demand for more complex, higher
functionality mobile phone and infrastructure products. Revenue from consumer, <FONT style="white-space: nowrap">multi-applications</FONT>
and other markets increased 6.2% over 2004 and contributed 23.3% of our net revenues in 2005.
Revenue from the personal computers market decreased 1.3% over 2004 and contributed 21.5% of our
net revenues in 2005. We expect to continue to be dependent on the communications, consumer and
<FONT style="white-space: nowrap">multi-applications</FONT>, and personal computers markets for substantially all of our net revenues.
</DIV>


<P align="center" style="font-size: 10pt">49
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Gross Profit</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross profit in 2005 was $189.2&nbsp;million, an increase of $63.6&nbsp;million compared to $125.6
million in 2004. Gross margin as a percentage of net revenues was 16.4% in 2005 compared to 16.3%
in 2004. In 2005, gross profit improved primarily as a result of higher equipment utilization,
depreciation savings from the change in equipment useful lives and continued cost control measures,
including a reduction in workforce, partially offset by lower overall average selling prices,
changes in product mix and an increase in cost of materials. Overall equipment utilization was
approximately 72% in 2005 compared to 69% in 2004. We continued to experience pressure to reduce
average selling prices in 2005. Our cost of revenues consist principally of fixed costs such as
depreciation and leasing expenses and variable costs such as direct and indirect labor, materials
and overhead expenses. We also experienced continued higher cost as a result of external global
economic factors such as higher gold prices, higher oil prices, and the adverse effect of the
strengthening of the Singapore dollar, South Korean Won and Japanese yen against the U.S. dollar in
2005 when compared to 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Selling, General and Administrative</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling, general and administrative expenses were $135.8&nbsp;million in 2005, an increase of 59.8%
compared to $85.0&nbsp;million in 2004. As a percentage of net revenues, selling, general and
administrative expenses were 11.7% in 2005, compared to 11.0% in 2004. The increase in selling,
general and administrative expenses in 2005 was primarily due to the higher headcount resulting
from our merger with ChipPAC, the inclusion of merger and integration expenses, and ChipPAC
expenses which amounted to $84.3&nbsp;million. The merger and integration expenses and ChipPAC expenses
in 2005 included the amortization of the intangible assets which amounted to $38.1&nbsp;million and
<FONT style="white-space: nowrap">stock-based</FONT> compensation expenses of $0.7&nbsp;million mainly resulting from the expensing of the
unearned compensation on unvested options recorded in the ChipPAC acquisition. The increase was
partially offset by continued measures to control costs and manage discretionary expenses in 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Research and Development</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and development expenses in 2005 were $26.1&nbsp;million compared to $17.6&nbsp;million in
2004, an increase of $8.5&nbsp;million. Research and development expenses had increased primarily due to
the inclusion of ChipPAC expenses which amounted to $13.9&nbsp;million, inclusive of the amortization of
the acquired intangible assets which amounted to $2.4&nbsp;million in 2005. However, these expenses were
partially offset by depreciation savings from the change in equipment useful lives and continued
measures to control costs and manage discretionary expense.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Restructuring Charges</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the quarter ended March&nbsp;31, 2005, certain restructuring plans were executed to realign
our organization and reduce operating costs to better align our expenses with revenues. We had a
total reduction in workforce of 88 employees related to the restructuring. Severance and related
charges of $0.8&nbsp;million were expensed in 2005. There were no restructuring charges incurred in
2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Goodwill Impairment</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As required by U.S. GAAP, we performed our annual test for impairment in 2005, and determined
that the fair value of the reporting units exceeded their carrying value, and therefore goodwill
was not impaired. In 2004, we impaired $453.0&nbsp;million of goodwill related to our acquisition of
ChipPAC. We will continue to perform a test for goodwill impairment at least annually as required
by U.S. GAAP.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Net Interest Income (Expense)</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net interest expense was $36.2&nbsp;million in 2005 compared to $24.4&nbsp;million in 2004. Net interest
expense consisted of interest income of $6.4&nbsp;million and interest expense of $42.6&nbsp;million in 2005
and interest income of $4.4&nbsp;million and interest expense of $28.8&nbsp;million in 2004. The increase in
interest income in 2005 was primarily due to an increase of the marketable securities held by us.
The increase in interest expense was primarily due to interest on debts assumed as a result of our
merger with ChipPAC, and our
accrued interest on the $215.0&nbsp;million 6.75% senior notes due 2011 issued in November&nbsp;2004,
the $150.0&nbsp;million 7.5% senior notes due 2010 issued in July&nbsp;2005, an increase in foreign loans of
$19.7&nbsp;million in South Korea and $4.6&nbsp;million in Taiwan, and the $99.0&nbsp;million <FONT style="white-space: nowrap">short-term</FONT> debts
which was borrowed and repaid in 2005. The increase was partially offset by the reduction in
interest expense as a result of our redemption and repurchase of $168.5&nbsp;million (out of $200.0
million) aggregate principal amount of our 1.75% convertible notes due 2007 and repayment of
certain <FONT style="white-space: nowrap">long-term</FONT> debts in South Korea and Taiwan, respectively. Total outstanding <FONT style="white-space: nowrap">interest-bearing</FONT>
debt was $821.7&nbsp;million and $834.8&nbsp;million as of December&nbsp;25, 2005 and December&nbsp;31, 2004,
respectively.
</DIV>

<P align="center" style="font-size: 10pt">50
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Foreign Currency Exchange Gain (Loss)</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net foreign currency exchange gain was $0.5&nbsp;million in 2005, compared to net foreign currency
exchange loss of $1.1&nbsp;million in 2004. These <FONT style="white-space: nowrap">non-cash</FONT> losses and gains were primarily due to the
fluctuations between the exchange rate of the United States dollar and the Singapore dollar, the
South Korean Won and the Japanese yen.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Other Non-Operating Income (Expense)</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other non-operating expense, net was $1.1&nbsp;million in 2005 compared to $0.9&nbsp;million in 2004.
The increase was primarily due to <FONT style="white-space: nowrap">write-off</FONT> of capitalized debt issuance cost of $1.7&nbsp;million from
the repurchase and redemption of our 1.75% convertible notes due 2007 in 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Income Tax Expense</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have recorded a valuation allowance to reduce deferred tax assets to the amount we believe
is more likely than not to be realized. In the event that deferred tax assets would be realizable
in the future in excess of the net recorded amount, an adjustment to the deferred tax asset would
increase income in the period such determination was made. We have a mix of tax rates across the
various jurisdictions in which we do business. Our primary tax jurisdictions are Singapore, South
Korea, China, Malaysia, Taiwan and the United States of America. Our consolidated income taxes were
$9.7&nbsp;million in 2005 compared to $7.9&nbsp;million in 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Quarterly Results</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth our unaudited results of operations, including as a percentage
of net revenues, for the eight fiscal quarters ended December&nbsp;31, 2006. We believe that all
necessary adjustments, consisting only of normal recurring adjustments, have been included in the
amounts stated below to present fairly the selected quarterly information when read in conjunction
with our consolidated financial statements and the related notes included elsewhere in this annual
report. Our results of operations have varied and may continue to vary significantly from quarter
to quarter and are not necessarily indicative of the results of any future periods.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="30" style="border-bottom: 1px solid #000000"><B>Fiscal Quarter Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>March 27,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>June 26,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>September 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>March 26,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>June 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>September 24,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="30"><B>(In thousands)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">234,146</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">264,346</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">301,298</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">357,463</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">385,709</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">418,133</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">397,109</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">415,982</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(209,748</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(228,541</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(250,588</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(279,146</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(309,116</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(331,327</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(318,185</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(332,145</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,398</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,805</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,710</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">78,317</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,593</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">86,806</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">78,924</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">83,837</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Selling, general and
administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,246</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,761</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,034</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,710</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,711</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,914</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,707</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,134</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Research and
development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,942</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,536</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,243</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,973</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,909</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,632</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,932</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Restructuring charges</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">830</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,938</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total operating
expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,018</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,297</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,277</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,060</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,684</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,823</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,277</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,066</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating income (loss).</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14,620</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,492</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,433</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,257</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,909</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,983</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,647</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,771</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income
(expenses), net:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest income
(expenses), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,447</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,283</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,148</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,337</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,696</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,414</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,796</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,509</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Foreign currency
exchange gain (loss).</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(391</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">880</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(29</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(455</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(593</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(521</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity income from
equity investee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other <FONT style="white-space: nowrap">non-operating</FONT>
income (expenses),
net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,544</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">157</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">227</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">275</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">294</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">453</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(914</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total other
income
(expenses), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,382</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,055</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,041</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,282</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,430</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,575</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,808</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,920</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">51
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="30" style="border-bottom: 1px solid #000000"><B>Fiscal Quarter Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>March 27,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>June 26,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>September 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>March 26,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>June 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>September 24,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="30"><B>(In thousands)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;before
income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(26,002</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12,547</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,392</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,975</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,479</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,408</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,839</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,851</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,139</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,159</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,247</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,144</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,918</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,211</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,137</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,493</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;before
minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(27,141</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13,706</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,145</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,831</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,561</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,197</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,702</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,358</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,357</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,156</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,949</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,545</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,177</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,205</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,083</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(27,119</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(15,063</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,011</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">16,882</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12,016</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">18,020</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">18,497</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">28,275</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="30"><B>Fiscal Quarter Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="30" style="border-bottom: 1px solid #000000"><B>(As a Percentage of Net Revenues)</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>March 27,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>June 26,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>September 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>March 26,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>June 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>September 24,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(89.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(86.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(83.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(78.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(80.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(79.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(80.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(79.8</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Selling, general and
administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Research and
development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Restructuring
charges</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total operating
expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating income
(loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income
(expenses), net:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest income
(expenses)&nbsp;net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Foreign currency
exchange gain
(loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity income from
equity investee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other <FONT style="white-space: nowrap">non-operating</FONT>
income (expenses),
net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">(0.2</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total other income
(expenses), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.6</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;before
income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;before
minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11.6</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5.7</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.2</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">3.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">6.9</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">52
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Liquidity and Capital Resources</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our principal source of liquidity consists of cash flows from operating activities, bank facilities, debt financing,
and our existing cash and cash equivalents and marketable securities. As
at December&nbsp;31, 2006, we had cash, cash equivalents and marketable
securities of $231.9&nbsp;million. We also have available lines
of credit and banking facilities consisting of loans, letter of credits and bank guarantees,
including those available to our consolidated subsidiaries, which amounted to an aggregate of
$447.6&nbsp;million, of which $105.0&nbsp;million was utilized as of December&nbsp;31, 2006. Our liquidity needs
arise primarily from servicing our outstanding debts, working capital needs and the funding of
capital expenditures. Our capital expenditures are largely driven by the demand for our services,
primarily to increase our packaging and testing capacity, to replace packaging and testing
equipment from time to time, and to expand our facilities. Depending on business conditions, we
expect our capital expenditure to be approximately $250.0&nbsp;million in 2007 as our capital
expenditure spending continues to be targeted at demand that we see from our customers and on
long-term strategic investments. We spent $348.5&nbsp;million on capital expenditures in 2006, compared
to $277.7&nbsp;million in 2005. We experienced an increase in capital expenditure in 2006 as we are
expanding our assets across the various geographic operating locations based on the expected
business growth and certain <FONT style="white-space: nowrap">long-term</FONT> strategic investments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At the annual general meeting in April&nbsp;2006, our shareholders approved the repurchase of up to
approximately 50&nbsp;million ordinary shares (2.5% of the issued ordinary share capital as of the date
of the annual general meeting). The approved amount for share repurchases under this shareholders&#146;
mandate will terminate on the earlier of the date on which the next annual general meeting is held
or the date which the approval is revoked or varied. As of December&nbsp;31, 2006, we have not
repurchased any shares. We intend to seek a renewal of the shareholders&#146; mandate in our next annual general meeting. We may
use our available funds, draw down on our available lines of credit or seek additional financing or
a combination of these to finance our repurchase of our ordinary shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that our cash on hand, existing credit facilities and anticipated cash flows from
operations will be sufficient to meet our currently anticipated capital expenditure requirements,
investment requirements, share repurchases, as well as capital lease and debt service repayment
obligations for 2007. Our debt service repayment obligations for 2007
include our obligation to repay the remaining $31.5&nbsp;million aggregate
principal amount of our 1.75% convertible notes upon maturity in March&nbsp;2007 and to meet the
redemption of the outstanding $115.0&nbsp;million aggregate principal amount of our 0% convertible notes
if our noteholders exercise their put option thereunder in November&nbsp;2007. Further, STSPL&#146;s
proposed tender offer for the remaining shares in our Company that STSPL does not already own,
as described above under &#147;Recent Developments &#151; Temasek Holdings&#146; Subsidiary,
Singapore Technologies Semiconductors Pte Ltd&#146;s, Tender Offer&#148;, if consummated, would result in a
change in control of our Company as defined in the indenture relating to our $150.0&nbsp;million of
2.5% convertible subordinated notes due 2008. In such an event, holders of our 2.5% convertible
subordinated notes due 2008 will have the right to require us to repurchase all or a portion of their notes.

If our capital expenditure requirements exceed our expectations as a result of higher than anticipated growth in the semiconductor industry,
acquisition or investment opportunities, the expansion of our business or otherwise, or if our cash
flows from operations are lower than anticipated, including as a result of an unexpected decrease
in demand for our services due to a downturn in the semiconductor industry or otherwise, we may be
required to obtain additional debt or equity financing from time to time depending on prevailing
market conditions. In such events, there can be no assurance that additional financing will be
available or, if available, that such financings will be obtained on terms favorable to us or that
any additional financing will not be dilutive to our shareholders or creditors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Total Borrowings</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2006, our total debt outstanding consisted of $762.9&nbsp;million of borrowings,
which included $150.0&nbsp;million of 7.5% senior notes due 2010, $215.0&nbsp;million of 6.75% senior notes
due 2011, $31.5&nbsp;million of 1.75% convertible notes due 2007, $115.0&nbsp;million of zero coupon
convertible notes due 2008, $150.0&nbsp;million of 2.5% convertible subordinated notes due 2008, and
other <FONT style="white-space: nowrap">long-term</FONT> and <FONT style="white-space: nowrap">short-term</FONT> borrowings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On January&nbsp;14, 2005, we repurchased an additional $26.1&nbsp;million aggregate principal amount of
our 1.75% convertible notes due 2007 with our existing cash on hand. On March&nbsp;18, 2005, we redeemed
$125.9&nbsp;million aggregate principal amount of our 1.75% convertible notes due 2007 pursuant to
demands for redemption from note holders in accordance with the indenture governing our 1.75%
convertible notes due 2007. We paid a total amount of $138.6&nbsp;million (excluding interest) in
respect of the redeemed convertible notes. We financed the redemption from cash and short-term
borrowings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;17, 2005, we drew down a total of $99.0&nbsp;million under our lines of credit with
<FONT style="white-space: nowrap">Oversea-Chinese</FONT> Banking Corporation Limited and Bank of America N.A. to pay part of the purchase
price for the redemption of our 1.75% convertible notes due 2007 described above. On July&nbsp;20, 2005,
we repaid the <FONT style="white-space: nowrap">Oversea-Chinese</FONT> Banking Corporation Limited and Bank of America N.A. facilities with
a portion of the net proceeds from the offering of the 7.5% senior notes due 2010 described below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On April&nbsp;18, 2005, our registration statement for our exchange offer relating to our 6.75%
senior notes due 2011 was declared effective by the SEC. Pursuant to the exchange offer, we
accepted tenders to exchange $213.9&nbsp;million aggregate principal amount of our 6.75% senior notes
due 2011 that were registered for a like principal amount of our then outstanding unregistered
6.75% senior notes due 2011.
</DIV>

<P align="center" style="font-size: 10pt">53
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;19, 2005, we offered $150.0&nbsp;million of 7.5% senior notes due 2010 in a private
placement. We received approximately $146.7&nbsp;million after deducting debt issuance costs. A portion
of the net proceeds were used to repay the $99.0&nbsp;million outstanding with <FONT style="white-space: nowrap">Oversea-Chinese</FONT> Banking
Corporation Limited and Bank of America N.A. In September&nbsp;2005, we filed an exchange offer
registration statement with the SEC. Pursuant to the exchange offer, we accepted tenders to
exchange all $150.0&nbsp;million aggregate principal amount of our 7.5% senior notes due 2010 that were
registered for a like principal amount of our then outstanding unregistered 7.5% senior notes due
2010.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2006, we increased our total term loan facilities from Hana Bank in South Korea to $30.0
million, an increase of $15.0&nbsp;million over 2005. During 2006, we borrowed $12.0&nbsp;million under these
facilities to finance our purchase of a building and land in South Korea. These borrowings are
repayable over eight equal quarterly installments from November&nbsp;2006 to June&nbsp;2009 and as of
December&nbsp;31, 2006, $14.1&nbsp;million was outstanding. Further in 2006, Winstek borrowed NT$1.6&nbsp;billion
($50.3&nbsp;million as of December&nbsp;31, 2006) under its NT$1.8&nbsp;billion ($55.2&nbsp;million as of December&nbsp;31,
2006) floating rate New Taiwan dollar term loan facility, obtained from a syndicate of lenders with
Mega Bank (formerly known as Chiao Tung Bank) as the agent bank. This facility is secured by a
pledge of Winstek&#146;s equipment with net book value of $50.2&nbsp;million as of December&nbsp;31, 2006. The
proceeds from this facility were primarily used to repay certain of Winstek&#146;s other credit
facilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On October&nbsp;16, 2006, we repurchased the outstanding $50.0&nbsp;million aggregate principal amount
of our 8.0% convertible subordinated notes due 2011. We paid a total amount of $50.5&nbsp;million
(excluding interest) in respect of the subordinated convertible notes. The repurchase was financed
with our current working capital, including our cash and cash equivalents.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See &#147;Item&nbsp;10. Additional Information &#151; C. Material Contracts&#148; and Notes&nbsp;15, 16 and 17 to our
audited consolidated financial statements for more details on our debt instruments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I><FONT style="white-space: nowrap">Off-Balance</FONT> Sheet Arrangements</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We provided tax guarantee to the South Korean tax authorities as discussed
below. We have no significant investment in any
unconsolidated entities. Our <FONT style="white-space: nowrap">off-balance</FONT> sheet commitments are limited to operating leases,
royalty/license agreements, purchase obligations and contingent payments to Cirrus Logic, Inc.
assumed in the merger with ChipPAC, with respect to the purchase of test assets. Our total
<FONT style="white-space: nowrap">off-balance</FONT> sheet obligations were approximately $273.6&nbsp;million as of December&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Contractual Obligations</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our total commitments on our loans, capital lease, operating leases, other obligations and
other agreements as of December&nbsp;31, 2006, were as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000"><B>Payments Due</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Within</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>More Than</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>1 Year</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>1-3 Years</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>3-5 Years</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>5 Years</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(In thousands)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">On balance sheet commitments:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">1.75% convertible notes due 2007(1)(3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">36,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">36,800</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Zero coupon convertible notes due
2008(1)(2)(3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">131,280</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">131,280</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.5% convertible subordinated notes
due 2008(3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">6.75% senior notes due 2011(3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">215,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">215,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">7.5% senior notes due 2010(3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Capital lease obligations(3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,680</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,680</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><FONT style="white-space: nowrap">Long-term</FONT> loans(3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,301</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,345</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,380</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">518</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75,544</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><FONT style="white-space: nowrap">Short-term</FONT> loans(3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">592</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">592</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other <FONT style="white-space: nowrap">non-current</FONT> liabilities(4)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total on balance sheet commitment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">65,373</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">330,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">366,380</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">518</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">762,896</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">54
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000"><B>Payments Due</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Within</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>More Than</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>1 Year</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>1-3 Years</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>3-5 Years</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>5 Years</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(In thousands)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Off balance sheet commitments:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Operating leases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">29,945</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">42,226</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">16,561</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">43,261</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">131,993</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Royalty/licensing agreements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,363</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,587</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,890</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,840</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Contingent payments to Cirrus</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">750</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchase obligations:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&#151; Capital commitments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,932</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,932</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&#151; Inventory purchase commitments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,049</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,049</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total off balance sheet commitments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">143,039</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,451</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,261</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">273,564</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total commitments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">208,412</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">387,438</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">396,831</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">43,779</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,036,460</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>On maturity of the 1.75% convertible notes due 2007 and zero coupon convertible notes due
2008, we are required to pay the note holders 117.665% and 123.4% of the principal amounts,
respectively.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Holders of our zero coupon convertible notes due 2008 have the right to require us to
repurchase all or a portion of their convertible notes on November&nbsp;7, 2007.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>The convertible notes, senior notes, capital lease obligations, short-term and long-term
loans agreements contain provisions for the payment of interest
either on maturity or on a monthly,
quarterly, semi-annual or annual basis at a stated rate of interest over the term of the debt.
These payment obligations are not reflected in the table above. The interest payments due
within 1&nbsp;year, 1-3&nbsp;years, 3-5&nbsp;years and more than 5&nbsp;years amount to $32.6&nbsp;million, $65.8&nbsp;million, $40.4&nbsp;million, and $0.01&nbsp;million, respectively.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Our other non-current liabilities as of December&nbsp;31, 2006 were $84.8&nbsp;million, including $26.9
million related to severance benefits for our employees in South Korea which were not included
in the table due to lack of contractual certainty as to the timing of payments.</TD>
</TR>
</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Contingencies</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the normal course of business, we are subject to claims and litigations. These claims may
include allegations of infringement of intellectual property rights of others as well as other
claims of liability. On July&nbsp;31, 2002, Seagate Technology L.L.C. (Seagate) filed suit against Atmel
Corporation and Atmel SARL in Santa Clara County Superior Court. Seagate alleges that Atmel
supplied defective semiconductor chips, and that Atmel had its chips outsourced and packaged by
ChipPAC and Amkor Technology, Inc. On November&nbsp;19, 2003, Atmel filed a First Amended
<FONT style="white-space: nowrap">Cross-Complaint</FONT> against ChipPAC, Amkor and Sumitomo Bakelite, Ltd., the Japanese manufacturer of
the allegedly defective epoxy mold compound.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February&nbsp;2006, our Company, ChipPAC and STATS ChipPAC (BVI)&nbsp;Limited were named as
defendants in a patent infringement lawsuit filed in United States Federal Court for the Northern
District of California. The plaintiff, Tessera, has asserted that semiconductor chip packaging,
specifically devices having BGA and <FONT style="white-space: nowrap">multi-chip</FONT> BGA configurations used by the defendants infringe
certain patents of Tessera. Tessera has further asserted that our Company is in breach of an
existing license agreement entered into by Tessera with ChipPAC, which agreement has been assigned
by ChipPAC to our Company. We believe that we have a meritorious defense to the claims and intend
to defend the lawsuit vigorously. A court determination that our
products or processes infringe the intellectual property rights of
others could result in significant liability and/or require us to
make material changes to our products and/or processes. Due to the inherent uncertainties of the lawsuit, we cannot
accurately predict the ultimate outcome and it could result in
significant liability and/or injunction and could have a material adverse effect on the business, financial condition
and the results of operations of our Company.
</DIV>

<P align="center" style="font-size: 10pt">55
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the merger with ChipPAC, we assumed certain contingent liabilities. In
2002, an assessment of approximately 16.0&nbsp;billion South Korean Won (approximately $17.0&nbsp;million
based on the exchange rate as of January&nbsp;31, 2007) made by the South Korean National Tax Service
(NTS)&nbsp;relating to withholding tax not collected on the interest income on the loan between the
ChipPAC&#146;s subsidiaries in South Korea and Hungary for the period from 1999 to September&nbsp;2001. The
prevailing tax treaty does not require withholding tax on the transactions in question. ChipPAC has
appealed the assessment through the NTS&#146;s MAP and believes that the assessment will be overturned.
On July&nbsp;18, 2002, the Icheon tax office of the NTS approved a suspension of the proposed assessment
until resolution of the disputed assessment. The NTS required a corporate guarantee amounting to
the tax assessment in exchange for the suspension. ChipPAC complied with the guarantee request on
July&nbsp;10, 2002. A further assessment of 2.7&nbsp;billion South
Korean Won (approximately $2.9&nbsp;million
based on the exchange rate as of January&nbsp;31, 2007) was made on January&nbsp;9, 2004 for interest expense
from October&nbsp;2001 to May&nbsp;2002. ChipPAC has applied for the MAP and obtained an approval for a
suspension of the proposed assessment by providing a corporate guarantee amounting to the
additional taxes. The MAP will terminate on July&nbsp;3, 2007 if not extended by the NTS. In the event
that we are not successful with the appeal, the maximum amount payable including potential interest
and local surtax estimated to be 36.5&nbsp;billion South Korean Won (approximately $38.8&nbsp;million based
on the exchange rate as of January&nbsp;31, 2007). As of December&nbsp;31, 2006, no accrual has been made.
However, our evaluation of the likely impact of the above contingent liabilities could change in
the future and may result in additional liability assumed in the initial purchase of ChipPAC. The
final outcome of the
resolution of this matter could result in significant liability and could have a material
adverse effect on the business, financial condition and results of operations of our Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Cash Flows From Operating Activities</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2006, cash provided by operations was $427.8&nbsp;million compared to $270.7&nbsp;million in 2005.
Cash provided and used by operations is calculated by adjusting our net income or loss by <FONT style="white-space: nowrap">non-cash</FONT>
related items such as depreciation and amortization, share-based compensation expense, amortization
of leasing prepayments, accretion of discount on certain of our outstanding convertible notes,
amortization of debt issuance cost, loss or gain from sale of assets, loss from repurchase and
redemption of our 8% convertible subordinated notes due 2011, deferred income taxes, foreign
currency exchange loss or gain, minority interest, share of equity income and by changes in assets
and liabilities. In 2006, <FONT style="white-space: nowrap">non-cash</FONT> related items included $276.1&nbsp;million related to depreciation
and amortization (including amortization of capitalized debt issuance costs and leasing
prepayments), $13.7&nbsp;million related to <FONT style="white-space: nowrap">share-based</FONT> compensation expense, $6.6&nbsp;million from the
accretion of discount on certain of our convertible notes, $0.5&nbsp;million from loss on repurchase and
redemption of our 8.0% convertible subordinated notes due 2011, $19.9&nbsp;million from the deferred
taxes, $10.0&nbsp;million from the minority interest in income of our subsidiary and $0.2&nbsp;million income
from investment in equity investee. In 2005, <FONT style="white-space: nowrap">non-cash</FONT> related items included $281.9&nbsp;million related
to depreciation and amortization (including amortization of capitalized debt issuance costs and
leasing prepayments), $0.7&nbsp;million related to <FONT style="white-space: nowrap">share-based</FONT> compensation expense, $7.4&nbsp;million from
the accretion of discount, $1.7&nbsp;million from loss on repurchase and redemption of the 1.75%
convertible notes due 2007, $9.4&nbsp;million from the deferred taxes and $6.4&nbsp;million from the minority
interest in income of our subsidiary. Working capital uses of cash included increases in accounts
receivable, inventories and decreases in amount due to affiliates. Working capital source of cash
included decreases in amount due from affiliates, other receivables, prepaid expenses and other
assets and increases in accounts payable, accrued operating expenses and other payables.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2005, cash provided by operations was $270.7&nbsp;million compared to $136.6&nbsp;million in 2004.
Cash provided and used by operations is calculated by adjusting our net income or loss by <FONT style="white-space: nowrap">non-cash</FONT>
related items such as depreciation and amortization, amortization of leasing prepayments, accretion
of discount on certain of our outstanding convertible notes, amortization of debt issuance cost,
loss or gain from sale of assets, loss from repurchase and redemption of our 1.75% convertible
notes due 2007, deferred income taxes, foreign currency exchange loss or gain, minority interest
and by changes in assets and liabilities, accretion of discount on certain of our convertible
notes, amortization of debt issuance cost, impairment of goodwill, loss (gain)&nbsp;from sale of assets,
deferred income taxes, foreign currency exchange loss (gain), minority interest, and by changes in
assets and liabilities. In 2004, <FONT style="white-space: nowrap">non-cash</FONT> related items included $453.0&nbsp;million of goodwill
impairment charges, $216.3&nbsp;million related to depreciation and amortization (including
amortization of capitalized debt issuance costs and leasing prepayments), $0.7&nbsp;million related to
<FONT style="white-space: nowrap">share-based</FONT> compensation expense, $11.4&nbsp;million from the accretion of discount, $0.8&nbsp;million from
loss on repurchase and redemption of our 1.75% convertible notes due 2007 and our 12.75% senior
notes due 2009, $15.0&nbsp;million from the deferred taxes and $3.8&nbsp;million from the minority interest
in income of our subsidiary. Working capital uses of cash included increases in accounts
receivable, amounts due from affiliates, inventories and decreases in amount due to affiliates.
Working capital source of cash included decreases in other receivables, prepaid expenses and other
assets and increases in accounts payable, accrued operating expenses and other payables.
</DIV>

<P align="center" style="font-size: 10pt">56
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Cash Flows From Investing Activities</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2006, cash used in investing activities was $425.8&nbsp;million compared to $263.0&nbsp;million in
2005. The primary usage of cash in investing activities was related to the acquisition of property
and equipment, net of changes in payables related to property, plant and equipment purchases, of
$393.6&nbsp;million in 2006 and $245.8&nbsp;million in 2005. We experienced an increase in capital
expenditure in 2006 as we are expanding our assets across the various geographic operating
locations based on the expected business growth and certain <FONT style="white-space: nowrap">long-term</FONT> strategic investments. In
2006, we acquired a 25% shareholding in MAT for $10.2&nbsp;million. In 2006 and 2005, we invested $6.4
million and $4.9&nbsp;million, respectively, in the acquisition of software, licenses and other
intangible assets. In 2006 and 2005, we invested in marketable securities which amounted to $80.9
million and $32.0&nbsp;million, respectively, and received proceeds from the sale and maturity of our
marketable securities of $56.2&nbsp;million and $16.5&nbsp;million, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2005, cash used in investing activities was $263.0&nbsp;million compared to $264.8&nbsp;million in
2004. The primary usage of cash in investing activities was related to the acquisition of property
and equipment of $245.8&nbsp;million in 2005 and $287.6&nbsp;million in 2004. We experienced a decrease in
capital expenditure in 2005 as we focused on extracting better utilization from our existing
equipment and benefited from our ability to redeploy assets across the various geographic operating
locations to maximize utilization. In 2005, we acquired $4.9&nbsp;million of software and licenses. In
2005 and 2004, we invested in marketable securities which amounted to $32.0&nbsp;million and $160.9
million, respectively, and received proceeds from the sale or maturity of our marketable securities
of $16.5&nbsp;million and $177.2&nbsp;million, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Cash Flows From Financing Activities</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2006, cash used in financing activities was $54.9&nbsp;million compared to $9.4&nbsp;million in 2005.
In 2006, $60.3&nbsp;million was borrowed and $69.9&nbsp;million was repaid on our borrowings and debts,
compared to $188.1&nbsp;million and $180.9&nbsp;million, respectively, in 2005. In 2006, we repurchased the
outstanding $50.0&nbsp;million aggregate principal amount of our 8.0% convertible subordinated notes due
2011 at an aggregate consideration of $50.5&nbsp;million. In 2005, we repurchased $26.1&nbsp;million and
redeemed $125.9&nbsp;million aggregate principal of our 1.75% convertible notes due 2007 at an aggregate
consideration of $167.3&nbsp;million. In 2005, $146.5&nbsp;million, net of expenses, was provided from the
issuance of $150.0&nbsp;million of 7.5% senior notes due 2010. In 2006 and 2005, we reduced our
restricted cash by $1.6&nbsp;million and increased our restricted cash by $1.5&nbsp;million, respectively.
In addition, $7.1&nbsp;million and $11.7&nbsp;million of capital lease payments were made in 2006 and 2005,
respectively. In 2006 and 2005, $13.3&nbsp;million and $13.5&nbsp;million, respectively, was provided by the
issuance of new ordinary shares of our Company through the employee share option plan and the
employee share purchase plan. The total number of ordinary shares issued in 2006 and 2005 were 26.5
million and 32.0&nbsp;million, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2005, cash used in financing activities was $9.4&nbsp;million compared to cash provided by
financing activities of $41.1&nbsp;million in 2004. In 2005, $188.1&nbsp;million was borrowed and $180.9
million was repaid on our borrowings and debts, compared to $107.6&nbsp;million and $81.0&nbsp;million,
respectively, in 2004. In 2005, we repurchased $26.1&nbsp;million and redeemed $125.9&nbsp;million aggregate
principal of our 1.75% convertible notes due 2007 at an aggregate consideration of $167.3&nbsp;million.
In 2005, $146.5&nbsp;million, net of expenses, was provided from the issuance of $150.0&nbsp;million of 7.5%
senior notes due 2010 compared to the net proceeds of $210.5&nbsp;million from the issuance of $215.0
million of 6.75% of senior notes due 2011 in 2004. In 2005 and 2004, we increased our restricted
cash by $1.5&nbsp;million and reduced our restricted cash by $2.9&nbsp;million, respectively. In addition,
$11.7&nbsp;million and $7.2&nbsp;million of capital lease payments were made in 2005 and 2004, respectively.
In 2005 and 2004, $13.5&nbsp;million and $2.0&nbsp;million, respectively, were provided by the issuance of
new ordinary shares of our Company through the employee share option scheme and the employee share
purchase plan. The total number of ordinary shares issued in 2005 and 2004 were 32.0&nbsp;million and
5.8&nbsp;million, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Special Tax Status</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We were previously granted pioneer status under The Economic Expansion Incentives (Relief from
Income Tax) Act, Chapter&nbsp;86 of Singapore, for &#147;Subcontract Assembly And Testing of Integrated
Circuits
Including Wafer Probing Services&#148;. In December&nbsp;2003, an application was submitted to the
Singapore Economic Development Board (EDB)&nbsp;to revoke our pioneer status granted from January&nbsp;1,
1996 to December&nbsp;31, 2003. Our pioneer trade was in a tax loss position due to the substantial
amount of capital allowances claimed arising from capital expenditure on our plant and machinery
and trade losses in certain years. As a result, we had not enjoyed any tax exemption in respect of
our income arising from the pioneer activities. On the other hand, we have paid taxes in respect of
our interest and rental income, as losses arising from the pioneer trade cannot be <FONT style="white-space: nowrap">set-off</FONT> against
the <FONT style="white-space: nowrap">non-qualifying</FONT> income during the pioneer incentive period due to the application of the law in
respect of the pioneer incentive. In September&nbsp;2004, the application to revoke retroactively our
pioneer status was approved by the EDB. Accordingly, we recorded $5.0&nbsp;million of tax recoverable in
December&nbsp;2004 related to the expected refund of taxes paid previously on interest and rental income
as the unutilized tax losses and capital allowances arising from the trading activities would then
be allowed to <FONT style="white-space: nowrap">set-off</FONT> against
</DIV>

<P align="center" style="font-size: 10pt">57
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">the income derived in the previous years. We received a partial
refund of taxes amounting to $4.6&nbsp;million in April&nbsp;2005. In 2006, we received the remaining $0.4
million from EDB. We are in the process of working with the EDB for a new tax incentive for our
Singapore operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Derivative Financial Instruments</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are exposed to fluctuations in currency exchange rates and interest rates. From time to
time, we may employ derivative instruments such as forward foreign currency swaps, foreign forward
contracts and options and interest rate swaps to mitigate the financial risks associated with
certain anticipated cash flows, assets and liabilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2005 and 2006, the Company entered into foreign currency forward contracts to protect the
Company from fluctuations in exchange rates. At December&nbsp;25, 2005 and December&nbsp;31, 2006, the
Company had a series of foreign currency forward contracts qualifying as cash flow hedges with
total contract value of approximately $147.0&nbsp;million and $68.0&nbsp;million, respectively. In 2005, the
Company entered into a series of gold forward contracts qualifying as cash flow hedges with total
contract value of approximately $7.0&nbsp;million to reduce exposure of the commodity price risk related
to gold usage in the cost of materials. The duration of these instruments are generally less than
12&nbsp;months. All forward contracts qualify for hedge accounting as defined by SFAS No.&nbsp;133,
&#147;Accounting for Derivative Instruments and Hedging Activities&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Foreign Currency Risk</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A portion of our costs is denominated in various foreign currencies, like the Singapore
dollar, the South Korean Won, the Malaysian Ringgit, the Chinese Renminbi, New Taiwan dollars and
the Japanese yen. As a result, changes in the exchange rates of these currencies or any other
applicable currencies to the U.S. dollar will affect our cost of goods sold and operating margins
and could result in exchange losses. We cannot fully predict the impact of future exchange rate
fluctuations on our profitability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From time to time, we may have engaged in, and may continue to engage in, foreign exchange
rate hedging activities in an effort to mitigate the impact of exchange rate fluctuations. However,
we cannot assure you that any hedging technique we implement will be effective. If it is not
effective, we may experience reduced net income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Research and Development</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See &#147;Item&nbsp;4. Information on our Company &#151; B. Business Overview &#151; Research and Development&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Recent Accounting Pronouncements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2004, the FASB issued SFAS No.&nbsp;123(R), &#147;Share-Based Payment&#148; (SFAS 123(R)). This
statement revises SFAS No.&nbsp;123, &#147;Accounting for Stock-Based Compensation&#148;, amends SFAS No.&nbsp;95,
&#147;Statement of Cash Flows&#148;, and supersedes APB No.&nbsp;25, &#147;Accounting for Stock Issued to Employees&#148;.
SFAS 123(R) requires companies to apply a <FONT style="white-space: nowrap">fair-value</FONT> based measurement method in accounting for
<FONT style="white-space: nowrap">share-based</FONT> payment transactions with employees and to record compensation expense for all share
awards
granted, and to awards modified, repurchased or cancelled after the required effective date.
In addition, companies are required to record compensation expense (as previous awards continue to
vest) for the unvested portion of previously granted awards that remain outstanding at the date of
adoption. SFAS 123(R) is effective for annual periods beginning after June&nbsp;15, 2005, which is the
Company&#146;s fiscal 2006. In March&nbsp;2005, the SEC released SEC Staff Accounting Bulletin No.&nbsp;107,
<FONT style="white-space: nowrap">Share-Based</FONT> Payment (SAB 107). SAB 107 contains interpretive guidance related to the interaction
between SFAS 123(R) and certain SEC rules and regulations, as well as provides the SEC&#146;s views
regarding the valuation of <FONT style="white-space: nowrap">share-based</FONT> payment arrangements for public companies. SAB 107 also
highlights the importance of disclosures made related to the accounting for <FONT style="white-space: nowrap">share-based</FONT> payment
transactions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The adoption of SFAS 123(R) had a material impact on our consolidated financial statements for
2006, and is expected to continue to materially impact our financial statements in the foreseeable
future. See Note 23 to the financial statements appearing herein for more information on the impact of the adoption of SFAS 123(R).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In July&nbsp;2006, the FASB issued FASB Interpretation No.&nbsp;48, &#147;Accounting for Uncertainty in
Income Taxes&#148; (FIN 48). FIN 48 is an interpretation of SFAS No.&nbsp;109, &#147;Accounting for Income Taxes&#148;,
and prescribes a recognition threshold and measurement process for financial statement recognition
and measurement of uncertain tax positions taken or expected to be taken in a tax return. In
addition, FIN 48 requires expanded disclosure with respect to the uncertainty in income taxes and
is effective for fiscal year beginning after December&nbsp;15, 2006. The Company is currently evaluating
the impact, if any, that FIN 48 will have on the consolidated financial statements.
</DIV>


<P align="center" style="font-size: 10pt">58
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In September&nbsp;2006, the FASB issued SFAS No.&nbsp;157, &#147;Fair Value Measurements&#148; (SFAS 157),
which defines fair value, establishes guidelines for measuring fair value and expands disclosures
regarding fair value measurements. SFAS 157 does not require any new fair value measurements but
rather eliminates inconsistencies in guidance found in various prior accounting pronouncements.
SFAS 157 is effective for fiscal years beginning after November&nbsp;15, 2007. Earlier adoption is
permitted, provided the company has not yet issued financial statements, including for interim
periods, for that fiscal year. The Company is currently evaluating the impact of SFAS 157, but do
not expect the adoption of SFAS 157 to have a material impact on the Company&#146;s consolidated
financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In September&nbsp;2006, the FASB issued SFAS No.&nbsp;158, &#147;Employers&#146; Accounting for Defined Benefit
Pension and Other Postretirement Plans&nbsp;&#151; an amendment of FASB Statements No.&nbsp;87, 88, 106, and 132(R)&#148;
(SFAS 158). This standard requires employers to recognize the underfunded or overfunded status of a
defined benefit postretirement plan as an asset or liability in its statement of financial position
and to recognize changes in the funded status in the year in which the changes occur through
accumulated other comprehensive income, which is a component of stockholders&#146; equity. The new reporting requirements and related new footnote disclosure
rules of SFAS 158 are effective for fiscal years ending after December&nbsp;15, 2006. The adoption of
SFAS 158 does not have a material impact on the Company&#146;s
consolidated financial statements. Additionally,
SFAS 158 requires employers to measure the funded status of a plan as of the date of its <FONT style="white-space: nowrap">year-end</FONT>
statement of financial position effective for fiscal years ending
after December&nbsp;15, 2008.
</DIV>
<DIV align="left">
<A name="107"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 6.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>A. Directors and Senior Management</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the name, age (as at January&nbsp;31, 2007) and position of each
director and member of senior management. The business address of our directors and senior
management is our principal executive office in Singapore.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Age</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Position</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Board of Directors</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Charles R. Wofford(1)(2)(3)(4)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">73</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman of our Board to Directors</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Lim Ming Seong(5)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">59</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Deputy Chairman of our Board of Directors</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Tan Lay Koon
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">48</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director, President and Chief Executive Officer</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Peter Seah Lim Huat(6)(7)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">60</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Steven H. Hamblin(1)(8)(9)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">58</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Richard J. Agnich(1)(7)(9)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">63</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Robert W. Conn(1)(10)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">64</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">R. Douglas Norby(1)(11)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">71</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Park Chong Sup(1)(10)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">59</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Teng Cheong Kwee(1)(12)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">53</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Tokumasa Yasui(1)(13)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">62</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Senior Management</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Wan Choong Hoe
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">53</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Vice President, Chief Operating Officer</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Han Byung Joon
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">47</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Vice President, Chief Technology Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Scott J. Jewler
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">41</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Vice President, Chief Strategy Officer</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Michael G. Potter
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">40</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Vice President, Chief Financial Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Ng Tiong Gee
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Vice President, Human Resources and Chief Information Officer</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Janet T. Taylor
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">49</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Vice President, General Counsel</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Determined by our Board of Directors to be independent under Rule&nbsp;4200 of the Nasdaq
Marketplace Rules.</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Chairman of the Executive Committee.</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Chairman of the Executive Resource &#038; Compensation Committee.</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Chairman of the Nominating and Corporate Governance Committee.<BR></TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">59
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>Chairman of the Budget Committee.</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(6)</TD>
    <TD>&nbsp;</TD>
    <TD>Member of the Executive Resource &#038; Compensation Committee.</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(7)</TD>
    <TD>&nbsp;</TD>
    <TD>Member of the Nominating and Corporate Governance Committee.</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(8)</TD>
    <TD>&nbsp;</TD>
    <TD>Member of the Executive Committee.</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(9)</TD>
    <TD>&nbsp;</TD>
    <TD>Member of the Audit Committee.</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(10)</TD>
    <TD>&nbsp;</TD>
    <TD>Member of the Budget Committee.</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(11)</TD>
    <TD>&nbsp;</TD>
    <TD>Chairman of the Audit Committee.</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(12)</TD>
    <TD>&nbsp;</TD>
    <TD>Appointed as a director on October&nbsp;1, 2006.</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(13)</TD>
    <TD>&nbsp;</TD>
    <TD>Appointed as a director on January&nbsp;23, 2007.</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Board of Directors held four meetings in person in 2006. The attendance by directors at
Board meetings they were scheduled to attend was 100%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dr.&nbsp;Robert W. Conn, Mr.&nbsp;R. Douglas Norby and Dr.&nbsp;Park Chong Sup were nominated for election as
our directors pursuant to the terms of the merger agreement governing our merger with ChipPAC and
elected as our directors at our extraordinary shareholders&#146; meeting on August&nbsp;4, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other than with respect to these three persons, there are no arrangements or understandings
with any person pursuant to which any of our directors or members of senior management were
selected. There are no family relationships among any of our directors, senior management or
substantial shareholders. Mr.&nbsp;Peter Seah Lim Huat was an employee of Singapore Technologies Pte Ltd
(STPL), the parent company of our controlling shareholder, STSPL, until December&nbsp;31, 2004, when all
the assets of STPL were transferred to STPL&#146;s parent, Temasek Holdings, pursuant to a restructuring
exercise. Mr.&nbsp;Seah became a member of the Temasek Advisory Panel in January&nbsp;2005. Mr.&nbsp;Lim Ming
Seong was an employee of STPL until January&nbsp;31, 2002 and immediately thereafter became a Corporate
Advisor to STPL until February&nbsp;2, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Tay Siew Choon has resigned from our Board with effect from April&nbsp;30, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Board of Directors</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Charles R. Wofford</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Charles Richard Wofford has been a member of our Board of Directors since February&nbsp;1998
and the Chairman of our Board of Directors since August&nbsp;2002. Mr.&nbsp;Wofford was with Texas
Instruments, Inc. for 33&nbsp;years before leaving as Senior <FONT style="white-space: nowrap">Vice-President</FONT> to join Farr Company in
1991. He was the Chairman, Chief Executive Officer and President of Farr Company from 1992 to 1995 and Executive Vice
Chairman of FSI International from 1996 to 1998. He received his Bachelor of Arts degree from Texas
Western College.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Lim Ming Seong</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Lim Ming Seong has been the Deputy Chairman of our Board of Directors since June&nbsp;1998. He
is the Chairman of CSE Global Ltd, formerly known as CSE Systems &#038; Engineering Ltd, and sits on the
boards of StarHub Ltd and several other companies. Since joining STPL in December&nbsp;1986, he has held
various senior positions in the former Singapore Technologies group, including as Group Director of
STPL until January&nbsp;31, 2002. Prior to joining STPL, he was with the Ministry of Defence of
Singapore. Mr.&nbsp;Lim received his Bachelor of Applied Science (Honors) in Mechanical Engineering from
the University of Toronto and his Diploma in Business Administration from the University of
Singapore. He also participated in the Advanced Management Programs at INSEAD and Harvard University.
</DIV>

<P align="center" style="font-size: 10pt">60
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Tan Lay Koon</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Tan Lay Koon has been our President and Chief Executive Officer and a member of our Board
of Directors since June&nbsp;2002. Mr.&nbsp;Tan joined us in May&nbsp;2000 as our Chief Financial Officer. Prior
to joining us, he was an investment banker with Salomon Smith Barney, the global investment banking
unit of Citigroup Inc. Before that, he held various positions with the Government of Singapore,
Times Publishing Limited and United Overseas Bank Limited in Singapore. Mr.&nbsp;Tan graduated with a
Bachelor of Engineering (First Class&nbsp;Honors) from the University of Adelaide, Australia as a
Colombo Plan Scholar. He also has a Master of Business Administration (Distinction) from the
Wharton School, University of Pennsylvania where he was elected a Palmer scholar.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Peter Seah Lim Huat</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Peter Seah Lim Huat has been a member of our Board of Directors since July&nbsp;2002. He has
been a member of the Temasek Advisory Panel since January&nbsp;1, 2005. He was, until December&nbsp;31, 2004,
the President and Chief Executive Officer of STPL and a member of its board of directors. He was a
banker for the past 33&nbsp;years, retiring as the Vice Chairman and Chief Executive Officer of Overseas
Union Bank Limited in 2001. Mr.&nbsp;Seah is the Chairman of Singapore Computer Systems Limited,
SembCorp Industries Ltd and Singapore Technologies Engineering Ltd and sits on the boards of
CapitaLand Limited, Chartered and StarHub Ltd. His other appointments include being a member of S
Rajaratnam School of International Studies, Vice President of the Singapore Chinese Chamber of
Commerce and Industry and Honorary Treasurer of the Singapore Business Federation Council. Mr.&nbsp;Seah
also serves on the board of the Government of Singapore Investment Corporation. He was awarded the
Public Service Star (Bintang Bakti Masyarakat) in 1999. Mr.&nbsp;Seah graduated from the University of
Singapore in 1968 with an honors degree in Business Administration.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Steven H. Hamblin</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Steven Hugh Hamblin has been a member of our Board of Directors since June&nbsp;1998. Mr.&nbsp;Hamblin was with Compaq Computer Corporation from 1984 to 1996 and held various positions
including, Managing Director of Compaq Asia Manufacturing, Vice President Asia/Pacific Division,
Vice President and Financial Controller for Corporate Operations and Vice President of Systems
Division Operations. He was with Texas Instruments for ten years before leaving as its Marketing
Division Controller, Semiconductor Group, to join General Instrument, Microelectronics Division,
New York in 1983 as its Group Financial Executive. Mr.&nbsp;Hamblin is also a board member of Chartered.
He is a Certified Public Accountant. He received his Bachelor of Science in Civil Engineering from
the University of Missouri and his Master of Science in Industrial Administration
from <FONT style="white-space: nowrap">Carnegie-Mellon</FONT> University.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Richard J. Agnich</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Richard J. Agnich has been a member of our Board of Directors since October&nbsp;2001. He has
27&nbsp;years of experience in the semiconductor industry. Mr.&nbsp;Agnich joined Texas Instruments in 1973
and held various positions, including that of Senior Vice President, Secretary and General Counsel.
He is also a <FONT style="white-space: nowrap">co-founder</FONT> and is currently the Chair of Entrepreneurs Foundation of North Texas, and
serves on the Board of Trustees of Austin College. Mr.&nbsp;Agnich received his B.A. in Economics from
Stanford University and a Juris Doctor from the University of Texas School of Law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Robert W. Conn</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dr.&nbsp;Robert W. Conn has been a member of our Board of Directors since August&nbsp;2004. Dr.&nbsp;Conn was
a member of the board of directors of ChipPAC prior to the merger. Dr.&nbsp;Conn has been the Managing
Director of Enterprise Partners Venture Capital since July&nbsp;2002. Dr.&nbsp;Conn served as Dean of the
Jacobs School of Engineering, University of California, San Diego, from 1994 to 2002. From 1980 to
1994, Dr.&nbsp;Conn served as Professor of Engineering and Applied Science at the University of
California, Los Angeles (UCLA), where he was founding director of the Institute of Plasma and
Fusion Research. Dr.&nbsp;Conn <FONT style="white-space: nowrap">co-founded</FONT> a semiconductor equipment company in 1986, Plasma &#038; Materials
Technologies, now Trikon Technologies, and was Chairman of the Board through 1993. Dr.&nbsp;Conn is a
member of the U.S. National Academy of Engineering, and served in 1997 and 1998 as a member of the
U.S. President&#146;s Committee of Advisors on Science and Technology Panel on Energy R&#038;D Policy for the
21st Century. As Managing Director of a venture capital firm, Dr.&nbsp;Conn serves as a director of
eleven private companies: NEXX Systems, Inc., Pivotal Systems, Inc., Nuelight Inc., 3Leaf Networks,
Inc., Quorum Systems, Inc., Tarari Systems, Inc. Calient Networks, Inc., Hammerhead Systems, Inc.,
Novera Optics, Inc., Scoperta, Inc. and Quartics, Inc.. He is a member of one other public company
board, Intersil Corporation, and serves on Intersil&#146;s audit committee. Dr.&nbsp;Conn received his
Bachelor of Science in Chemical Engineering and Physics from the Pratt Institute. He received a
Masters of Science in Mechanical Engineering and a Ph.D in Engineering Science from the California
Institute of Technology.
</DIV>

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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>R. Douglas Norby</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;R. Douglas Norby has been a member of our Board of Directors since August&nbsp;2004. Mr.&nbsp;Norby
was a member of the board of directors of ChipPAC prior to the merger. He was Senior Vice President
and Chief Financial Officer of Tessera Technologies, Inc. from July&nbsp;2003 to January&nbsp;2006. Mr.&nbsp;Norby
worked as a consultant for Tessera Technologies, Inc. from May to July&nbsp;2003. Mr.&nbsp;Norby was Senior
Vice President and Chief Financial Officer of Zambeel, Inc. from March&nbsp;2002 to February&nbsp;2003. From
December&nbsp;2000 to March&nbsp;2002, Mr.&nbsp;Norby was Senior Vice President and Chief Financial Officer of
Novalux, Inc., and from 1996 to 2000, he was Executive Vice President and Chief Financial Officer
of LSI Logic Corporation. Mr.&nbsp;Norby is a director of LSI Logic Corporation, Alexion
Pharmaceuticals, Inc., Neterion, Inc., Magnachip Semiconductor Ltd. and
Nexx Systems, Inc., and serves as the Chairman of Alexion&#146;s, Neterion&#146;s,
Magnachip&#146;s and Nexx&#146;s audit committee. He received his B.A. in Economics from Harvard University
and M.B.A. from Harvard Business School.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Park Chong Sup</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dr.&nbsp;Park Chong Sup has been a member of our Board of Directors since August&nbsp;2004. Dr.&nbsp;Park was
a member of the board of directors of ChipPAC prior to the merger. Dr.&nbsp;Park has been the Chairman
and Chief Executive Officer of Maxtor Corporation from November&nbsp;2004 to May&nbsp;2006. Dr.&nbsp;Park served
as Investment Partner and Senior Advisor at H&#038;Q Asia Pacific from April&nbsp;2004 until September&nbsp;2004,
and as Managing Director from November&nbsp;2002 until March&nbsp;2004. Dr.&nbsp;Park served as the Chairman and
Chief Executive Officer of Hynix Semiconductor Inc. (formerly Hyundai Electronics Industries Co.
Ltd.) from April&nbsp;2000 to May&nbsp;2002. He served as President and Chief Executive Officer of Hyundai
Electronics America, Inc. from September&nbsp;1996 to October&nbsp;1999 and Chairman from November&nbsp;1999 to
May&nbsp;2002. Dr.&nbsp;Park is a director of Smart Modular Technologies, Inc., <FONT style="white-space: nowrap">A-Max</FONT> Technology Ltd., Seagate
Technology and Ballard Power Systems, Inc. Dr.&nbsp;Park holds a B.A. in Management from Yonsei University, an M.A. in
Management from Seoul National University, an M.B.A. from the University of Chicago and a Doctorate
in Management from Nova Southeastern University.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Teng Cheong Kwee</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Teng Cheong Kwee has been a member of our Board of Directors since October&nbsp;2006. He was
previously a member of our Board from January&nbsp;2001 to August&nbsp;2004 and was appointed a member and
Chairman of our Audit Committee in January&nbsp;2001 and January&nbsp;2003, respectively. Mr.&nbsp;Teng was the
Head of Risk Management &#038; Regulatory Division of the Singapore Exchange Limited and has held
various positions in regulatory and financial institutions including the Monetary Authority of
Singapore. Mr.&nbsp;Teng has more than 20&nbsp;years of experience in the finance industry. He is also a
<FONT style="white-space: nowrap">non-executive</FONT> Director of several other companies listed on the <FONT style="white-space: nowrap">SGX-ST</FONT>. Mr.&nbsp;Teng received his
Bachelor of Engineering (Industrial) (First Class&nbsp;Honors) and Bachelor of Commerce from the
University of Newcastle, Australia.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Tokumasa Yasui</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Tokumasa Yasui has been a member of our Board of Directors since January&nbsp;2007. Mr.&nbsp;Yasui
is currently Special Advisor to the President of Renesas Solutions Corp., a subsidiary of Renesas
Technology Corp., a joint venture between Hitachi Ltd. and Mitsubishi Ltd. Prior to that, he was a
Managing Director of Renesas Semiconductor (Malaysia) Sdn. Bhd. He has also held various senior
management positions with Hitachi Ltd. where he last served as Group Executive of the Semiconductor
Division. He has also served as Executive Vice President of Elpida Memory, Inc., which started as a
joint venture between Hitachi Ltd. and NEC Corp. Mr.&nbsp;Yasui holds a Bachelor of Engineering and a
Master of Engineering in Electrical Engineering from Kyoto University.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Senior Management</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Wan Choong Hoe</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Wan Choong Hoe joined us as Chief Operating Officer in September&nbsp;2004. Mr.&nbsp;Wan was
previously Vice President and Managing Director responsible for Singapore and China operations for
National Semiconductor Manufacturer Singapore Pte. Ltd. (National Semiconductor), a position he
held since 2000. From 1994 to 2000, Mr.&nbsp;Wan served as National Semiconductor&#146;s Vice President and
Managing Director responsible for Singapore and previously held positions as Director of Operations
and Director of QRA/Logistics. Prior to joining National Semiconductor in 1986, Mr.&nbsp;Wan held
various positions at Texas Instruments Singapore Pte. Ltd. and from 1997 to 2001, served as
Chairman of the Gintic Research Institute Management Board. Mr.&nbsp;Wan holds a Bachelor of Electrical
and Electronics Engineering from the University of Singapore.
</DIV>

<P align="center" style="font-size: 10pt">62
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Han Byung Joon</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dr.&nbsp;Han Byung Joon joined us as our Chief Technology Officer in December&nbsp;1999. Prior to
joining us, Dr.&nbsp;Han was Director of Product Development at Anam Semiconductor, Inc. and, prior to
that, held various engineering positions with IBM and AT&#038;T Bell Labs in Murray Hill, New Jersey. He
is credited with the invention of several wafer and <FONT style="white-space: nowrap">chip-scale</FONT> semiconductor packaging technologies
patented today. Dr.&nbsp;Han received his Doctorate in Chemical Engineering from Columbia University,
New York, in 1988.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Scott J. Jewler</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Scott J. Jewler joined us as our Chief Strategy Officer in August&nbsp;2004. Prior to joining us,
Mr.&nbsp;Jewler held various executive positions at Amkor Technology, Inc., including President of Amkor
Technology Taiwan and Senior Vice President, Assembly Business Unit. Before that, he held various
manufacturing operations positions at Mitsubishi Semiconductor America, Inc. Mr.&nbsp;Jewler holds five
U.S. patents in the area of integrated circuit packaging. Mr.&nbsp;Jewler graduated from Clemson
University with a Bachelor of Science degree in Mechanical Engineering.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Michael G. Potter</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Michael G. Potter was appointed Chief Financial Officer in August&nbsp;2004. Mr.&nbsp;Potter was
Acting Chief Financial Officer of ChipPAC prior to the merger, a position he had held since April
2004. Prior to that time, he served as Corporate Controller of ChipPAC from October&nbsp;2000 through
April&nbsp;2004. Prior to joining ChipPAC, Mr.&nbsp;Potter held several executive positions at Honeywell
Inc., including serving as Controller for a Strategic Business Unit of Honeywell. Mr.&nbsp;Potter
started his career at KPMG Peat Marwick. Mr.&nbsp;Potter holds a Bachelor of Commerce degree,
Accounting, from Concordia University and a Graduate Diploma of Public Accountancy from McGill
University. He is also a chartered accountant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Ng Tiong Gee</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Ng Tiong Gee
was appointed Chief Information Officer in May&nbsp;2001 and Senior Vice President of Human Resources in February 2007. Mr.&nbsp;Ng was previously
the Chief Information Officer of Gateway Singapore, heading the technology multinational&#146;s IT
activities in Asia Pacific. Prior to that, he spent over six years with Siemens Components (now
known as Infineon Technologies Asia Pacific) where he last served as Director of Information
Systems and Services. Between 1988 and 1992, he held various key engineering positions at Digital
Equipment Singapore, now part of Hewlett Packard. Mr.&nbsp;Ng graduated with a Bachelor of Mechanical
Engineering with honors from the National University of Singapore in 1987. He also holds a Master&#146;s
Degree in Science (computer integrated manufacturing) and Business Administration from the Nanyang
Technological University in Singapore.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Janet T. Taylor</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ms.&nbsp;Janet T. Taylor joined us as General Counsel in June&nbsp;2005. Prior to joining our Company,
Ms.&nbsp;Taylor practiced as a Foreign Legal Consultant at the law firm of Kartini Muljadi &#038; Rekan in
Indonesia. Ms.&nbsp;Taylor was counsel in the U.S. Securities Practice Group of Sidley Austin Brown &#038;
Wood&#146;s Singapore office from 2000 to 2002 and prior to that, a partner in the U.S. Securities
Practice Group of Baker &#038; McKenzie&#146;s Singapore office. In 1999, she joined the U.S. Securities
Practice Group of Norton Rose&#146;s London office until she returned to Singapore in 2000. In 1993, she
joined LeBoeuf, Lamb Greene &#038; MacRae&#146;s New York office until 1996 when she joined Baker &#038;
McKenzie&#146;s New York office and subsequently worked in Baker &#038; McKenzie&#146;s Singapore and London
offices. Ms.&nbsp;Taylor began her legal career in 1989 at Debevoise &#038; Plimpton in New York. Ms.&nbsp;Taylor
was admitted to the New York Bar in 1990. She holds a Juris Doctor from Harvard Law School, a
Bachelor of Arts degree (History) from the University of Texas and a Bachelor of Business
Administration degree (Accounting) from Sam Houston State University.
</DIV>


<P align="center" style="font-size: 10pt">63
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Compensation of Directors and Senior Management</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth
the aggregate amount of compensation including bonus paid or proposed to be paid for all of our directors and
senior management with respect to services rendered in 2006.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Executive</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Non executive</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Director</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Directors(1)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Total(2)(3)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Charles R. Wofford</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">$129,790</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">$129,790</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lim Ming Seong</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">58,420</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">58,420</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tan Lay Koon</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">$1,417,373</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">1,417,373</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Peter Seah Lim Huat</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">50,040</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">50,040</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tay Siew Choon(4)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">16,340</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">16,340</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Steven H. Hamblin</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">81,790</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">81,790</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Richard J. Agnich</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">65,790</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">65,790</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">R. Douglas Norby</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">52,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">52,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Robert W. Conn</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">50,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Park Chong Sup</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">51,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">51,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Teng Cheong Kwee(5)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">8,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">8,500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Senior management
(excluding our Executive Director) as a group</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD align="right">3,116,683</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">$1,417,373</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" align="right">$563,670</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right">$5,097,726</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>We will seek approval at our annual general meeting in 2007 for the payment of directors&#146;
fees of approximately $563,670 for 2006.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Does not include compensation given in the form of share options. For more information on
share options granted to our directors and senior management, see &#147; &#151; E. Share Ownership for
Directors and Senior Management&#148;.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes $283,498 representing payment of <FONT style="white-space: nowrap">one-third</FONT> of
the notional Economic Value Added (EVA) bank account. See discussion below.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Resigned as a director on April&nbsp;30, 2006.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>Appointed as a director on October&nbsp;1, 2006.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of January&nbsp;31, 2007, we have eleven directors on our Board. Our executive director does not
receive any directors&#146; fees. Our <FONT style="white-space: nowrap">non-executive</FONT> directors are paid directors&#146; fees. Our
<FONT style="white-space: nowrap">non-executive</FONT> directors are also reimbursed for reasonable expenses they incur in attending
meetings of the Board and its committees and <FONT style="white-space: nowrap">company-sponsored</FONT> training from time to time. They may
receive compensation for performing additional or special duties at the request of the Board. Our
directors&#146; fees for 2006 will be submitted for approval by our shareholders at our annual general
meeting to be held in April&nbsp;2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have provided to our directors and officers customary directors and officers liability
insurance cover.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We obtained shareholders&#146; approval to adopt a revised compensation scheme, including a share
repurchase program within specified mandates relating to maximum repurchase price, volume, timing
and manner of repurchases, at our last annual general meeting of shareholders held in April&nbsp;2006.
We intend to effect such repurchases in compliance with <FONT style="white-space: nowrap">Rule&nbsp;10b-18</FONT> under the Securities Exchange
Act of 1934, as amended (Exchange Act). The revised compensation scheme, among other things, allow
us the flexibility to deliver repurchased ordinary shares held in treasury (instead of issuing new
shares) for our employee share plans.
</DIV>

<P align="center" style="font-size: 10pt">64
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
overall compensation scheme continues to include a <FONT style="white-space: nowrap">short-term</FONT> (annual)&nbsp;cash incentive plan
to reward our senior executives and other eligible employees for their performance and
contributions. The <FONT style="white-space: nowrap">short-term</FONT> incentive plan is funded by a pool of monies that we set aside based
on a predetermined aggregate percentage of payroll. Payment in 2007 with respect to services
rendered in 2006 is dependant on the level of achievement against corporate financial targets as
well as plant and functional goals. Each participant has a bonus target as a percentage of base
salary.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition to the <FONT style="white-space: nowrap">short-term</FONT> incentive plan, the directors and senior executives and other
designated employees are also eligible to participate in a restricted share plan. Further, Mr.
Tan Lay Koon and a limited group of the senior employees are also eligible to participate in a
performance share plan. See &#147;&#151;  E. Share Ownership for Directors and Senior Management &#151;
Employees&#146; Share Ownership Schemes&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Finally, Mr.&nbsp;Tan Lay Koon and a very limited group of the most senior executives are eligible
to participate in a modified <FONT style="white-space: nowrap">long-term</FONT> cash incentive plan based on measuring Economic Value Added
(EVA). EVA improvement year over year funds a group EVA pool. If the group EVA pool has a net
positive balance in a given year, individual EVA bonuses would be distributed (<FONT style="white-space: nowrap">one-third</FONT> paid to
the participant and <FONT style="white-space: nowrap">two-thirds</FONT> held in an individual EVA bank account for each of the
participants).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
group incentive EVA pool is derived from the annual wage increments of the
participants and a sharing of the positive EVA and the change in EVA over the preceding year (which
can result in a negative incentive pool if the change in EVA is significantly negative). The amount
allocated to the individuals from this pool is based on the collective achievement of the
corporate goals, achievement of individual performance targets as well as his or her scoring on
corporate values. Each eligible senior executive has his or her own notional EVA bank account. The
bonus earned each year is added to his or her notional EVA bank account, and payment is made only
when there was a positive EVA bank balance in the notional EVA bank account. This incentive plan
with regard to EVA was suspended for the year 2005 while our compensation plan was then under
review.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not provide any <FONT style="white-space: nowrap">post-retirement</FONT> benefits, other than pursuant to the plans required or
permitted by local regulations and described below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Labor Standards Law of South Korea, employees with more than one year of service are
entitled to receive a <FONT style="white-space: nowrap">lump-sum</FONT> payment upon termination of their employment with STATS ChipPAC
Korea Ltd., based on their length of service and rate of pay at the time of termination. Accrued
severance benefits are adjusted annually for all eligible employees based on their employment as of
the balance sheet date. The expense for severance benefits for the period August&nbsp;5, 2004 to
December&nbsp;31, 2004, and for 2005 and 2006 were approximately $1.8&nbsp;million, $6.3&nbsp;million and $9.1
million, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the National Pension Act of South Korea, STATS ChipPAC Korea Ltd. is required to
contribute a certain percentage for pension based on the employees&#146; salary to the Korean National
Pension Fund. The expense for the pension benefits for the period August&nbsp;5, 2004 to December&nbsp;31,
2004, and for 2005 and 2006 were approximately $0.7&nbsp;million, $2.1&nbsp;million and $2.8&nbsp;million,
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Singapore law, we make monthly contributions based on the statutory funding requirement
into a Central Provident Fund for substantially all of our Singapore employees who are Singapore
citizens and Singapore permanent residents. The aggregate expenses under this plan were $4.6
million for 2004, $4.8&nbsp;million for 2005 and $5.3&nbsp;million for 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Chinese law and Shanghai municipal government regulations, we make monthly contributions
based on the statutory funding requirement into the Pension Fund Center and Provident Fund Center
of Shanghai for all of our Chinese employees. From August&nbsp;5, 2004 to December&nbsp;31, 2004, and for
2005 and 2006, the aggregate expenses under this plan were $1.2&nbsp;million, $1.8&nbsp;million and $2.2
million, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Malaysian law, we make monthly contributions based on statutory requirements to the
Employee Provident Fund for all employees except for contract and foreign workers. STATS ChipPAC
Malaysia Sdn Bhd&#146;s total expenses under this plan for the period August&nbsp;5, 2004 to December&nbsp;31,
2004, and for 2005 and 2006 were approximately $0.7&nbsp;million, $1.9&nbsp;million and $2.0&nbsp;million,
respectively. Employees with more than 20&nbsp;years of service with STATSChipPAC Malaysia Sdn Bhd are
entitled to a single sum payment of $2,600 upon their mandatory retirement from their employment at
age 55&nbsp;years. We paid $5,300, $21,200 and $51,600 for such retirement payments for the period
August&nbsp;5, 2004 to December&nbsp;31, 2004, and for 2005 and 2006, respectively. Accrued gratuity benefits
for eligible employees are adjusted annually.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;STATS ChipPAC, Inc. and STATS ChipPAC Test Services, Inc. have a 401(k) savings plan where the
Company matches 50% of employee contributions up to 6% of eligible employee compensation. The
Company&#146;s matching contributions under the 401(k) plan were $320,000,
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; nowrap margin-top: 6pt">$395,000 and $457,000 in 2004, 2005 and 2006, respectively. The matching contributions are
accrued monthly and adjusted when the actual amounts are calculated. The expenses relating to the
plan are $15 per person per quarter and are accrued on a monthly
basis. Returns on the 401(k)&nbsp;plan from investments in mutual funds are calculated daily by an external administrator who administers
the plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Winstek operates a defined benefit retirement plan for a substantial portion of its employees
in Taiwan in accordance with the Labor Standards Law in Taiwan. Pension benefits are generally
based on years of service and average salary for the six months prior to the approved retirement
date. Winstek revised its contribution in 2006 from 2% to 6% of eligible wages and salaries on a
monthly basis to a pension fund maintained with the Central Trust of China, as required by the
Labor Standards Law. At each year end, Winstek actuarially determines pension benefit costs and
obligations using the projected unit credit method, and the amounts calculated depend on a variety
of assumptions. These assumptions include discount rates, rates for expected returns on plan
assets, mortality rates and retirement rates. The funding of the pension plan is determined in
accordance with statutory funding requirements. Winstek is obligated to make up any shortfall in
the plan&#146;s assets in meeting the benefits accrued to the participating staff. As at December&nbsp;31,
2006, there was no shortfall in the plan&#146;s assets. Total pension plan expenses in 2004, 2005 and
2006 were approximately $76,000, $55,000 and $5,000, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Board Practices</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Board of Directors</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Articles of Association set the minimum number of directors at two. We currently have
eleven directors. A number of our directors are <FONT style="white-space: nowrap">re-elected</FONT> at each annual general meeting of
shareholders. The number of directors retiring and eligible to stand for <FONT style="white-space: nowrap">re-election</FONT> each year
varies, but generally it is equal to <FONT style="white-space: nowrap">one-third</FONT> of our board, with the directors who have been in
office longest since their last <FONT style="white-space: nowrap">re-election</FONT> or appointment standing for <FONT style="white-space: nowrap">re-election</FONT>. Our Articles
of Association also provide that the Board of Directors has the power to appoint any person to be a
director to fill a casual vacancy or as an additional director. These persons may only be directors
until the next annual general meeting of shareholders but are eligible for <FONT style="white-space: nowrap">re-election</FONT>.
Accordingly, the appointments of Mr.&nbsp;Lim Ming Seong, Dr.&nbsp;Robert W. Conn, Dr.&nbsp;Park Chong Sup, Mr.&nbsp;Teng Cheong Kwee and Mr.&nbsp;Tokumasa Yasui will expire and we will seek shareholders&#146; approval for
their <FONT style="white-space: nowrap">re-election</FONT> at the next annual general meeting of shareholders to be held in April&nbsp;2007.
Under the Companies Act, the term of any director shall expire at the conclusion on the date of the
annual general meeting of shareholders immediately following the date that director turns 70&nbsp;years
of age, although he or she will be eligible for <FONT style="white-space: nowrap">re-appointment</FONT>. Directors who are aged&nbsp;70 or older
are eligible for <FONT style="white-space: nowrap">re-appointment</FONT> upon the approval of the shareholders of our Company by way of an
ordinary resolution passed at an annual general meeting and, if <FONT style="white-space: nowrap">re-appointed</FONT>, will hold office
until the next annual general meeting of the shareholders. Accordingly, the appointments of Mr.&nbsp;Charles R. Wofford and Mr.&nbsp;R. Douglas Norby will expire and we will seek shareholders&#146; approval for
their <FONT style="white-space: nowrap">re-appointment</FONT> at the next annual general meeting of shareholders to be held in April&nbsp;2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of January&nbsp;31, 2007, Temasek Holdings, through its <FONT style="white-space: nowrap">wholly-owned</FONT> subsidiary, Singapore
Technologies Semiconductors Pte Ltd (STSPL), beneficially owned approximately 35.56% of our
outstanding ordinary shares. Temasek Holdings, a private limited company incorporated in Singapore,
is <FONT style="white-space: nowrap">wholly-owned</FONT> by the Minister for Finance (Incorporated) of Singapore, a body corporate
constituted by the Minister for Finance (Incorporation) Act (Cap. 183). As a result, Temasek
Holdings has significant influence over matters requiring the approval of our shareholders. The
actions of Temasek Holdings and STSPL, particularly through the election of directors and
subsequent selection of management by those directors, can affect our strategic decisions, our
legal and capital structure and our <FONT style="white-space: nowrap">day-to-day</FONT> operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Articles of Association permit a director to appoint an alternate director to act in place
of such director should the director be unable to perform his or her duties as director for a
period of time. Under Singapore law, the alternate director is not merely an agent of the director
but is also held accountable to the Company for his or her actions as director during the period
for which he or she acts as alternate director.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not have any service contracts with any of our non executive directors. The services
contract of our executive director does not provide for benefits upon termination of employment.
</DIV>

<P align="center" style="font-size: 10pt">66
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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Committees of our Board of Directors</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Audit Committee</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit Committee currently consists of three members, all of whom are <FONT style="white-space: nowrap">non-executive</FONT>
directors and determined by our Board of Directors to be independent under the Nasdaq Marketplace
Rules. The current members of the Audit Committee are Mr.&nbsp;R. Douglas Norby (Chairman), Mr.&nbsp;Steven
H. Hamblin and Mr.&nbsp;Richard J. Agnich. In January&nbsp;2007, Mr.&nbsp;Richard J. Agnich resigned as Chairman
of the Audit Committee and Mr.&nbsp;R. Douglas Norby was appointed Chairman. The Audit Committee serves
as an independent and objective party to review the integrity and reliability of the financial
information presented by management to shareholders, regulators and the general public. It oversees
the establishment, documentation, maintenance and periodic evaluation of the system of our internal
controls and is responsible for the appointment, compensation, independence, retention, termination
and oversight of the work of our external auditors. The Audit Committee also reviews and evaluates
the performance and policies of our internal audit function and of its external auditors. Under
Singapore law, only board members of a company may serve on its Audit Committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit Committee held five meetings in 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Executive Resource &#038; Compensation Committee</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The current members of the Executive Resource &#038; Compensation Committee are Mr.&nbsp;Charles R.
Wofford (Chairman), Mr.&nbsp;Peter Seah Lim Huat and Mr.&nbsp;Teng Cheong Kwee. In January&nbsp;2007, Mr.&nbsp;Steven
H. Hamblin resigned as a member of the Executive Resource &#038; Compensation Committee and Mr.&nbsp;Teng
Cheong Kwee was appointed as a member.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Executive Resource &#038; Compensation Committee oversees the development of leadership and
management talent in our Company, ensures that we have appropriate remuneration policies and
designs competitive compensation packages with a focus on <FONT style="white-space: nowrap">long-term</FONT> sustainability of business and
<FONT style="white-space: nowrap">long-term</FONT> shareholders&#146; return.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With effect from January&nbsp;16, 2006, we have been relying on the exemption provided by Nasdaq to
permit foreign private issuers to follow home country corporate governance practices in lieu of
Nasdaq Marketplace Rule&nbsp;4350(c)(3). Accordingly, in lieu of Nasdaq Marketplace Rule&nbsp;4350(c)(3) that
requires the compensation of the chief executive officer and all other executive officers of a
<FONT style="white-space: nowrap">Nasdaq-listed</FONT> company to be determined, or recommended to our Board of Directors for determination,
by a majority of the independent directors or a compensation committee comprised solely of
independent directors, we follow the following practice which is consistent with the Singapore code
of corporate governance:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Executive Resource &#038; Compensation Committee is comprised entirely of non-executive
directors, the majority of whom, including the Chairman, qualify as independent directors
under the Nasdaq Marketplace Rules and the Singapore code of corporate governance. Mr.
Peter Seah Lim Huat does not qualify as an independent director under the Nasdaq
Marketplace Rules or the Singapore code of corporate governance.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Executive Resource &#038; Compensation Committee is responsible for reviewing,
considering and approving the compensation policies, incentive programs, specific
compensation (including each award and total proposed awards under each equity based plan)
of each Executive Vice President, Senior Vice President and Vice
President who reports directly to the Chief Executive Officer. The Executive Resource &#038; Compensation Committee has
delegated to the Chief Executive Officer the power to approve awards to employees at the
job level of Vice President and below who do not report directly to the Chief Executive
Officer. The Executive Resource &#038; Compensation Committee also reviews and approves all our
option plans, share plans and other equity based plans.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Executive Resource &#038; Compensation Committee oversees the development of leadership and
management talent in our Company, ensures that we have appropriate remuneration policies and
designs competitive compensation packages with a focus on <FONT style="white-space: nowrap">long-term</FONT> sustainability of business and
<FONT style="white-space: nowrap">long-term</FONT> shareholders&#146; return.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January&nbsp;2007, our Board adopted a new charter for our Executive Resource &#038; Compensation
Committee which became effective on January&nbsp;24, 2007. Our Board has resolved, with effect from
January&nbsp;24, 2007, to delegate to the Executive Resource &#038; Compensation Committee the power to
review, vary (if necessary) and approve the entire specific remuneration package and service
contract terms for key management executives of the Company at the
job level of Executive Vice President, Senior Vice President and Vice
President who reports directly to the Chief Executive Officer as well
as the Chief Executive Officer.
</DIV>

<P align="center" style="font-size: 10pt">67
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Previously, the Executive Resource and Compensation Committee would
approve the entire specific remuneration package and service contract terms for management
executives of the Company at the job level of Vice President and above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Specifically, the duties and responsibilities of the Executive Resource &#038; Compensation
Committee includes the following:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Consider, review, vary and approve our Company&#146;s policy for determining executive
remuneration including the remuneration policy with regard to
Executive Vice Presidents, Senior Vice Presidents and Vice
Presidents who reports directly to the Chief Executive Officer;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Consider, review, vary and approve the entire specific remuneration package and service
contract terms for each Executive Vice President, Senior Vice President and Vice
President who reports directly to the Chief Executive Officer;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Review and approve all our option plans, stock plans and other equity based plans; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Approve the remuneration framework, including director&#146;s fees for our <FONT style="white-space: nowrap">non-executive</FONT> directors.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Executive Resource &#038; Compensation Committee held six meetings in 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Budget Committee</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Budget Committee currently consists of Mr.&nbsp;Lim Ming Seong (Chairman), Dr.&nbsp;Park Chong Sup
and Dr.&nbsp;Robert W. Conn. In April&nbsp;2006, Mr.&nbsp;Tay Siew Choon, who was then a member of the Budget
Committee, resigned as a member of the Board of Directors and in January&nbsp;2007, Dr.&nbsp;Robert W. Conn
was appointed as a member. The Budget Committee meets with our senior management to review our
annual budget and to review our quarterly financial performance in relation to our budget.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Budget Committee held four meetings in 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Executive Committee</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Executive Committee currently consists of Mr.&nbsp;Charles R. Wofford
(Chairman), Mr.&nbsp;Steven H.&nbsp;Hamblin and Mr.&nbsp;Teng Cheong Kwee. In April&nbsp;2006, Mr.&nbsp;Tay Siew Choon, who was then a member of
the Executive Committee, resigned as a member of the Board of Directors and in October&nbsp;2006, Mr.
Peter Seah Lim Huat was appointed as a member. In January&nbsp;2007,
Mr.&nbsp;Peter Seah Lim Huat resigned as a
member of the Executive Committee and Mr.&nbsp;Teng Cheong Kwee was appointed as a member. The main
objective of the Executive Committee is to enable our Board to delegate some of its powers and
functions regarding the governing of our affairs and the affairs of our subsidiaries to the
Executive Committee in order to facilitate timely decision-making processes within the limits of
authority as determined by our Board.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Executive Committee held four meetings in 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Nominating and Corporate Governance Committee</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The current members of the Nominating and Corporate Governance Committee are Mr.&nbsp;Charles R.
Wofford (Chairman), Mr.&nbsp;Peter Seah Lim Huat and Mr.&nbsp;Richard J. Agnich.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Nominating and Corporate Governance Committee&#146;s responsibilities include identifying
suitable candidates for appointment to our Board, with a view to ensuring that the individuals
comprising our Board can contribute in the relevant strategic areas of our business and are able to
discharge their responsibilities as directors having regard to the law and high standards of
governance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With effect from January&nbsp;16, 2006, we have been relying on the exemption provided by Nasdaq to
permit foreign private issuers to follow home country corporate governance practices in lieu of
Nasdaq Marketplace Rule&nbsp;4350(c)(3). Accordingly, in lieu of Nasdaq Marketplace Rule&nbsp;4350(c)(3) that
requires director nominees to be selected, or recommended for the board of directors&#146; selection, by
a majority of the independent directors or a nominating committee comprised solely of independent
directors, we follow the following practice which is consistent with the Singapore code of
corporate governance:
</DIV>

<P align="center" style="font-size: 10pt">68
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Nominating and Corporate Governance Committee comprises not less than three members,
the majority of whom, including the Chairman, qualify as independent directors under the
Nasdaq Marketplace Rules and the Singapore code of corporate governance. Mr.&nbsp;Seah does not
qualify as an independent director under the Nasdaq Marketplace Rules or the Singapore code
of corporate governance.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Nominating and Corporate Governance Committee&#146;s duties and responsibilities include
the following:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the identification of qualified candidates to become Board members;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the selection of nominees for election as directors at the next annual meeting of
shareholders (or extraordinary general meeting of shareholders at which directors are to
be elected);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the selection of candidates to fill any vacancies on our Board;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iv)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the development and recommendation to our Board of a set of corporate governance
guidelines and principles applicable to our Company (being our Code of Business Conduct
and Ethics); and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(v)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>oversight of the evaluation of our Board and Board committees.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Nominating and Corporate Governance Committee held three meetings in 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. Employees</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2006, we employed 13,817 <FONT style="white-space: nowrap">full-time</FONT> employees and 394 temporary or contract
employees. The average number of temporary or contract employees in 2006 based on the number of
temporary or contract employees at the end of each month was 493 per month.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2006, approximately 1,675 of our employees at the Icheon, South
Korea, facility were represented by the ChipPAC Korea Labor Union and are covered by collective bargaining
and wage agreements. The wage agreement is renewed every year, and the collective bargaining
agreement, which, among other things, covers basic union activities, working conditions and welfare
programs is renewed every other year. The wage agreement was renewed in 2006 and is effective
through April&nbsp;30, 2007. The collective bargaining agreement was renewed in 2005 and is effective
through April&nbsp;30, 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth numbers of our employees by function and location for the dates
indicated:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Function:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Direct and indirect labor (manufacturing)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,398</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,315</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,181</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Indirect labor (administration)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">653</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">694</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">770</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">232</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">260</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,280</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,241</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,211</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Location:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Singapore</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,828</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,092</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,527</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">China</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,459</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,452</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,241</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Malaysia</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,310</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,472</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,007</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">South Korea</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,031</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,407</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,513</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Taiwan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">443</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">560</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">645</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">United States</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">198</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">245</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">262</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,280</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,241</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,211</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">69
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>E. Share Ownership for Directors and Senior Management</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on an aggregate of 2,003,007,258 ordinary shares outstanding as of January&nbsp;31, 2007,
each of our directors and senior management officers had a beneficial ownership of less than 1% of
our outstanding ordinary shares, including ordinary shares held directly or in the form of ADSs and
share options granted as of such date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Beneficial ownership is determined in accordance with rules of the SEC and includes shares
over which the indicated beneficial owner exercises voting and/or investment power or receives the
economic benefit of ownership of such securities. Ordinary shares subject to options currently
exercisable or exercisable within 60&nbsp;days are deemed outstanding for computing the percentage
ownership of the person holding the options but are not deemed outstanding for computing the
percentage ownership of any other person.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All our ordinary shares have identical rights in all respects and rank equally with one
another.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Share Options for Directors</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table contains information pertaining to share options held by our directors as
of January&nbsp;31, 2007.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="42%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>

    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>

    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>

    <TD width="0%">&nbsp;</TD>
    <TD width="33%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of Ordinary Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Per Share Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Issuable on Exercise of Option</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Price (S$)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Exercisable Period</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<tr>
<td>&nbsp;</td>
</tr>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Charles R. Wofford</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.885</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">04/29/2003 to 04/28/2007</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">08/06/2004 to 08/05/2008</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.91</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">02/17/2005 to 02/16/2009</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">08/11/2005 to 08/10/2009</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">57,500</TD>
    <TD nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">05/03/2006 to 05/02/2010</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">57,500</TD>
    <TD nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.925</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">10/31/2006 to 10/30/2010</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">60,000</TD>
    <TD nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">05/29/2007 to 05/28/2011</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lim Ming Seong</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">200,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.592</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">04/24/2002 to 04/23/2011</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.885</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">04/29/2003 to 04/28/2007</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">08/06/2004 to 08/05/2008</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.91</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">02/17/2005 to 02/16/2009</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">08/11/2005 to 08/10/2009</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">05/03/2006 to 05/02/2010</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.925</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">10/31/2006 to 10/30/2010</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">05/29/2007 to 05/28/2011</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tan Lay Koon</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.93</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">04/20/2001 to 04/19/2010</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">700,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.826</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">10/19/2001 to 10/18/2010</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">449,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.592</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">04/24/2002 to 04/23/2011</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">325,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.885</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">04/29/2003 to 04/28/2012</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">06/26/2003 to 06/25/2012</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">700,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">08/06/2004 to 08/05/2013</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.91</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">02/17/2005 to 02/16/2014</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">08/11/2005 to 08/10/2014</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">600,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">05/03/2006 to 05/02/2015</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">600,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.925</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">10/31/2006 to 10/30/2015</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">700,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">05/29/2007 to 05/28/2011</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Peter Seah Lim Huat</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">08/06/2004 to 08/05/2013</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.91</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">02/17/2005 to 02/16/2014</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">08/11/2005 to 08/10/2014</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">05/03/2006 to 05/02/2010</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.925</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">10/31/2006 to 10/30/2010</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">05/29/2007 to 05/28/2011</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">70
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

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<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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<TR valign="bottom">
    <TD width="42%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>

    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>

    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>

    <TD width="0%">&nbsp;</TD>
    <TD width="33%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of Ordinary Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Per Share Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Issuable on Exercise of Option</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Price (S$)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Exercisable Period</B></TD>
</TR>

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<tr>
<td>&nbsp;</td>
</tr>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Steven H. Hamblin</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.885</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">04/29/2003 to 04/28/2007</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">08/06/2004 to 08/05/2008</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.91</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">02/17/2005 to 02/16/2009</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">35,000</TD>
    <TD nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">08/11/2005 to 08/10/2009</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">37,500</TD>
    <TD nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">05/03/2006 to 05/02/2010</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">37,500</TD>
    <TD nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.925</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">10/31/2006 to 10/30/2010</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">45,000</TD>
    <TD nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">05/29/2007 to 05/28/2011</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Richard J. Agnich</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.885</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">04/29/2003 to 04/28/2007</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">08/06/2004 to 08/05/2008</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.91</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">02/17/2005 to 02/16/2009</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">25,000</TD>
    <TD nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">08/11/2005 to 08/10/2009</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">42,500</TD>
    <TD nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">05/03/2006 to 05/02/2010</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">42,500</TD>
    <TD nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.925</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">10/31/2006 to 10/30/2010</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">45,000</TD>
    <TD nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">05/29/2007 to 05/28/2011</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Robert W. Conn</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">174,000</TD>
    <TD nowrap>(2)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">04/15/2003 to 08/04/2009</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">130,500</TD>
    <TD nowrap>(2)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">02/05/2005 to 08/04/2009</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">37,500</TD>
    <TD nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">05/03/2006 to 05/02/2010</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">37,500</TD>
    <TD nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.925</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">10/31/2006 to 10/30/2010</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">40,000</TD>
    <TD nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">05/29/2007 to 05/28/2011</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">R. Douglas Norby</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">174,000</TD>
    <TD nowrap>(2)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">04/15/2003 to 08/04/2009</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">130,500</TD>
    <TD nowrap>(2)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">03/17/2004 to 08/04/2009</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">130,500</TD>
    <TD nowrap>(2)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">02/05/2005 to 08/04/2009</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">37,500</TD>
    <TD nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">05/03/2006 to 05/02/2010</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">37,500</TD>
    <TD nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.925</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">10/31/2006 to 10/30/2010</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">45,000</TD>
    <TD nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">05/29/2007 to 05/28/2011</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Park Chong Sup</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">130,500</TD>
    <TD nowrap>(2)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.57</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">10/20/2001 to 08/04/2009</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">43,500</TD>
    <TD nowrap>(2)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">09/27/2002 to 08/04/2009</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">130,500</TD>
    <TD nowrap>(2)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">03/17/2004 to 08/04/2009</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">130,500</TD>
    <TD nowrap>(2)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">02/05/2005 to 08/04/2009</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">37,500</TD>
    <TD nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">05/03/2006 to 05/02/2010</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">37,500</TD>
    <TD nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.925</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">10/31/2006 to 10/30/2010</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">40,000</TD>
    <TD nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">05/29/2007 to 05/28/2011</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Teng Cheong Kwee (3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.885</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">04/29/2003 to 04/28/2007</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">08/06/2004 to 08/05/2008</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.91</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">02/17/2005 to 02/16/2009</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>The exercise prices for these options are denominated in U.S. dollars and are presented here
in Singapore dollars for comparability purposes using the exchange rate based on the Bloomberg
Close Quote on the respective dates of grant.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>The exercise prices for these options are denominated in U.S. dollars and presented here in
Singapore dollars for comparability purposes using the exchange rate based on Bloomberg Close
Quote on August&nbsp;5, 2004 of S$1.7214 per $1.00.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Appointed as a director on October&nbsp;1, 2006.</TD>
</TR>

</TABLE>




<P align="center" style="font-size: 10pt">71
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Employees&#146; Share Ownership Scheme</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2006, we engaged an outside consultant to advise us on our overall compensation scheme. As
part of our <FONT style="white-space: nowrap">re-evaluation</FONT> of our overall compensation scheme, we adopted the STATS ChipPAC Ltd.
Restricted Share Plan (RSP)&nbsp;and the STATS ChipPAC Ltd. Performance Share Plan (PSP)&nbsp;described below
as well as amended the STATS ChipPAC Ltd. Employee Share Purchase Plan 2004 (ESPP) and the STATS ChipPAC Ltd. Share Option Plan (STATS ChipPAC Option Plan) as described
below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The STATS ChipPAC Option Plan, as amended, has been
phased out as of December&nbsp;2006 and replaced by longer term incentives in the form of restricted
shares to be granted pursuant to the RSP. <FONT style="white-space: nowrap">One-half</FONT> of the share based compensation in 2006 was
granted pursuant to the STATS ChipPAC Option Plan and the other half was granted pursuant to the
RSP. Grants of restricted shares are based on our Company&#146;s performance against the prior year&#146;s
financial goals and grant targets based on job level. Vesting is over a <FONT style="white-space: nowrap">three-year</FONT> period from date
of grant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Further, Mr.&nbsp;Tan Lay Koon and a limited group of senior employees will be eligible to
participate in the PSP. Under the PSP, fully vested shares would be granted based on grant targets for each eligible participant that are determined according to our Company&#146;s achievement of
specified <FONT style="white-space: nowrap">three-year</FONT> performance goals.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective January&nbsp;30, 2006, the Companies Act was amended pursuant to the Companies Amendment
Act, as a result of which a Singapore company can repurchase shares out of its capital, as well as
from distributable profits and ordinary shares repurchased by a company can be held by that company
as treasury shares instead of being required to be cancelled. In light of these amendments, at our
annual shareholders&#146; meeting in April&nbsp;2006, we obtained shareholders&#146; approval to repurchase up to
approximately 50&nbsp;million ordinary shares (2.5% of the issued ordinary share capital as of the date
of the annual general meeting) to allow us the flexibility to deliver repurchased ordinary shares
held in treasury (instead of issuing new shares) under our equity incentive plans. The approved
amount for share repurchases under this shareholders&#146; mandate will terminate on the earlier of the
date on which the next annual general meeting is held or the date which the approval is revoked or
varied. As of December&nbsp;31, 2006, we have not repurchased any shares. We intend to seek renewal of the shareholders&#146;
mandate in our next annual general meeting in April&nbsp;2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Equity Incentive Plans</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>STATS ChipPAC Ltd. Substitute Purchase and Option Plan (Substitute Option Plan) and STATS
ChipPAC Ltd. Substitute Equity Incentive Plan (the Substitute EIP, and together with the Substitute
Option Plan, the Substitute Plans).</I> In connection with the merger between STATS and ChipPAC, we
adopted the Substitute Plans to enable substitute options to be granted to holders of options
granted under the ChipPAC 1999 Stock Purchase and Option Plan and the ChipPAC 2000 Equity Incentive
Plan. The number of our ordinary shares that may be issued under the Substitute Option Plan and the
Substitute EIP, may not exceed, in the aggregate, 7&nbsp;million and 73&nbsp;million ordinary shares,
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>STATS ChipPAC Ltd. Share Option Plan, as amended. </I>Effective May&nbsp;28, 1999, we adopted the ST
Assembly Test Services Ltd Share Option Plan 1999 (STATS 1999 option plan). The STATS 1999 option
plan was amended from time to time to accomplish various varying objectives, including among other
purposes, to comply with changes in applicable laws and to bring the plan in line with current
market practices. In connection with the consummation of the merger and, in light of the
significant increase in the number of our employees, our shareholders approved an amendment to the
STATS 1999 option plan, effective as of August&nbsp;5, 2004, to increase the maximum number of ordinary
shares issuable under the plan and the issuance of new ordinary shares upon the exercise of options
granted under the plan. The STATS 1999 option plan was <FONT style="white-space: nowrap">re-named</FONT> the STATS ChipPAC Ltd. Share Option
Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The purpose of the STATS ChipPAC Option Plan is to offer selected individuals an opportunity
to acquire or increase an ownership interest in us through the grant of options to purchase our
ordinary shares. Options granted under the STATS ChipPAC Option Plan may be either nonqualified
options or incentive stock options (ISO)&nbsp;intended to qualify under Section&nbsp;422 of the United States
Internal Revenue Code of 1986, as amended (Internal Revenue Code).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April&nbsp;2006, the shareholders approved the resolution to limit the aggregate number of
ordinary shares that may be issued under the STATS ChipPAC Option Plan to no more than 198&nbsp;million
ordinary shares (subject to <FONT style="white-space: nowrap">anti-dilution</FONT> adjustment pursuant to the plan), including 80&nbsp;million
ordinary shares that may be issued under the Substitute Plans. To the extent any options under the
STATS ChipPAC Option Plan or the Substitute Plans expire unexercised or are otherwise cancelled or
otherwise terminated, the ordinary shares allocable to such options will again be available for
grant.
</DIV>

<P align="center" style="font-size: 10pt">72
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The STATS ChipPAC Option Plan is administered by the Executive Resource and Compensation
Committee. Employees, directors and consultants are eligible for the grant of options subject to
certain exceptions as provided in the plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The exercise price of an ISO must not be less than 100% of the fair market value of our
ordinary share on the date of grant. However, an individual who owns more than 10% of the total
combined voting power of all classes of our outstanding shares is not eligible to be granted ISOs
unless (i)&nbsp;the exercise price of the ISO is at least 110% of the fair market value of the shares on
the date of grant and (ii)&nbsp;such ISO by its terms is not exercisable after the expiration of five
years from the date of grant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The options typically vest over a <FONT style="white-space: nowrap">four-year</FONT> period. The term of an option granted to an
employee may not, prior to the amendments to the plan adopted in April&nbsp;2006, exceed 10&nbsp;years from
the date of grant, and pursuant to the amendments to the plan adopted in April&nbsp;2006, exceed seven
years from the date of grant. The term of an option granted to a <FONT style="white-space: nowrap">non-employee</FONT> may not exceed five
years from the date of grant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2006, we granted to our directors, officers and employees options to purchase an aggregate
of 16,498,100 ordinary shares under the STATS ChipPAC Option Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of January&nbsp;31, 2007, options (under the STATS ChipPAC Option Plan and the Substitute Plans
combined) to purchase an aggregate of 114,932,062 ordinary shares were outstanding, out of which
options to purchase 22,767,300 ordinary shares were held by all our directors and executive
officers as a group. The exercise prices of these options range from S$0.25 to S$6.93. The
expiration dates of these options range from April&nbsp;2007 to December&nbsp;2015.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>STATS ChipPAC Ltd. Employee Share Purchase Plan 2004</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In August&nbsp;2004, our Company adopted the STATS ChipPAC Ltd. Employee Share Purchase Plan 2004
(ESPP)&nbsp;to provide our employees with the opportunity to purchase our ordinary shares in order to
encourage broad employee ownership, encourage employees to remain in our employ, enhance the
ability to attract new employees by providing an opportunity to acquire a vested interest in our
success and provide a performance incentive to our employees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The ESPP is administered by the Executive Resource and Compensation Committee. Employees of
our Company and designated subsidiaries are eligible to participant in the plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to the amendments to the ESPP adopted in 2006, substantially all employees could
purchase our Company&#146;s ordinary shares at a price equal to 85% of the lower of the fair market
value at the beginning or the end of specified <FONT style="white-space: nowrap">six-month</FONT> purchase periods. Share purchases are
limited to 15% of an employee&#146;s eligible compensation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April&nbsp;2006, changes to the terms of the ESPP were approved by the shareholders. We
eliminated the provision that the purchase price of the shares to be purchased under the ESPP be
determined by reference to the lower of the fair market value at the beginning or the end of the
specified purchase period and instead provided that the purchase price be determined by reference
to the fair market value of the shares based on the quoted market price on the date of the
purchase, or, if the shares are acquired through an open market purchase, the price actually paid
for the shares. Further, instead of providing for a 15% discount on the purchase price, our Company
may match up to 20% of the contributions of the ESPP participants by transferring or issuing shares
or providing cash contribution for the purchase of shares. As a result of these changes, the ESPP
no longer qualifies under Section&nbsp;423 of the United States Internal Revenue Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, in 2006, the maximum aggregate of ordinary shares that may be issued under the
ESPP was revised from 130&nbsp;million ordinary shares to no more than 92&nbsp;million ordinary shares of our
Company (subject to <FONT style="white-space: nowrap">anti-dilution</FONT> adjustment pursuant to the ESPP).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless terminated earlier, the ESPP will terminate automatically seven years from its
adoption. Our Board of Directors may amend or terminate the plan at any time and for any reason,
except that no termination of the plan may affect purchase rights previously granted (subject to
limited exceptions as provided in the plan).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>STATS ChipPAC Ltd. Restricted Share Plan</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April&nbsp;2006, our Company adopted the STATS ChipPAC Ltd. Restricted Share Plan (RSP). The
purpose of the RSP is to replace the STATS ChipPAC Option Plan by 2007 and to offer selected
individuals an opportunity to acquire a proprietary interest in the success of our Company, or to
increase their interest, through the grant of Restricted Share Units (RSUs).
</DIV>

<P align="center" style="font-size: 10pt">73
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The RSP is administered by the Executive Resource and Compensation Committee. Employees,
directors and consultants are eligible to participant in the RSP.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An RSU represents an unfunded, unsecured promise of our Company to issue or transfer ordinary
shares of our Company with no exercise or purchase price as the award vests in accordance with a
schedule determined by the Executive Resource and Compensation Committee. RSUs may be granted
subject to performance conditions. Each RSU has a value equal to the fair market value of an
ordinary share and the Executive Resource and Compensation Committee  has the authority to settle RSUs in cash or shares. RSUs
granted under the plan are generally not transferable. Unvested portions of RSUs are generally
subject to forfeiture if employment terminates prior to vesting. A grantee of RSUs has no rights as
a shareholder with respect to any ordinary shares covered by the RSP until such ordinary shares
have been issued or transferred pursuant to the terms of the RSP.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The number of ordinary shares that may be issued under the STATS ChipPAC RSP may not exceed,
in the aggregate, 50&nbsp;million ordinary shares of our Company (subject to <FONT style="white-space: nowrap">anti-dilution</FONT> adjustments
pursuant to the RSP). As of December&nbsp;31, 2006, no grant of RSUs or shares under the RSP had been
made.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless terminated earlier, the RSP plan will terminate automatically seven years after the
later of the date of its adoption or shareholders&#146; approval of an increase in the plan limit. Our
Board of Directors may amend, suspend or terminate the RSP at any time and for any reason, subject
to shareholders&#146; approval to the extent required by Nasdaq or applicable laws or regulations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>STATS ChipPAC Ltd. Performance Share Plan</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April&nbsp;2006, our Company adopted the STATS ChipPAC Ltd. Performance Share Plan (PSP). The
PSP is intended to supplement our Company&#146;s long-term compensation strategy of senior level
employees, under which the number of ordinary shares ultimately or their equivalent cash value or
combination thereof received by the employee depends on our Company&#146;s performance against specified
targets over a period of time to be determined by the Executive Resource and Compensation
Committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The PSP is administered by the Executive Resource and Compensation Committee. Employees,
directors and consultants are eligible to participate in the PSP.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
ordinary shares covered by a grant under the PSP shall be fully
vested. Performance shares awards are granted subject to performance
criteria measured over performance periods as determined by the Executive Resource and Compensation
Committee, which are typically over three years. The Executive Resource and Compensation Committee
has the authority to settle performance shares in cash or shares, or a combination thereof. A
grantee of any awards under the PSP has no rights as a shareholder with respect to any ordinary
shares covered by the grantee&#146;s PSP award until such ordinary shares have been issued or
transferred pursuant to the terms of the PSP.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The number of ordinary shares that may be issued under the PSP may not exceed, in the
aggregate, 15&nbsp;million ordinary shares of our Company. As of December&nbsp;31, 2006, no grant of share
awards under the PSP had been made.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless terminated earlier, the PSP plan will terminate automatically seven years after the
later of the date of its adoption or shareholders&#146; approval of an increase in the plan limit. Our
Board of Directors may amend, suspend or terminate the PSP at any time and for any reason, subject
to shareholders&#146; approval to the extent required by Nasdaq or applicable laws or regulations.
</DIV>
<DIV align="left">
<A name="108"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 7.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>A. Major Shareholders</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of January&nbsp;31, 2007, Temasek Holdings, through its <FONT style="white-space: nowrap">wholly-owned</FONT> subsidiary, Singapore
Technologies Semiconductors Pte Ltd (STSPL), beneficially owned approximately 35.56% of our
outstanding ordinary shares. Temasek Holdings, a private limited company incorporated in Singapore,
is <FONT style="white-space: nowrap">wholly-owned</FONT> by the Minister for Finance (Incorporated) of Singapore, a body corporate
constituted by the Minister for Finance (Incorporation) Act (Cap. 183). As a result, Temasek Holdings has
significant influence over matters requiring the approval of our shareholders.
</DIV>

<P align="center" style="font-size: 10pt">74
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Matters that typically require the approval of our shareholders include, among other things:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the election of directors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the merger or consolidation of us with any other entity;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any sale of all or substantially all of our assets; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the timing and payment of dividends.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth certain information regarding the ownership of our ordinary
shares as of March&nbsp;7, 2007 by each person who is known by us to own beneficially more than 5% of
our outstanding ordinary shares. Beneficial ownership is determined in accordance with the rules of
the SEC and includes shares over which the indicated beneficial owner exercises voting and/or
investment power or receives the economic benefit of ownership of such securities. Ordinary shares
subject to options currently exercisable or exercisable within 60&nbsp;days are deemed outstanding for
the purposes of computing the percentage ownership of the person holding the options but are not
deemed outstanding for the purposes of computing the percentage ownership of any other person.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="65%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>

    <TD width="10%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Percentage</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name of Beneficial Owner</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Beneficially Owned</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Beneficially Owned</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Temasek Holdings(1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">712,228,050</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">35.35</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">FMR Corp.(2)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">240,096,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">11.92</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>As provided by Temasek Holdings, a private limited company incorporated in Singapore, <FONT style="white-space: nowrap">wholly-owned</FONT> by the
Minister for Finance (Incorporated) of Singapore, a body corporate constituted by the Minister
for Finance (Incorporation) Act (Cap. 183), which owns 100% of the ordinary shares of STSPL. Temasek
Holdings is therefore deemed to beneficially own 712,228,050 of our
ordinary shares, which are owned directly by STSPL as of
March&nbsp;1, 2007. The percentage beneficially owned is based on
an aggregate 2,014,574,554 ordinary shares outstanding as of
March&nbsp;7, 2007.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>As provided in a notice by FMR&nbsp;Corp. and Fidelity International Limited&nbsp;(FIL) to our Company
dated March&nbsp;7, 2007. Based on Amendment No.&nbsp;4 to the Schedule&nbsp;13G filed by FMR Corp. and
Edward C. Johnson III, Chairman of FMR Corp., with the SEC on February&nbsp;14, 2007, the shares are owned by
institutional accounts managed by direct or indirect <FONT style="white-space: nowrap">wholly-owned</FONT> subsidiaries of FMR&nbsp;Corp. and FIL, respectively,
in varying amounts. Members of the family of Edward&nbsp;C.&nbsp;Johnson,&nbsp;III, Chairman of FMR&nbsp;Corp.,
through their ownership, directly or through trusts, of equity shares of FMR&nbsp;Corp. representing 49%
of the voting power of FMR&nbsp;Corp. and a shareholders&#146; voting agreement, form a controlling group with
respect to FMR&nbsp;Corp. Partnerships controlled predominantly by members of the family of Edward&nbsp;C.&nbsp;Johnson,&nbsp;III,
Chairman of FMR&nbsp;Corp. and FIL, or trusts for their benefit, own shares of FIL voting stock representing approximately
47% of the total voting power of FIL. The percentage benefically
owned is based on an aggregate 2,014,574,554 ordinary shares outstanding
as of March&nbsp;7, 2007.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The <FONT style="white-space: nowrap">Take-Over</FONT> Code of Singapore provides that any person acquiring an interest (either on his
or her own or together with parties acting in concert with him) in 30% or more of our voting shares
or, if such person holds (either on his own or together with parties acting in concert with him)
between 30% and 50% (both inclusive) of our voting shares, and acquires (either on his or her own
or together with parties acting in concert with him) additional voting shares representing more
than 1% of our voting shares in any six-month period, may be required to extend a <FONT style="white-space: nowrap">take-over</FONT> offer
for the remaining voting shares in accordance with the provisions of the <FONT style="white-space: nowrap">Take-Over</FONT> Code. See &#147;Item&nbsp;10.
Additional Information &#151; B. Memorandum and Articles of Association &#151; Take-Overs&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All our ordinary shares have identical rights in all respects and rank equally with one
another.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our ordinary shares have been traded on the <FONT style="white-space: nowrap">SGX-ST</FONT> since January&nbsp;31, 2000, and our ADSs have
been traded on the NASDAQ Stock Market since January&nbsp;28, 2000.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of January&nbsp;31, 2007, 463,700,430 of our ordinary shares, representing 23.15% of our
outstanding shares, were held by a total of 17 holders of record with addresses in the United
States. Because many of our ordinary shares and ADSs were held by brokers and other
</DIV>

<P align="center" style="font-size: 10pt">75
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">institutions on
behalf of shareholders in street name, we believe that the number of beneficial holders of our
ordinary shares and ADSs could be higher.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On January&nbsp;31, 2007, the closing price of our ordinary shares on the <FONT style="white-space: nowrap">SGX-ST</FONT> was S$1.29 per
ordinary share and the closing price of our ADSs on the NASDAQ Stock Market was $8.36 per ADS.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;1, 2007,
STSPL announced its intention to launch a voluntary conditional cash offer for the remaining ordinary shares
and ADSs in our Company that STSPL does not already own. See &#147;Item&nbsp;4. Information on our Company &#151;
A.&nbsp;History and Development of Our Company &#151; Temasek Holdings&#146;
Subsidiary, Singapore Technologies Semiconductors Pte Ltd&#146;s, Tender Offer&#148;.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Related Party Transactions</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Temasek Holdings is a holding company with investments in a group of companies (the Temasek
Holdings Group). We engage in transactions with companies in the Temasek Holdings Group in the
ordinary course of business. Such transactions are generally entered into on normal commercial
terms. We entered into a turnkey contract with Chartered in March&nbsp;2000 pursuant to which we agreed
to provide wafer sort, packaging and test services to Chartered. The term of this agreement, which
was due to expire in March&nbsp;2003, was extended to March&nbsp;2005 by an amendment agreement dated October
30, 2002. This agreement governs the conduct of business between the parties, relating, among other
things, to our provision of sort, packaging and test services to Chartered which were previously
governed solely by purchase orders executed by Chartered. The agreement does not contain any firm
commitment from Chartered to purchase or from us to supply services covered thereunder. In April
2004, we entered into another test services agreement with Chartered pursuant to which we agreed to
give Chartered priority to use six of our testers, and access to six additional testers, for which
Chartered guarantees minimum loading and issuance of purchase orders of $450,000 per month. This
test services agreement expired in March&nbsp;2005. In March&nbsp;2005, we entered into a <FONT style="white-space: nowrap">three-year</FONT>
partnership agreement with Chartered pursuant to which we agreed to provide wafer sort, assembly
and test services to Chartered. This is not a firm commitment from Chartered to purchase from us
nor is it a firm commitment from us to supply services covered thereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2004, we paid management fees of $1.1&nbsp;million to STPL for various management and corporate
services provided pursuant to the Singapore Technologies Management and Support Services Agreement
entered into in December&nbsp;1999 and terminated on December&nbsp;31, 2004. We
believe that our arrangement with STPL approximated the cost of providing these services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with the requirements of the Nasdaq Marketplace Rules, all new related party
transactions (as defined in Item&nbsp;404 of <FONT style="white-space: nowrap">Regulation&nbsp;S-K</FONT> under the Securities Act) require approval
by the Audit Committee of our Board of Directors. In addition, more significant related party
transactions must be separately approved by a majority of our Board of Directors. We also engage in
transactions with other companies directly or indirectly controlled by Temasek Holdings, in the
ordinary course of business. These transactions, which include transactions for gas, water and
electricity, facilities management, transportation and telecommunication services are at their
prevailing market rates/prices (including where appropriate, preferential rates and discounts) and
on customary terms and conditions, and are generally not subject to review by the Audit Committee.
These expenses amounted to approximately $24.1&nbsp;million, $14.7&nbsp;million and $18.4&nbsp;million for 2004,
2005 and 2006, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Interest of Experts and Counsel</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>
<DIV align="left">
<A name="109"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 8.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>FINANCIAL INFORMATION</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>A. Consolidated Statements and Other Financial Information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please see Item&nbsp;18 for a list of the financial statements filed as part of this annual report.
</DIV>


<P align="center" style="font-size: 10pt">76
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Legal Proceedings</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February&nbsp;2006, our Company, ChipPAC and STATS ChipPAC (BVI)&nbsp;Limited were named as
defendants in a patent infringement lawsuit filed in United States Federal Court for the Northern
District of California. The plaintiff, Tessera, has asserted that semiconductor chip packaging,
specifically devices having BGA and multi-chip BGA configurations used by the defendants infringe
certain patents of Tessera. Tessera has further asserted that our Company is in breach of an
existing license agreement entered into by Tessera with ChipPAC, which agreement has been assigned
by ChipPAC to our Company. We believe that we have a meritorious defense to the claims and intend
to defend the lawsuit vigorously. A court determination that our products and processes infringe the intellectual property rights of others could
result in significant liability and/or require us to make material changes to our products and/or processes. Due to the inherent uncertainties of the lawsuit, we cannot
accurately predict the ultimate outcome and it could result in
significant liability and/or injunction and could have a material adverse effect on the business, financial condition
and the results of operations of our Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are not involved in any other legal or arbitration proceedings, the outcome of which we
believe would have a material adverse effect on our business, financial condition and results of
operations. From time to time, however, we are involved in claims that arise in the ordinary course
of business, and we maintain insurance that we believe to be adequate to cover these claims.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Dividend Policy</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have never declared or paid any cash dividends on our ordinary shares, including our
ordinary shares represented by ADS. We may declare dividends by ordinary resolution of our
shareholders at a general meeting, but we may not pay dividends in excess of the amount recommended
by our Board of Directors. Our Board of Directors may, without the approval of our shareholders,
also declare an interim dividend. We must pay all dividends out of profits. In making its
determinations, our Board of Directors will consider, among other things, future earnings, results
of operations, capital requirements, our general financial condition, general business conditions
and other factors which they may deem relevant. We may pay dividends in Singapore dollars or U.S.
dollars. Holders of ADS will receive any distributions in U.S. dollars.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Significant Changes</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There has been no significant subsequent event following the close of the last financial year
up to the date of this annual report that are known to us and require disclosure in this annual
report for which disclosure was not made in this annual report.
</DIV>

<P align="center" style="font-size: 10pt">77
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="110"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 9.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>THE OFFER AND LISTING</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>A. Offer and Listing Details</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Price range of our ordinary shares and ADSs</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The historical &#145;high&#146; and &#145;low&#146; prices of our ordinary shares and ADSs for the periods stated
are as shown below.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Price per Ordinary Share</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Price per ADS on</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>on the SGX-ST</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>NASDAQ Stock Market(1)</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>(in S$)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>(in US$)</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Low</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Low</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Annual for 2002</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.87</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Annual for 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.73</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Annual for 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.92</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.40</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Annual for 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Annual for 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.91</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Quarterly highs and lows:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; quarter ended March&nbsp;27, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.37</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; quarter ended June&nbsp;26, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.97</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.43</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.75</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; quarter ended September&nbsp;25, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; quarter ended December&nbsp;25, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.02</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; quarter ended March&nbsp;26, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.77</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.19</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; quarter ended June&nbsp;25, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.53</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; quarter ended September&nbsp;24, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.91</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; quarter ended December&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.93</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.74</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Monthly highs and lows:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">August&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.87</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.48</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">September&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.96</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.98</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">October&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.93</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.74</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">November&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.97</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.08</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">December&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.31</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.59</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.26</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">February&nbsp;2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.64</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.19</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Prior to July&nbsp;2006, on the Nasdaq National Market.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Plan of Distribution</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Markets</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our ordinary shares are listed on <FONT style="white-space: nowrap">SGX-ST</FONT> <FONT style="white-space: nowrap">(SGX-ST:&nbsp;STATSChP)</FONT> and, our ADSs are quoted on the
NASDAQ Stock Market (NASDAQ:&nbsp;STTS).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. Selling Shareholders</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>E. Dilution</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>


<P align="center" style="font-size: 10pt">78
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>F. Expenses of the Issue</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>

<DIV align="left">
<A name="111"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 10.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>ADDITIONAL INFORMATION</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>A. Share Capital</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Memorandum and Articles of Association</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a company limited by shares incorporated under the laws of the Republic of Singapore.
Our Company registration number in Singapore is 199407932D.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Objects</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We were established mainly to manufacture, assemble, test and provide services relating to
electrical and electronic components. We also carry out research and development work in relation
to the electrical and electronic industry.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A detailed list of all the other objects and purposes of our Company can be found in Article&nbsp;3
of our Memorandum of Association which was filed as an Exhibit to our registration statement on
<FONT style="white-space: nowrap">Form&nbsp;F-1</FONT> (Registration Number: <FONT style="white-space: nowrap">333-93661</FONT>) in connection with our initial public offering
in 2000 and is available for examination at our registered office at No.&nbsp;5, Yishun Street&nbsp;23, Singapore
768442, Republic of Singapore.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Board of Directors</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Articles of Association state that a director must declare at a meeting of our Board of
Directors if there are matters which may conflict with his duties or interests as a director. He is
not allowed to vote in respect of any contract or arrangement or other proposal whatsoever in which
he has any interest, directly or indirectly and shall not be counted in the quorum in relation to
any resolution with respect to which he is not entitled to vote. If an independent quorum is not
achieved, the remaining directors may convene a general meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our directors may exercise all the borrowing powers of our Company to borrow money, to
mortgage or charge its undertaking, property and uncalled capital, and to issue debentures and
other securities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No shares are required to be held by a director for director&#146;s qualification.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Singapore law, no person of or over the age of 70&nbsp;years shall be appointed or act as a
director of a public company or of a subsidiary of a public company unless the shareholders at an
annual general meeting vote by an ordinary resolution in favor of his appointment to hold office
until the next annual general meeting of our Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Articles of Association set the minimum number of directors at two. The number of
directors retiring and eligible to stand for <FONT style="white-space: nowrap">re-election</FONT> each year varies, but generally it is
equal to <FONT style="white-space: nowrap">one-third</FONT> of our Board, with the directors who have been in office longest since their
<FONT style="white-space: nowrap">re-election</FONT> or appointment standing for <FONT style="white-space: nowrap">re-election</FONT>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Articles of Association permit a director to appoint an alternate director to act in place
of such director should the director be unable to perform his or her duties as director for a
period of time. There is currently no alternate director. Under Singapore law, the alternate
director is not merely an agent of the director but is accountable to the Company for his or her
actions as director during the period for which he or she acts as alternate director.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Ordinary Shares</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have only one class of shares, namely, ordinary shares. As of December&nbsp;31, 2006, there were
2,002,814,117 ordinary shares issued and allotted by our Company.
</DIV>

<P align="center" style="font-size: 10pt">79
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Until January&nbsp;30, 2006, our ordinary shares had a par value of S$0.25 each. The Companies
Amendment Act, which came into effect on January&nbsp;30, 2006, abolished the concept of &#147;par value&#148; and
&#147;authorized capital&#148;. Accordingly, as of January&nbsp;30, 2006, the shares of our Company have no par or
nominal value.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our ordinary shares have identical rights in all respects and rank equally with one another.
Our Articles of Association provide that we may issue shares of a different class with
preferential, deferred, qualified or other special rights, privileges or conditions as our Board of
Directors may think fit, and may issue preference shares which are, or at the option of our Company
are, redeemable, subject to certain limitations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All of our ordinary shares are in registered form. All our issued ordinary shares are entitled
to voting rights described under &#147;&#151;Voting Rights&#148; below. We may, subject to and in accordance with
the Companies Act and the rules of the <FONT style="white-space: nowrap">SGX-ST</FONT>, purchase our own ordinary shares. We may not, except
as provided in the Companies Act, grant any financial assistance for the acquisition or proposed
acquisition of our ordinary shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>New Ordinary Shares</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;New ordinary shares may only be issued with the prior approval of the shareholders in a
general meeting. The approval, if granted, will lapse at the conclusion of the annual general
meeting following the date on which the approval was granted or the date by which such annual
general meeting is required by law to be held, whichever is earlier. Our shareholders have given
the general authority to allot and issue ordinary shares in the capital of our Company prior to the
next annual general meeting. Subject to the foregoing, the provisions of the Companies Act and any
special rights attached to shares currently issued, all new ordinary shares are under the control
of our Board of Directors who may allot and issue the same with such rights and restrictions as it
may think fit, provided that, amongst others, new ordinary shares may not be issued to transfer a
controlling interest in our Company without the prior approval in general meeting of our
shareholders. Our shareholders are not entitled to <FONT style="white-space: nowrap">pre-emptive</FONT> rights under our Articles of
Association or Singapore law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Shareholders</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Only persons who are registered in our register of members and, in cases in which the person
so registered is The Central Depository (Pte) Limited (&#147;CDP&#148;) or its nominee, as the case may be,
the persons named as depositors in the depository register maintained by CDP for our ordinary
shares, are recognized as shareholders. We will not, except as required by law, recognize any
equitable, contingent, future or partial interest in any ordinary share or other rights in respect
of any ordinary share other than an absolute right to the entirety thereof of the registered holder
of the ordinary share or of the person whose name is entered in the depository register for that
ordinary share. We may close the register of members for any time or times. However, the register
may not be closed for more than 30&nbsp;days in aggregate in any calendar year. We typically close the
register to determine shareholders&#146; entitlement to receive dividends and other distributions for no
more than ten days a year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Transfer of Ordinary Shares</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There is no restriction on the transfer of fully paid ordinary shares except where required by
law. Our directors may decline to register any transfer of ordinary shares which are not fully paid
shares or ordinary shares on which we have a lien. Ordinary shares may be transferred by a duly
signed instrument of transfer in a form acceptable to our directors. Our directors may also decline
to register any instrument of transfer unless, among other things, it has been duly stamped if
required and is presented for registration together with the share certificate and such other
evidence of title as they may require. We will replace lost or destroyed certificates for ordinary
shares if the applicant pays a fee which will not exceed S$2 and furnishes any evidence and
indemnity that our directors may require.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>General Meetings of Shareholders</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are required to hold an annual general meeting every year. Our Board of Directors may
convene an extraordinary general meeting whenever it thinks fit and must do so if shareholders
representing not less than 10% of our issued share capital request in writing that such a meeting
be held. In addition, two or more shareholders holding not less than 10% of our issued share
capital may call a meeting. Unless otherwise required by Singapore law or by our Articles of
Association, voting at general meetings is by ordinary resolution, requiring an affirmative vote of
a simple majority of the votes cast at that meeting. An ordinary resolution suffices, for example,
for the appointment of directors. A special resolution, requiring the affirmative vote of at least
75% of the votes cast at the meeting, is necessary for certain matters
under Singapore law, including the voluntary winding up of our Company, amendments to our
Memorandum and Articles of Association, a change of our corporate name and a reduction in our share
capital. We must give at least 21&nbsp;days&#146; notice in writing for every general meeting convened for
the purpose of passing a special resolution. Ordinary resolutions require at least 14&nbsp;days&#146; notice
in writing. The notice must be
</DIV>

<P align="center" style="font-size: 10pt">80
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">given to every shareholder who has supplied us with an address in
Singapore for the giving of notices and must set forth the place, the day and the hour of the
meeting and, in the case of special business, the general nature of that business and a statement
regarding the effect of any proposed resolution on our Company in respect of such special business.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Voting Rights</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A shareholder is entitled to attend, speak and vote at any general meeting, in person or by
proxy. A proxy need not be a shareholder. A person who holds ordinary shares through the CDP
<FONT style="white-space: nowrap">book-entry</FONT> settlement system will only be entitled to vote at a general meeting if his name appears
on the depository register maintained by CDP as at 48 hours before the time of the general meeting
as certified by CDP to our Company. Except as otherwise provided in our Articles of Association,
two or more shareholders holding at least 33<SUP style="font-size: 85%; vertical-align: text-top">1</SUP>/3% of our total issued and <FONT style="white-space: nowrap">fully-paid</FONT>
ordinary shares must be present in person or by proxy to constitute a quorum at any general
meeting. Under our Articles of Association, on a show of hands, every shareholder present in person
or by proxy shall have one vote (provided that in the case of a shareholder who is represented by
two proxies, only one of the two proxies as determined by that shareholder or, failing such
determination, by the chairman of the meeting (or by a person authorized by him) in his sole
discretion shall be entitled to vote on a show of hands), and on a poll, every shareholder present
in person or by proxy shall have one vote for each ordinary share held or represented. A poll may
be demanded in certain circumstances, including by the chairman of the meeting, by not less than
five shareholders present in person or by proxy and entitled to vote at the meeting, by a
shareholder present in person or by proxy and representing not less than <FONT style="white-space: nowrap">one-tenth</FONT> of the total
voting rights of all the shareholders having the right to vote at the meeting or, by a member
present in person or by proxy and holding not less than 10% of the total number of <FONT style="white-space: nowrap">paid-up</FONT> shares
of our Company (excluding treasury shares).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Dividends</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may, by ordinary resolution of our shareholders, declare dividends at a general meeting,
but we may not pay dividends in excess of the amount recommended by our directors. We must pay all
dividends out of our profits. Our directors may also declare an interim dividend without the
approval of the shareholders. All dividends in respect of shares are paid in proportion to the
number of shares held by a shareholder, unless the rights attaching any ordinary shares or the
terms of issue thereof provide otherwise. Where shares are partly paid, all dividends must be
apportioned and paid proportionately to the amounts paid or credited as paid on the partly paid
shares. All dividends must be apportioned and paid proportionately to the amounts so paid or
credited as paid during any portion or portions of the period in respect of which the dividend is
paid. An amount paid or credited as paid on a share in advance of a call is to be ignored. Unless
otherwise directed, dividends are paid by check or warrant sent through the post to each
shareholder at his registered address. Notwithstanding the foregoing, the payment to CDP of any
dividend payable to a shareholder who holds his ordinary shares through the CDP <FONT style="white-space: nowrap">book-entry</FONT>
settlement system shall, to the extent of payment made to CDP, discharge us from any liability to that shareholder in respect of that payment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Bonus and Rights Issue</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our directors may, with approval by our shareholders at a general meeting, issue bonus shares
for which no consideration is payable to our Company to the shareholders in proportion to their
shareholdings and/or capitalize any reserves or profits (including profit or monies carried and
standing to any reserve account) and distribute the same as bonus shares credited as <FONT style="white-space: nowrap">paid-up</FONT> to our
shareholders in proportion to their shareholdings. Our directors may also issue rights to take up
additional ordinary shares to shareholders in proportion to their shareholdings. Such rights are
subject to any conditions attached to such issue and the regulations of any stock exchange in which
we are listed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I><FONT style="white-space: nowrap">Take-Overs</FONT></I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The <FONT style="white-space: nowrap">Take-Over</FONT> Code regulates the acquisition of, amongst others, ordinary shares of public
companies and contains certain provisions that may delay, deter or prevent a future <FONT style="white-space: nowrap">take-over</FONT> or
change in control of our Company. Any person acquiring an interest, either on his or her own or
together with parties acting in concert with him in 30% or more of our voting shares or, if such
person holds, either on his own or together with parties acting in concert with him, between 30%
and 50% (both inclusive) of our voting shares, and acquires additional voting shares representing
more than 1% of our voting shares in any <FONT style="white-space: nowrap">six-month</FONT> period, may be required to extend a <FONT style="white-space: nowrap">take-over</FONT>
offer for the remaining voting shares in accordance with the provisions of the <FONT style="white-space: nowrap">Take-Over</FONT> Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Parties acting in concert&#148; comprise individuals or companies who, pursuant to an arrangement
or understanding (whether formal or informal), <FONT style="white-space: nowrap">co-operate</FONT>, through the acquisition by any of them
of shares in a company, to obtain or consolidate effective control of that company. Certain persons
are presumed (unless the presumption is rebutted) to be acting in concert with each other. They are
as follows: a company, its related companies and their associated companies and companies whose
associated companies include any of these companies; a company and
</DIV>

<P align="center" style="font-size: 10pt">81
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">any of its directors (including their close relatives, related trusts and companies controlled by any of the directors, their close
relatives and related trusts); a company and any of its pension funds and employee share schemes; a
person and any investment company, unit trust or other fund whose investment such person manages on
a discretionary basis; a financial or other professional adviser and its client in respect of
shares held by the adviser and persons controlling, controlled by or under the same control as the
adviser and all the funds managed by the adviser on a discretionary basis, where the shareholdings
of the adviser and any of those funds in the client total 10% or more of the client&#146;s equity share
capital; directors of a company (including their close relatives, related trusts and companies
controlled by any of such directors, their close relatives and related trusts) that is subject to
an offer or where the directors have reason to believe a bona fide offer for the company may be
imminent; partners; and an individual and his close relatives, related trusts, any person who is
accustomed to act in accordance with his or her instructions and companies controlled by the
individual, his close relatives, his related trusts or any person who is accustomed to act in
accordance with his instructions.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to certain exceptions, a <FONT style="white-space: nowrap">take-over</FONT> offer must be in cash or be accompanied by a cash
alternative at not less than the highest price paid by the offeror or parties acting in concert
with the offeror within the preceding six months.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the <FONT style="white-space: nowrap">Take-Over</FONT> Code, where effective control of a company is acquired or consolidated by
a person, or persons acting in concert, a general offer to all other shareholders is normally
required. An offeror must treat all shareholders of the same class in an offeree company equally. A
fundamental requirement is that shareholders in the company subject to the <FONT style="white-space: nowrap">take-over</FONT> offer must be
given sufficient information, advice and time to consider and decide on the offer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Liquidation or Other Return of Capital</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If our Company liquidates or in the event of any other return of capital, holders of ordinary
shares will be entitled to participate in any distribution of surplus assets in proportion to their
shareholdings, subject to any special rights attaching to any other class of shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Indemnity</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As permitted by Singapore law, our Articles of Association provide that, subject to the
Companies Act, our directors and officers shall be entitled to be indemnified by our Company
against any liability incurred in defending any proceedings, whether civil or criminal, which
relate to anything done or omitted or alleged to have been done or omitted by them as officers or
employees of our Company and in which judgment is given in their favor or in which they are
acquitted or in connection with any application under any statute for relief from liability in
respect thereof in which relief is granted by the court. We may not indemnify our directors and
officers against any liability which by law would otherwise attach to them in respect of any
negligence, default, breach of duty or breach of trust of which they may be guilty in relation to
our Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Limitations on Rights to Hold or Vote Shares</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as described herein, there are no limitations imposed by Singapore law or by our
Articles of Association on the rights of non-resident shareholders to hold or exercise voting
rights attached to our ordinary shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Substantial Shareholdings</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Companies Act and the Securities and Futures Act, Chapter&nbsp;289 of Singapore require the
substantial shareholders of our Company to give notice to our Company and the <FONT style="white-space: nowrap">SGX-ST</FONT>, including
particulars of their interest and the circumstances by reason of which they have such interest,
within two business days of their becoming substantial shareholders of our Company and of any
change in the percentage level of their interest.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Companies Act, a person has a substantial shareholding in our Company if he has an
interest (or interests) in one or more voting shares in our Company and the total votes attached to
that share, or those shares, are not less than 5% of the total votes attached to all the voting
shares in our Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Percentage level&#148; in relation to a substantial shareholder, means the percentage figure
ascertained by expressing the total votes attached to our voting shares in which the substantial
shareholder has an interest or interests immediately before or (as the case may be) immediately
after the relevant time as a percentage of the total votes attached to all the voting shares in our
Company, and, if it is not a whole number, rounding that figure down to the next whole number.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Minority Rights</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The rights of minority shareholders of Singapore-incorporated companies are protected under
Section&nbsp;216 of the Companies Act, which gives the Singapore courts a general power to make any
order, upon application by any shareholder of the company, as they think fit to remedy situations
where: (1)&nbsp;the affairs of the company are being conducted or the powers of the board of directors
are being exercised in a manner oppressive to, or in disregard of the interests of, one or more of
the shareholders; or (2)&nbsp;the company takes an action, or threatens to take an action, or the
shareholders pass a resolution, or proposes to pass a resolution, which unfairly discriminates
against, or is otherwise prejudicial to, one or more of the shareholders, including the applicant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Singapore courts have wide discretion as to the relief they may grant and such relief is not
limited to the relief listed in the Companies Act. However, Singapore courts may direct or prohibit
any act or cancel or vary any transaction or resolution, regulate the conduct of our Company&#146;s
affairs in the future, and authorize civil proceedings to be brought in the name of, or on behalf
of, our Company by a person or persons and on such terms as the courts may direct. The Singapore
courts may also direct that our Company or some of our shareholders purchase the shares of a
minority shareholder and, in the case of a purchase of shares by us, a corresponding reduction of
our share capital, and direct that our Memorandum or Articles of Association be amended or that our
Company be wound up.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Material Contracts</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We lease the land on which our Singapore facility is situated under a <FONT style="white-space: nowrap">long-term</FONT> operating
lease from the Housing and Development Board, a statutory board of the Government of Singapore,
pursuant to a lease agreement dated November&nbsp;18, 1996. The lease is for a <FONT style="white-space: nowrap">30-year</FONT> period commencing
March&nbsp;1, 1996, and is renewable for a further 30&nbsp;years subject to the fulfillment of certain
conditions. The rent is $43,073 (S$70,209) per month, after deducting a rebate offered by the
landlord, subject to revision to market rate in March of each year, with the increase capped at 4%
per annum. In August&nbsp;2004, the rate of rental increase was changed from a cap of 4% per annum to a
cap of the lower of 5.5% per annum of the preceding annual rental rate or to the prevailing rental
rate posted by the Housing and Development Board. The new rates became effective upon the
landlord&#146;s withdrawal of the rental rebate in March&nbsp;2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January&nbsp;2002, we established a $306.7&nbsp;million (S$500.0&nbsp;million) MTN Program. Under the MTN
Program, we may, from time to time, issue notes in series or tranches in Singapore dollars or any
other currencies as may be agreed upon between us and the dealers of the MTN Program. Each series
of notes may be issued in various amounts and terms, and may bear fixed or floating rates of
interest. The notes constitute unsecured obligations. The MTN Program limits our ability to pay
dividends while the interest on the notes is unpaid, to create security interests to secure our
indebtedness and to undertake any form of reconstruction, amalgamation, merger or consolidation
with another company if such arrangement would affect our ability to make payments on the notes,
among other things. We intend to use any proceeds from the MTN Program for our general corporate
purposes including capital expenditure, working capital and investments. We have not issued any
notes under the MTN Program. Our ability to issue notes under the MTN Program will depend on market
and other conditions (including our financial condition) prevailing at the time we intend to issue
notes. As a result, we may not be able to issue notes under the MTN Program.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March&nbsp;2002, we issued $200.0&nbsp;million of senior unsecured and unsubordinated convertible
notes due March&nbsp;18, 2007. The convertible notes bear interest at the rate of 1.75% per annum and
have a yield to maturity of 4.91%. At the maturity date, we will pay to the note holders 117.665%
of the principal amount. The notes can be converted into our ordinary shares or, subject to certain
limitations, ADSs, each of which currently represents ten ordinary shares, at a conversion price of
S$3.408 per ordinary share (at a fixed exchange rate of US$1.00 = S$1.8215). The conversion price
may be subject to adjustments for certain events. We may elect to satisfy our obligations to
deliver ordinary shares or ADSs through delivery of cash in accordance with the terms of the notes.
We may redeem all or a portion of the convertible notes at any time on or after March&nbsp;18, 2004 at a
price to yield of 4.91% per year to the redemption date if our shares or ADSs trade at or above
125% of the conversion price for a period of 20 trading days in any 30 consecutive trading day
period. On March&nbsp;18, 2005, we redeemed $125.9&nbsp;million of the notes at a price equal to 110.081% of
the principal amount of the notes being redeemed, plus any accrued and unpaid interest accrued to
the date of redemption. We also repurchased $26.1&nbsp;million of the notes during 2005. We paid an
aggregate consideration of $167.3&nbsp;million for such redemptions and repurchases in 2005. In
addition, upon the occurrence of certain repayment events, including a change in control, on or
prior to March&nbsp;18, 2007, each note holder may require us to repurchase all or a portion of such
holder&#146;s notes at a price to yield of 4.91% per year to the redemption date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have licensed patent rights from Freescale Semiconductor, Inc. to use technology in
manufacturing BGA packages under an agreement (which was initially
entered into with Motorola, Inc. in October 1996, as amended in April
2003, and which Motorola, Inc. assigned to Freescale Semiconductor, Inc. in June&nbsp;2004). The agreement
expires on December&nbsp;31, 2010. Under this agreement, we are required to pay Freescale Semiconductor,
Inc. a royalty based upon a
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">percentage of net revenues. We cannot assure you that we will be able
to renew this agreement when it expires on terms that are favorable to us or at all.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;20, 2003, we executed a Strategic Assistance Loan Agreement with Simmtech, pursuant to
which we granted an <FONT style="white-space: nowrap">interest-free</FONT> loan of $5&nbsp;million to Simmtech and Simmtech undertook to supply
such quantities of materials, substrates and other supplies to enable us to produce a specified
number of PBGA and stPBGA packages up to mid 2007. The loan is repayable in installments of
$450,000, with the first installment of the repayment amount due on June&nbsp;23, 2004 and thereafter on
the first day of each subsequent three month period, except that the last repayment amount is due
no later than July&nbsp;1, 2007. In order to secure Simmtech&#146;s obligations under the Strategic
Assistance Loan Agreement to us, Simmtech deposited and pledged 0.7&nbsp;million shares of common stock
of Simmtech under a Pledge Agreement dated June&nbsp;20, 2003 as well as transferred to us, all its
rights and interests in certain movable property to be released and <FONT style="white-space: nowrap">re-transferred</FONT> upon the
repayment of the loan pursuant to a Yangdo Tambo Agreement dated June&nbsp;20, 2003. On December&nbsp;26,
2003, we signed a Base Capacity and Continuing Support Agreement with Simmtech and a Loan Agreement
pursuant to which we granted an <FONT style="white-space: nowrap">interest-free</FONT> loan of $15&nbsp;million to Simmtech. Under the Base
Capacity and Continuing Support Agreement which took effect from January&nbsp;1, 2004, Simmtech further
committed and undertook to supply certain quantities of substrates and other supplies to enable us
to produce certain specified quantities of PBGA and stPBGA packages. In connection with this, we
executed a Strategic Assistance Loan Agreement under which we granted a loan of $15&nbsp;million to
Simmtech. The loan is repayable in installments of $882,353, with the first installment paid on
January&nbsp;2, 2005 and subsequent installments payable on the first day of each subsequent three-month
period, provided that the last installment shall be due no later than January&nbsp;2, 2009. Under the
Loan Agreement, in the event that Simmtech spins off its substrate manufacturing operations and
forms a new company to run such operations, we are entitled to make an equity investment of up to
30% in the new company. Further, for as long as the loan is outstanding from Simmtech, we have the
right to nominate for election one <FONT style="white-space: nowrap">non-standing</FONT> member to the board of directors of Simmtech. In
order to secure Simmtech&#146;s obligations under the Strategic Assistance Loan Agreement to us,
Simmtech deposited and pledged 2.4&nbsp;million shares of common stock of Simmtech under a Share Pledge
Agreement dated December&nbsp;26, 2003. Simmtech also transferred to us, pursuant to a Yangdo Tambo
Agreement dated December&nbsp;26, 2003, all its rights and interests in the equipment to be purchased
using the loan sums. These rights and interests will be released and <FONT style="white-space: nowrap">re-transferred</FONT> upon repayment
of the loan. In addition, we were granted a fourth priority maximum amount factory mortgage over
certain property owned by Simmtech. At Simmtech&#146;s request, we discharged the pledge of 0.7&nbsp;million
shares on January&nbsp;27, 2005 in consideration of the value of the 2.4&nbsp;million shares pledged to us
under the December&nbsp;26, 2003 Share Pledge Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In November&nbsp;2003, we issued $115.0&nbsp;million of senior unsecured and unsubordinated convertible
notes due November&nbsp;7, 2008. The convertible notes have a yield to maturity of 4.25%. At the
maturity date, we will pay to the note holders 123.4% of the principal amount, comprising principal
and redemption interest. The notes can be converted into our ordinary shares, or subject to certain
limitations, ADSs, each of which currently represents ten ordinary shares, at an initial conversion
price of $3.05 per ordinary share (equivalent to an initial number of 570.5902 ordinary shares per
$1,000 principal amount of convertible notes, based on a fixed exchange rate of US$1.00 =
S$1.7403). The conversion price may be subject to adjustments for certain events. We may elect to
satisfy our obligations to deliver ordinary shares or ADSs through delivery of cash in accordance
with the terms of the notes. We may redeem all or a portion of the convertible notes at any time on
or after November&nbsp;7, 2006 at a price to yield of 4.25% per annum to the redemption date if our
shares or ADSs trade at or above 130% of the conversion price for a period of 20 trading days in
any 30 consecutive trading day period. The note holders may require us to repurchase all or a
portion of their notes on November&nbsp;7, 2007 at a price equal to 118.32% of the principal amount of
the notes being redeemed, plus any accrued and unpaid interest accrued to the date of redemption.
In addition, upon the occurrence of certain repayment events, including a change in control, on or
prior to November&nbsp;7, 2008, each note holder may require us to repurchase all or a portion of such
holder&#146;s notes at a price to yield of 4.25% per year to the redemption date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In May and June&nbsp;2003, ChipPAC issued $150.0&nbsp;million of 2.5% convertible subordinated notes due
2008. These convertible notes are ChipPAC&#146;s unsecured and subordinated obligations. These
convertible notes will mature on June&nbsp;1, 2008, with interest at the rate of 2.5% per annum payable
<FONT style="white-space: nowrap">semi-annually</FONT> on June 1 and December 1 of each year. On the maturity date of these convertible
notes, ChipPAC will pay to the note holders of these convertible notes 100% of the principal
amount. These convertible notes were originally convertible into ChipPAC Class&nbsp;A common stock.
However, as a condition precedent to the merger, we, ChipPAC and the trustee for these convertible
notes entered into a supplemental indenture to modify the conversion rights of these convertible
notes such that these convertible notes would be convertible into our ADSs. Pursuant to the
supplemental indenture, these convertible notes can be converted into our ADSs at a conversion
price of $9.267 per ADS. The conversion price may be subject to adjustments for certain events.
These convertible notes are not redeemable at the option of ChipPAC. Upon the occurrence of
specified change in control events, each holder of these notes may require ChipPAC to repurchase
all or a portion of such holder&#146;s notes at a purchase price equal to 100% of the principal amount
thereof on the date of purchase plus accrued and unpaid interest, if any. On October&nbsp;11, 2004, we,
ChipPAC and the trustee for these convertible notes entered into a second supplemental indenture to
provide for an unconditional guarantee of these convertible notes on a subordinated basis by STATS
ChipPAC (but not by any of its subsidiaries). On October&nbsp;18, 2004, ChipPAC commenced a consent
solicitation from holders of these convertible notes to amend the indenture
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">governing these convertible notes to replace ChipPAC&#146;s obligation to file with the SEC annual reports and such
other information, documents and reports specified in Sections&nbsp;13 and 15(d) of the Exchange Act
with an obligation for us to file all such reports with the SEC as are applicable to a foreign
private issuer. The consent solicitation expired on November&nbsp;1, 2004. ChipPAC received valid
deliveries of consents from holders of approximately $130.5&nbsp;million aggregate principal amount, or
87%, of these convertible notes outstanding. Accordingly, ChipPAC obtained the requisite consents
authorizing the adoption of the proposed amendment to the indenture. The consents were accepted and
the amendments to the indenture became effective on November&nbsp;2, 2004. Payment of the consent fee of
$326,250 was made on November&nbsp;4, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March 2004, our subsidiary, Winstek entered into a Loan Agreement with a syndicate of lenders, with Mega Bank as the agent bank, for the sum of $54.6&nbsp;million (NT$1.8&nbsp;Billion). As of December&nbsp;31, 2006, Winstek has drawn down $50.3&nbsp;million (NT$1.6&nbsp;billion) under the loan, which is repayable in eight equal installments commencing February&nbsp;27, 2006
and ending on August&nbsp;27, 2009. The interest rate on the loan is 3.5% per annum and interest on the loan is payable on a monthly basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In November&nbsp;2004, we issued $215.0&nbsp;million of 6.75% senior notes due 2011. These notes are our
unsecured senior obligations. These notes are guaranteed, on an unsecured senior basis, by all of
our existing <FONT style="white-space: nowrap">wholly-owned</FONT> subsidiaries (except STATS ChipPAC Test Services (Shanghai) Co., Ltd.,
STATS ChipPAC Shanghai Co., Ltd. and STATS ChipPAC Semiconductor Shanghai Co., Ltd.) and our future
restricted subsidiaries (except where prohibited by local law). These notes will mature on November&nbsp;15, 2011, with interest at the rate of 6.75% per annum payable <FONT style="white-space: nowrap">semi-annually</FONT> on May&nbsp;15 and November&nbsp;15 of each year, commencing May&nbsp;15, 2005. Prior to November&nbsp;15, 2008,
we may redeem all or part of these notes at any time by paying a <FONT style="white-space: nowrap">&#147;make-whole&#148;</FONT> premium plus accrued and unpaid interest. We may
redeem all, but not less than all, of these notes at any time in the event of certain changes
affecting withholding taxes at 100% of their principal amount plus accrued and unpaid interest. On
or after November&nbsp;15, 2008, we may redeem all or a part of these notes at any time at the
redemption prices specified under the terms and conditions of these notes plus accrued and unpaid
interest. In addition, prior to November&nbsp;15, 2007, we may redeem up to 35% of these notes with the
net proceeds of certain equity offerings. Upon a change of control, we will be required to offer to
purchase these notes at 101% of their principal amount plus accrued and unpaid interest.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In July&nbsp;2005, we issued $150,000 of 7.50% senior notes due 2010. These notes are our unsecured
senior obligations. The senior notes are guaranteed on an unsecured senior basis, by all of our
existing <FONT style="white-space: nowrap">wholly-owned</FONT> subsidiaries (except STATS ChipPAC Test Services (Shanghai) Co., Ltd., STATS
ChipPAC Shanghai Co., Ltd., STATS ChipPAC Semiconductor Shanghai Co., Ltd. and STATS ChipPAC Korea
Ltd.) and our future restricted subsidiaries (except where prohibited by local law). These notes
will mature on July&nbsp;19, 2010, with interest at the rate of 7.5% per annum payable <FONT style="white-space: nowrap">semi-annually</FONT> on
January&nbsp;19 and July&nbsp;19 of each year, commencing January&nbsp;19, 2006. Prior to July&nbsp;19, 2010, we may
redeem all or part of these notes at any time by paying a <FONT style="white-space: nowrap">&#147;make-whole&#148;</FONT> premium plus accrued and
unpaid interest. We may redeem all, but not less than all, of these notes at any time in the event
of certain changes affecting withholding taxes at 100% of their principal amount plus accrued and
unpaid interest. In addition, prior to July&nbsp;19, 2008, we may redeem up to 35% of these notes with
the net proceeds of certain equity offerings. Upon a change of control, we will be required to
offer to purchase these notes at 101% of their principal amount plus accrued and unpaid interest.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
May 2006, we entered in a three-year term loan agreement with Hana Bank, Korea for the sum of $25.0
million. The loan drawn down under this term loan agreement bears a floating rate of interest determined by reference to LIBOR and will be payable by June 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June&nbsp;2006, we entered into a strategic joint venture with CR Logic for the assembly and
test of select products in Wuxi, China. Under the agreement, CR Logic&#146;s indirect <FONT style="white-space: nowrap">wholly-owned</FONT>
subsidiary, ANST, has agreed to purchase more than 1,000 sets of key assembly and test equipment
from us for US$35&nbsp;million, to be settled in cash installments over a four year period until 2010.
We will continue to provide sales and technical support to our existing customers on specific low
lead count packages until December&nbsp;31, 2009 with customer purchase orders being placed directly
with ANST. ANST, in return, has agreed to pay us a commission on the aggregate amount of revenues
generated from such orders on a quarterly basis in 2007, 2008 and 2009. In connection with this
joint venture, we acquired a 25% ownership stake in ANST for a cash consideration of US$10&nbsp;million
with CR Logic owning a 75% interest.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In August&nbsp;2006, we entered into a facility agreement with <FONT style="white-space: nowrap">Oversea-Chinese</FONT> Banking Corporation
Limited, as the arranger and agent, and six lenders for a syndicated <FONT style="white-space: nowrap">three-year</FONT> revolving line of
credit of $125.0&nbsp;million. The purpose of the line of credit is to fund working capital requirements
and for general corporate purposes. Any loan drawn down under this
line of credit will bear a floating rate of interest determined by reference to LIBOR.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In August 2006, our subsidiary Winstek entered into a loan agreement with a syndicate of lenders, with Taishin Bank as the agent bank,
for the sum of $110.5&nbsp;million (NT$3.6&nbsp;Billion). Any loan drawn down under this term loan agreement will bear a floating rate of interest determined by reference to 90&nbsp;days commercial paper interest rate and will be payable six years from the first draw down.
</DIV>

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</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. Exchange Controls</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Currently, there are no exchange control restrictions in Singapore.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Exchange Rates</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fluctuations in the exchange rate between the Singapore dollar and the U.S&nbsp;dollar will affect
the U.S.&nbsp;dollar equivalent of the Singapore dollar price of the ordinary shares on <FONT style="white-space: nowrap">SGX-ST</FONT> and, as a
result, may affect the market price of our convertible notes. Currently, there are no restrictions
in Singapore on the conversion of Singapore dollars into U.S.&nbsp;dollars and vice versa.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth, for the fiscal years indicated, information concerning the
exchange rates between Singapore dollars and U.S.&nbsp;dollars based on the average of the noon buying
rate in the City of New York on the last business day of each month during the period for cable
transfers in Singapore dollars as certified for customs purposes by the Federal Reserve Bank of New
York. The table illustrates how many Singapore dollars it would take to buy one U.S.&nbsp;dollar. These
transactions should not be construed as a representation that those Singapore dollar or U.S.&nbsp;dollar
amounts could have been, or could be, converted into U.S.&nbsp;dollars or Singapore dollars, as the case
may be, at any particular rate, the rate stated below, or at all.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15" style="border-bottom: 1px solid #000000"><B>Singapore Dollars per US$1.00 Noon Buying Rate</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Average(1)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Low</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Period End</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fiscal Year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2002</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.79</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.73</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.74</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.78</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.70</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.69</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.63</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.73</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.63</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.66</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.67</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.58</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.53</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.53</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Month</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">August&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.57</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.58</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.57</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">September&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.57</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.59</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.59</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">October&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.56</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.59</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.56</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">November&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.57</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.54</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">December&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.53</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.53</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">January&nbsp;2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.53</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.54</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:30px; text-indent:-15px">February&nbsp;2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.53</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.53</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>The average of the daily noon buying rates on the last business day of each month during the
year.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>E. Taxation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Singapore Taxation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The statements made herein regarding taxation are general in nature and based on certain
aspects of the tax laws of Singapore and administrative guidelines issued by the relevant
authorities in force as of the date hereof and are subject to any changes in such laws or
administrative guidelines, or in the interpretation of these laws or guidelines, occurring after
such date, which changes could be made on a retroactive basis. The following is a summary of the
material Singapore income tax, stamp duty and estate duty consequences of the purchase, ownership
and disposal of the ordinary shares or ADSs (collectively, referred to the Securities) to a holder
of the Securities who is not tax resident in Singapore. The statements below are not to be regarded
as advice on the Singapore tax position of any holder of the Securities or of any person acquiring,
selling or otherwise dealing with the Securities or on any tax implications arising from the
acquisition, sale or other dealings in respect of the Securities. The statements made herein do not
purport to be a comprehensive description of all of the tax considerations that may be relevant to
a decision to purchase, own or dispose of the Securities and does not purport to deal with the tax
consequences applicable to all categories of investors some of which (such as dealers in
securities) may be subject to special rules. Prospective purchasers and holders of the Securities
are advised to consult their own tax advisors as to the Singapore or other tax consequences of the
acquisition, ownership or disposition of the Securities, including, in particular, the effect of
any foreign, state or local tax laws to which they are subject.
</DIV>

<P align="center" style="font-size: 10pt">86
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Income Tax</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>General</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT style="white-space: nowrap">Non-resident</FONT> corporate taxpayers are subject to income tax on income that is accrued in or
derived from Singapore, and on foreign income received or deemed received in Singapore, subject to
certain exceptions. A <FONT style="white-space: nowrap">non-resident</FONT> individual is subject to income tax on the income accrued in or
derived from Singapore.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the provisions of any applicable double taxation treaty, <FONT style="white-space: nowrap">non-resident</FONT> taxpayers who
derive certain types of income from Singapore are subject to a withholding tax on that income at a
rate of 20% for the year of assessment 2007 and 18% for the year of assessment 2008, or 15% in the case of interest and rental of moveable equipment, or 10% in the
case of royalty for the use of or the right to use any movable property, subject to certain
exceptions. We are obligated by law to withhold tax at the source.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A corporation will be regarded as being tax resident in Singapore if the control and
management of its business is exercised in Singapore (for example, if the corporation&#146;s board of
directors meets and conducts the business of the corporation in Singapore). An individual is tax
resident in Singapore in a year of assessment if, in the preceding year, he was physically present
in Singapore or exercised an employment in Singapore (other than as a director of a company) for
183&nbsp;days or more, or if the individual resides in Singapore.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Dividend Distributions</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends received in respect of our ordinary shares or ADSs by either a resident or
<FONT style="white-space: nowrap">non-resident</FONT> of Singapore are not subject to Singapore withholding tax.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Dividends paid out of <FONT style="white-space: nowrap">Tax-Exempt</FONT> Income or Income subject to Concessionary Tax Rate</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we pay dividends on the ordinary shares or ADSs out of income received that is exempt from
tax or out of our income received that is subject to tax at a concessionary rate, if any, such
dividends will be free from Singapore tax in the hands of the holders of the ordinary shares and
ADSs. See &#147;Item&nbsp;5. Operating and Financial Review and Prospects &#151; Special Tax Status&#148; for a
discussion of our application for tax incentive.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Dividends paid out of Income subject to Normal Corporate Taxation</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Imputation System</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to January&nbsp;1, 2003, (and to a certain extent between January&nbsp;1, 2003 and December&nbsp;31,
2007), pursuant to the transitional rules for the new <FONT style="white-space: nowrap">one-tier</FONT> corporate tax system (see &#147;&#151; New
<FONT style="white-space: nowrap">One-Tier</FONT> Corporate Tax System&#148; below) Singapore was on the imputation system of corporate taxation.
Under this system, the tax we paid on income subject to tax at the prevailing corporate income tax
rates up to year of assessment 2003 (up to December 31, 2002) would be imputed to, and deemed to be paid on behalf of, our shareholders upon distribution of such
income as dividends. Our shareholders would have received dividends (Franked Dividends) net of such
tax and would be taxed on the gross amount of dividends (that is, on the amount of net dividends
plus an amount equal to the amount of gross dividends multiplied by the prevailing corporate tax
rate). In this way, the tax we paid would be available to our shareholders as a tax credit to
offset their tax liability on their overall income subject to Singapore income tax (including the
gross amount of dividends).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A <FONT style="white-space: nowrap">non-resident</FONT> shareholder is effectively taxed on Franked Dividends at the corporate income
tax rate. Thus, because tax deducted from the dividend and paid by us at the corporate income tax
rate is in effect imputed to, and deemed paid on behalf of, our shareholders (as discussed in the
preceding paragraph), no further Singapore income tax will be imposed on net dividends received by
a <FONT style="white-space: nowrap">non-resident</FONT> holder of ordinary shares or ADSs. Further, the <FONT style="white-space: nowrap">non-resident</FONT> shareholder who does
not have a permanent establishment in Singapore and deductible expenses attributed to such dividend
income would normally not receive any tax refund from the Inland Revenue Authority of Singapore.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>New <FONT style="white-space: nowrap">One-tier</FONT> Corporate Tax System</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A new <FONT style="white-space: nowrap">one-tier</FONT> corporate tax system became effective from January&nbsp;1, 2003 (subject to certain
transitional rules). Under this new system, the tax on corporate profits is final and dividends
paid by a Singapore resident company will be tax exempt in the hands of the shareholder, regardless
of whether the shareholder is a company or an individual and whether or not the shareholder is a
Singapore tax resident. Accordingly,
</DIV>

<P align="center" style="font-size: 10pt">87
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">under the <FONT style="white-space: nowrap">one-tier</FONT> corporate tax system, no further Singapore income tax will be imposed on
the net dividends received by a non-resident holder of the ordinary shares or ADSs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;However, to enable companies to make use of their unutilized dividend franking credits as at
December&nbsp;31, 2002, there will be a <FONT style="white-space: nowrap">five-year</FONT> transition period from January&nbsp;1, 2003 to December&nbsp;31,
2007, during which a company may remain on the imputation system for the purposes of paying Franked
Dividends out of its unutilized dividend franking credits as at December&nbsp;31, 2002. Accordingly, as
long as we remain on the imputation system, shareholders may continue to receive dividends with
credits attached as described above under &#147;Imputation System&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the transitional period from January&nbsp;1, 2003 up to December&nbsp;31, 2007, when the imputation
system <FONT style="white-space: nowrap">co-exists</FONT> with the <FONT style="white-space: nowrap">one-tier</FONT> corporate tax system, if we have not moved to the <FONT style="white-space: nowrap">one-tier</FONT>
system, tax vouchers issued by us will distinguish between franked dividends and normal tax exempt
dividends not being exempt dividends under the <FONT style="white-space: nowrap">one-tier</FONT> system, such as dividends paid out of tax
exempt income, approved deduction or further deduction of expenses or certain foreign income for
which foreign tax credit was allowed. If we have fully utilized our dividend franking credits (that
is, we are required to move to the <FONT style="white-space: nowrap">one-tier</FONT> system) or if we elect to move to the <FONT style="white-space: nowrap">one-tier</FONT> system
at an earlier date, tax vouchers issued by us will distinguish between normal tax exempt dividends
and exempt dividends under the <FONT style="white-space: nowrap">one-tier</FONT> system. We do not presently intend to migrate to the new
<FONT style="white-space: nowrap">one-tier</FONT> corporate tax system until our dividend franking credits as at December&nbsp;31, 2002 are fully
utilized or until the transition period comes to an end on December&nbsp;31, 2007, whichever is earlier.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No comprehensive tax treaty currently exists between Singapore and the United States.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Tax on Capital Gains</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Singapore does not impose tax on capital gains. However, there are currently no specific laws
or regulations which address the characterization of capital gains; hence gains or profits may be
construed to be of an income nature and subject to tax, especially if they arise from activities
which the Inland Revenue Authority of Singapore regards as the carrying on of a trade or business
in Singapore. Thus, any gains or profits from the disposal of the ordinary shares or ADSs are not
taxable in Singapore unless the seller is regarded as carrying on a trade or business (for example,
one of dealing in securities) in Singapore, in which case the disposal profits would be taxable as
such profits would be considered revenue in nature.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;30, 2005, the Inland Revenue Authority of Singapore issued a circular entitled
&#147;Income Tax Implications arising from the adoption of Singapore Financial Reporting Standards&nbsp;39 (FRS&nbsp;39) &#151; Financial instruments: Recognition
and Measurement&#148; (FRS&nbsp;39 Circular). Legislative amendments to give effect to the FRS&nbsp;39
Circular have recently been passed by the Singapore Parliament. The tax regime described in FRS&nbsp;39
Circular generally applies, subject to certain <FONT style="white-space: nowrap">&#147;opt-out&#148;</FONT> provisions, to taxpayers who are required
to comply with FRS&nbsp;39 for financial reporting
purposes. Holders of our ordinary shares or ADSs who are adopting FRS&nbsp;39 for Singapore income tax
purposes may be required to recognize gains or losses on the shares or ADSs, irrespective of
disposal, in accordance with FRS&nbsp;39. Holders of our ordinary shares or ADSs who may be subject to
the tax treatment under the FRS&nbsp;39 Circular should consult their own accounting and tax advisers
regarding the Singapore income tax consequences of their acquisition, holding or disposal of our
ordinary shares or ADSs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Stamp Duty</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There is no stamp duty payable in respect of the issuance and holding of ordinary shares or
ADSs. Where ordinary shares or ADSs evidenced in certificated form are acquired in Singapore, stamp
duty is payable on the instrument of transfer of the ordinary shares or ADSs at the rate of S$0.20
for every S$100 or part thereof of the consideration for, or market value of, the ordinary shares
or ADSs, whichever is higher. The stamp duty is borne by the purchaser unless there is an agreement
to the contrary. Where an instrument of transfer is executed outside Singapore or no instrument of
transfer is executed, no stamp duty is payable on the acquisition of ordinary shares or ADSs.
However, stamp duty may be payable if the instrument of transfer is executed outside Singapore and
received in Singapore.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Estate Duty</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the case of an individual who is not domiciled in Singapore, Singapore estate duty is
imposed on the value of immovable properties of the individual situated in Singapore. Estate duty
is not imposed on the movable properties in Singapore owned by a <FONT style="white-space: nowrap">non-domiciled</FONT> person. Thus, an
individual holder of the ordinary shares or ADSs who is not domiciled in Singapore at the time of
his death will not be subject to Singapore estate duty on the value of the ordinary shares or ADSs
held by the individual upon the individual&#146;s death.
</DIV>

<P align="center" style="font-size: 10pt">88
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prospective purchasers of ordinary shares or ADSs, who are individuals, whether or not
domiciled in Singapore, should consult their own tax advisers regarding the Singapore estate duty
consequences of their investment and ownership of such ordinary shares and/or ADSs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>United States Federal Income Taxation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a general summary of the material United States federal income tax
consequences of the ownership and disposition of ordinary shares (including ordinary shares
represented by ADSs). This summary applies only to U.S.&nbsp;Holders (as defined below) that have the
U.S.&nbsp;dollar as their functional currency and that hold ordinary shares or ADSs as &#147;capital assets&#148;.
This discussion does not address tax considerations applicable to a U.S.&nbsp;Holder&#146;s special
circumstances or to U.S.&nbsp;Holders that may be subject to special tax rules. You are a &#147;U.S.&nbsp;Holder&#148;
if you are a beneficial owner of ordinary shares or ADSs and you are, for U.S.&nbsp;federal income tax
purposes, (i)&nbsp;a citizen or resident of the United States; (ii)&nbsp;a corporation (or other entity
taxable as a corporation) organized under the laws of the United States, any State thereof or the
District of Columbia; (iii)&nbsp;an estate the income of which is subject to U.S.&nbsp;federal income
taxation regardless of its source; or (iv)&nbsp;a trust that (a)&nbsp;is subject to the primary supervision
of a court within the United States and the control of one or more U.S.&nbsp;persons for all substantial
decisions of the trust or (b)&nbsp;has a valid election in effect under applicable U.S.&nbsp;Treasury
Regulations to be treated as a U.S.&nbsp;person. The following discussion is based on the tax laws of
the United States as in effect on the date hereof and on U.S.&nbsp;Treasury Regulations in effect or, in
some cases, proposed, as of the date hereof, as well as judicial and administrative interpretations
thereof available on or before such date. All of the foregoing authorities are subject to change,
which change could apply retroactively and could affect the tax consequences described below. U.S.&nbsp;Holders are urged to consult their own tax advisors with respect to the United States federal
income tax consequences of the ownership and disposition of ordinary shares and ADSs in light of
their own particular circumstances, as well as the effect of any state, local or <FONT style="white-space: nowrap">non-United</FONT> States
tax laws.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Distributions on Ordinary Shares or ADSs</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the passive foreign investment company (PFIC)&nbsp;rules discussed below, distributions,
if any, made with respect to the ordinary shares or ADSs will be included in the income of a U.S.&nbsp;Holder as dividend income to the extent of our current and accumulated earnings and profits,
calculated pursuant to United States federal income tax principles. U.S.&nbsp;Holders must include such
distributions in income on the date they are actually or constructively received by the U.S.&nbsp;Holder, in the case of ordinary shares, or by the depositary, in the case of the ADSs. Subject to
certain limitations, for taxable years beginning before January&nbsp;1, 2011, dividends paid to
<FONT style="white-space: nowrap">non-corporate</FONT> U.S.&nbsp;Holders, including individuals, may be eligible for reduced rate of taxation if
we are a &#147;qualified foreign corporation&#148; for United States federal income tax purposes. A qualified
foreign corporation generally includes (i)&nbsp;a foreign corporation that is eligible for the benefits
of a comprehensive income tax treaty with the United States that includes an exchange of
information program, and (ii)&nbsp;a foreign corporation if its stock with respect to which a dividend
is paid or its ADSs with respect to such stock are readily tradable on an established securities
market within the United States, but does not include an otherwise qualified corporation that is a
PFIC. We believe that we will be a qualified foreign corporation for so long as we are not a PFIC
and the ordinary shares or the ADSs are considered to be readily tradable on an established
securities market within the United States. No assurance can be made that our status as a qualified
foreign corporation will not change.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A corporate U.S.&nbsp;Holder will not be entitled to a dividends received deduction generally
available upon the receipt of dividends distributed by United States corporations. Distributions in
excess of our current and accumulated earnings and profits will be treated as a return of capital
to the extent of the U.S.&nbsp;Holder&#146;s basis in the ordinary shares or ADSs and thereafter as capital
gain. Such capital gain will be <FONT style="white-space: nowrap">long-term</FONT> capital gain if the U.S.&nbsp;Holder&#146;s holding period of the
ordinary shares or ADSs is more than one year at the time of sale or exchange.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a taxable dividend is paid in a currency other than the U.S.&nbsp;dollar, the amount includible
in gross income will be the U.S.&nbsp;dollar value of such dividend, calculated by reference to the
exchange rate in effect on the date of actual or constructive receipt of the dividend by the U.S.&nbsp;Holder, in the case of ordinary shares, or by the depositary, in the case of ADS, regardless of
whether the payment is actually converted into U.S.&nbsp;dollars. U.S.&nbsp;Holders should consult their own
tax advisors concerning the possibility of foreign currency gain or loss if any such currency is
not converted into U.S.&nbsp;dollars on the date of receipt.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends received with respect to the ordinary shares or ADSs will be treated as income from
outside the United States and, for taxable years beginning before December&nbsp;31, 2006, generally will
be treated as &#147;passive income&#148; or &#147;financial services income&#148; for United States foreign
tax credit purposes. For taxable years beginning after December&nbsp;31, 2006, dividends will be treated
as &#147;passive category income&#148; or &#147;general category income&#148; for United States foreign tax credit
purposes. Under the Internal Revenue Code of 1986, as amended, certain portions of dividends paid
by a foreign corporation 50% or more of which is owned by United States persons may be treated as
income from sources within the United States provided that the foreign corporation has more than a
small amount of income from sources within the United States. The Singapore taxes paid under the
imputation system are paid by our Company and deemed to have been distributed to and paid by our
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">shareholders. A U.S.&nbsp;Holder should not be subject to United States federal income tax on such
amounts, and the holder will likely not be eligible for foreign tax credits for such amounts
against its United States federal income tax liability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Sale or Exchange of the Ordinary Shares or ADSs</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the PFIC rules discussed below, upon the sale or exchange of an ordinary share or
an ADS, a U.S.&nbsp;Holder will generally recognize capital gain or loss equal to the difference between
(i)&nbsp;the amount of cash proceeds and the fair market value of any property received on the sale or
exchange and (ii)&nbsp;such holder&#146;s adjusted tax basis in the ordinary share or ADS. Such capital gain
or loss will be <FONT style="white-space: nowrap">long-term</FONT> capital gain or loss if the U.S.&nbsp;Holder&#146;s holding period in the ordinary
share or ADS is more than one year at the time of sale or exchange. <FONT style="white-space: nowrap">Long-term</FONT> capital gains
recognized by certain <FONT style="white-space: nowrap">non-corporate</FONT> U.S.&nbsp;Holders, including individuals, will generally be subject
to U.S.&nbsp;federal income tax at preferential rates. The deductibility of capital losses is subject to
limitations. Such gain or loss generally will be treated as income or loss from within the United
States for United States foreign tax credit purposes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Passive Foreign Investment Company</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Special United States federal income tax rules apply to U.S.&nbsp;persons owning shares of a PFIC.
We do not believe that we are currently a PFIC, nor do we anticipate becoming a PFIC in the
foreseeable future. However, there can be no assurance that we will not become a PFIC at some
future time as a result of changes in our assets, income or business operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we were classified as a PFIC for any taxable year during which a U.S.&nbsp;Holder held ordinary
shares or ADSs, such U.S.&nbsp;Holder generally would be taxed at ordinary income tax rates on any gain
realized on the sale or exchange of the ordinary share or ADSs and on any &#147;excess distribution&#148;
received. Such U.S.&nbsp;Holder would also be subject to a special interest charge with respect to any
such gain or &#147;excess distribution&#148;. Rather than being subject to this tax regime, if available, a
U.S.&nbsp;Holder of ordinary shares or ADSs may make a &#147;qualified electing fund&#148; or <FONT style="white-space: nowrap">&#147;mark-to-market&#148;</FONT>
election. A &#147;qualified electing fund&#148; election generally should be made for the first taxable year
in which a company is a PFIC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>United States Information Reporting and Backup Withholding</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividend payments with respect to ordinary shares or ADSs and proceeds from the sale, exchange
or redemption of ordinary shares or ADSs may be subject to information reporting to the Internal
Revenue Service and possible U.S. backup withholding at a current rate of 28%. Backup withholding
will not apply, however, to a U.S.&nbsp;Holder who furnishes a correct taxpayer identification number
and makes any other required certification or who is otherwise exempt from backup withholding. U.S.&nbsp;Holders
who are required to establish their exempt status generally must provide such certification
on Internal Revenue Service <FONT style="white-space: nowrap">Form&nbsp;W-9</FONT>. U.S.&nbsp;Holders should consult their tax advisors regarding the
application of the U.S. information reporting and backup withholding rules.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Backup withholding is not an additional tax. Amounts withheld as backup withholding may be
credited against a U.S.&nbsp;Holder&#146;s U.S.&nbsp;federal income tax liability, and such holder may obtain a
refund of any excess amounts withheld under the backup withholding rules by filing the appropriate
claim for refund with the Internal Revenue Service and furnishing any required information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>F. Dividends and Paying Agents</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>G. Statements by Experts</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>H. Documents on Display</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All documents relating to our Company which are referred to in this annual report are
available at our principal executive offices at 10&nbsp;Ang Mo Kio Street&nbsp;65, <FONT style="white-space: nowrap">#05-17/20</FONT> Techpoint,
Singapore 569059, Republic of Singapore and registered office at No.&nbsp;5, Yishun Street&nbsp;23, Singapore&nbsp;768442, Republic of Singapore.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>I. Subsidiary Information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>
<DIV align="left">
<A name="112"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 11.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are exposed to financial market risks, including changes in currency exchange rates and
interest rates. To mitigate the currency exchange risks, a substantial majority of our revenue,
material and equipment supplies are transacted in U.S.&nbsp;dollars. We may employ derivative
instruments such as forward foreign currency swaps, foreign currency contracts and options and
interest rate swaps to manage our foreign exchange and interest rate exposures. These instruments
are generally used to reduce or eliminate the financial risks associated with our assets and
liabilities and not for trading purposes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Investment and Interest Rates</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our exposure to market risk associated with changes in interest rates primarily relates to our
investment portfolio and debt obligations. We place our investments in time deposits and marketable
securities. We mitigate default risk by investing in marketable securities that are of at least an
&#147;A&#148; rating, as assigned by an internationally recognized credit rating organization, and major
Singapore banks and <FONT style="white-space: nowrap">government-linked</FONT> companies. We have no material cash flow exposure due to rate
changes for cash equivalents and <FONT style="white-space: nowrap">short-term</FONT> investments. The fair value of fixed rate debts will
vary as interest rates change. The fair value of convertible notes is also impacted by the market
price of our ordinary shares or ADSs. As of December&nbsp;31, 2006, our <FONT style="white-space: nowrap">short-term</FONT> and <FONT style="white-space: nowrap">long-term</FONT> debt
obligations for the $31.5&nbsp;million and $115.0&nbsp;million senior unsecured and unsubordinated
convertible notes due March&nbsp;18, 2007 and November&nbsp;7, 2008, respectively, the $150.0&nbsp;million
subordinated convertible notes due June&nbsp;1, 2008 and the $215.0&nbsp;million and $150.0&nbsp;million senior
notes due November&nbsp;15, 2011 and July&nbsp;19, 2010, respectively, bear fixed interest rate. The
convertible notes due March&nbsp;18, 2007 bear interest at a rate of 1.75% per annum and have a yield to
maturity of 4.91%. The convertible notes due November&nbsp;7, 2008 have a yield to maturity of 4.25%.
The subordinated convertible notes due 2008, and senior notes due 2011 and 2010 bear interest of
2.5%, 6.75% and 7.5% per annum, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Currency Exchange Rates</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A portion of our costs is denominated in various foreign currencies, like the Singapore
dollar, the Malaysian Ringgit, the South Korean Won, the Chinese Renminbi, the New Taiwan dollar
and the Japanese yen. As a result, changes in the exchange rates of these currencies or any other
applicable currencies to the U.S.&nbsp;dollar will affect our cost of goods sold and operating margins
and could result in exchange losses. We have entered into foreign currency contracts to mitigate
financial risks associated with payroll costs, materials costs and other costs denominated in
Singapore dollars, South Korean Won and Malaysia Ringgit to benefit from our expectations of future
exchange rate fluctuations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on our overall currency rate exposure, we have adopted a foreign currency hedging policy
for committed or forecasted currency exposures. As of December&nbsp;31, 2006, we had a series of
foreign currency forward contracts with total contract value of approximately $147.0&nbsp;million, to
hedge against fluctuation in Singapore dollars, South Korean Won and Malaysian Ringgit. We may
utilize foreign currency swaps as well as foreign exchange forward contracts and options. These
programs reduce, but do not always entirely eliminate the impact of currency exchange movements.
The goal of the hedging policy is to effectively manage risk associated with fluctuations in the
value of the foreign currency, thereby making financial results more stable and predictable.
However, we cannot assure you that any hedging policy we implement will be effective and we may
experience reduced operating margins if any such policies are unsuccessful.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have performed sensitivity analyses as of December&nbsp;31, 2006 and December&nbsp;25, 2005 by
measuring the change in fair values arising from a hypothetical 10% adverse movement in the
exchange rates for all the currencies relative to the U.S.&nbsp;dollar, with all other variables held
constant. The analyses cover our foreign currencies monetary denominated assets and liabilities.
The foreign currency exchange rates we used were based on our closing exchange rates as of December&nbsp;31,
2006 and December&nbsp;25, 2005. The sensitivity analyses indicated that a
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">hypothetical 10% adverse movement, after taking into account offsetting positions, would
result in a further foreign exchange loss of $3.9&nbsp;million and $1.4&nbsp;million as of December&nbsp;31, 2006
and December&nbsp;25, 2005, respectively
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Currency, maturity, interest rate and fair value information relating to our marketable
securities and, <FONT style="white-space: nowrap">short-term</FONT> and <FONT style="white-space: nowrap">long-term</FONT> debt are disclosed in Notes&nbsp;1(m), 4, 15, 17 and 27 to our
audited consolidated financial statements, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Commodity Price</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We purchase certain raw materials in the normal course of business, which are affected by
commodity prices. Therefore, we are exposed to some price volatility related to various market
conditions outside our control. However, we employ various purchasing and pricing contract
techniques in an effort to minimize volatility. Generally these techniques include setting in
advance the price for products to be delivered in the future. We do not generally make use of
financial instruments to hedge commodity prices, partly because of the contract pricing utilized.
While price volatility can occur, which would impact profit margins, there are generally
alternative suppliers available.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Limitations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fair value estimates are made at a specific point in time and are based on relevant market
information about the financial instrument. 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.
</DIV>
<DIV align="left">
<A name="113"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 12.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable
</DIV>
<DIV align="left">
<A name="114"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 13.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None
</DIV>
<DIV align="left">
<A name="115"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 14.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See &#147;Item&nbsp;10. Additional Information&#148; for a description of the rights of securities holders,
which remain unchanged.
</DIV>
<DIV align="left">
<A name="116"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 15.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>CONTROLS AND PROCEDURES</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Evaluation of Disclosure Controls and Procedures</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As required by <FONT style="white-space: nowrap">Rules&nbsp;13a-15</FONT> and <FONT style="white-space: nowrap">15d-15</FONT> under the Exchange Act, management has evaluated, with
the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of
our disclosure controls and procedures as of the end of the period covered by this report.
Disclosure controls and procedures refer to controls and other procedures designed to ensure that
information required to be disclosed in the reports we file or submit under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified in the rules and
forms of the SEC. Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed by us in our reports that
we file or submit under the Exchange Act is accumulated and communicated to management, including
our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions
regarding our required disclosure.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on the foregoing, our Chief Executive Officer and Chief Financial Officer have concluded
that, as of December&nbsp;31, 2006, the end of the period covered by this report, our disclosure
controls and procedures were effective.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Management&#146;s Annual Report on Internal Control over Financial Reporting</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management is responsible for establishing and maintaining adequate internal control over
financial reporting as such term is defined in Rule 13a-15(f) under the Exchange Act.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Internal control over financial reporting refers to a process designed by, or under the
supervision of, our Chief Executive Officer and Chief Financial Officer and effected by our Board
of Directors, management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles and includes those policies
and procedures that:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of
our assets;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that
our receipts and expenditures are being made only in accordance
with authorizations of our management and members of our board of
directors; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of our
assets that could have a material effect on our financial
statements.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Internal control over financial reporting cannot provide absolute assurance of achieving
financial reporting objectives because of its inherent limitations. Internal control over financial
reporting is a process that involves human diligence and compliance and is subject to lapses in
judgment and breakdowns resulting from human failures. Internal control over financial reporting
also can be circumvented by collusion or improper override. Because of such limitations, there is a
risk that material misstatements may not be prevented or detected on a timely basis by internal
control over financial reporting. However, these inherent limitations are known features of the
financial reporting process, and it is possible to design into the process safeguards to reduce,
though not eliminate, this risk.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management evaluated the effectiveness of our internal control over financial reporting as of
December&nbsp;31, 2006 using the framework set forth in the report of the Treadway Commission&#146;s
Committee of Sponsoring Organizations (COSO), &#147;Internal Control &#151; Integrated Framework&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on the foregoing, management has concluded that our internal control over financial
reporting was effective as of December&nbsp;31, 2006. Our independent registered public accounting firm,
PricewaterhouseCoopers, has issued an audit report on management&#146;s assessment of our internal
control over financial reporting, which is included herein.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Changes to Internal Controls</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management has evaluated, with the participation of our Chief Executive Officer and Chief
Financial Officer, whether any changes in our internal control over financial reporting that
occurred during our last fiscal year have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting. Based on the evaluation we
conducted, management has concluded that no such changes have occurred.
</DIV>
<DIV align="left">
<A name="117"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 16A.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>AUDIT COMMITTEE FINANCIAL EXPERT</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Board of Directors has determined that Mr.&nbsp;Steven H. Hamblin and Mr.&nbsp;R. Douglas Norby each
qualifies as an &#147;audit committee financial expert&#148; as defined in Item&nbsp;16A of <FONT style="white-space: nowrap">Form&nbsp;20-F</FONT>. Each of the
members of the Audit Committee is an &#147;independent director&#148; as defined in Rule&nbsp;4200(15) of the
Nasdaq Marketplace Rules.
</DIV>
<DIV align="left">
<A name="118"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 16B.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>CODE OF ETHICS</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Company has built a reputation of integrity and ethical business practices and gained
credibility and trust from our stockholders, customers, suppliers and employees over time. We have
adopted a code of business conduct and ethics that is designed to qualify as a &#147;code of ethics&#148;
within the meaning of Section&nbsp;406 of the <FONT style="white-space: nowrap">Sarbanes-Oxley</FONT> Act of 2002 and the rules promulgated
thereunder and is applicable to our employees, officers and <FONT style="white-space: nowrap">non-employee</FONT> directors, including our
chief executive officer, chief financial officer, principal accounting officer or controller, and
persons performing similar function. We have posted our code of ethics on our internal company
website, conducted <FONT style="white-space: nowrap">company-wide</FONT> awareness workshops and have included it within our new employee
orientation programs. We will provide it free of charge to the general public upon request.
</DIV>

<P align="center" style="font-size: 10pt">93
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="119"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 16C.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>PRINCIPAL ACCOUNTANT FEES AND SERVICES</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PwC served as our independent registered public accounting firm from August&nbsp;2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows the fees we paid or accrued for the audit and other services
provided by PwC for 2005 and 2006.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>(In thousands)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Audit fees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">849</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,935</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="white-space: nowrap">Audit-related</FONT> fees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tax fees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">124</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">140</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">All other fees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,235</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,156</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Audit Fees. </I>This category consists of fees billed for the audit of financial statements and
internal control over financial reporting, quarterly review of financial statements and other audit
services, which are normally provided by the independent auditors in connection with statutory and
accounting matters that arose during, or as a result of, the audit or the review of interim
financial statements and include the group audit; statutory audits required by <FONT style="white-space: nowrap">non-U.S.</FONT>
jurisdictions; comfort letters and consents; attest services; and assistance with and review of
documents filed with the SEC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I><FONT style="white-space: nowrap">Audit-Related</FONT> Fees. </I>This category consists of fees billed for assurance and related services
that are reasonably related to the performance of the audit or review of our financial statements
or that are traditionally performed by the external auditor, and include internal control reviews
of new systems, program and projects; review of security controls and operational effectiveness of
systems; due diligence related to acquisitions; accounting assistance; audits, offering of
convertible notes and audits in connection with proposed or completed acquisitions; and employee
benefit plan audits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Tax Fees. </I>This category includes fees billed for tax compliance services, including the
preparation of original and amended tax returns and claims for refund; tax consultations, such as
assistance and representation in connection with tax audits and appeals, tax advice related to
mergers and acquisitions, transfer pricing, and requests for rulings or technical advice from
taxing authorities and tax planning services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>All Other Fees. </I>No fees were paid or billed by PwC with respect to any other services which
have not been described above in 2005 and 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Audit Committee <FONT style="white-space: nowrap">Pre-approval</FONT> Process</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Audit Committee reviews and <FONT style="white-space: nowrap">pre-approves</FONT> the scope and the cost of all audit and
permissible non-audit services performed by the independent auditors, other than those for <I>de
minimus </I>services which are approved by the Audit Committee prior to the completion of the audit.
All of the services provided by PwC during the last three fiscal years have been approved by the
Audit Committee.
</DIV>
<DIV align="left">
<A name="120"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 16D.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEE</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>
<DIV align="left">
<A name="121"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 16E.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Neither we, nor any affiliated purchaser, made any purchase of our equity securities for the
year ended December&nbsp;31, 2006.
</DIV>
<DIV align="left">
<A name="122"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 17.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>FINANCIAL STATEMENTS</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See Item&nbsp;18 for a list of the Financial Statements filed as part of this annual report.
</DIV>


<P align="center" style="font-size: 10pt">94
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="123"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 18.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>FINANCIAL STATEMENTS</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following financial statements are filed as part of this annual report, together with the
report of the independent registered public accounting firms:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Report of Independent Registered Public Accounting Firm
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated Balance Sheets as at December&nbsp;25, 2005 and December&nbsp;31, 2006
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated
Statements of Operations and Comprehensive Income (Loss) for 2004, 2005 and 2006
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated Statements of Shareholders&#146; Equity for 2004, 2005 and 2006
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated Statements of Cash Flows for 2004, 2005 and 2006
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes to the Consolidated Financial Statements
</DIV>
<DIV align="left">
<A name="124"></A>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>ITEM 19.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>EXHIBITS</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following exhibits are filed as part of this annual report:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1.1**
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Memorandum of Association of STATS ChipPAC Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1.2.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amended Articles of Association of STATS ChipPAC Ltd. &#151; incorporated by reference to Exhibit&nbsp;2 of Amendment
No.&nbsp;2 to the Registration Statement on <FONT style="white-space: nowrap">Form&nbsp;8-A</FONT> (File No.&nbsp;000-29103) of STATS ChipPAC Ltd., as filed with the Securities
and Exchange Commission on May&nbsp;9, 2006</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Specimen ordinary share certificate of STATS ChipPAC Ltd. issued on and after January&nbsp;30,
2006 in respect of transfers of shares issued before January&nbsp;30, 2006 &#151; incorporated by
reference to Exhibit&nbsp;3.1 of Amendment No.&nbsp;2 to the Registration Statement on <FONT style="white-space: nowrap">Form&nbsp;8-A</FONT> (File
<FONT style="white-space: nowrap">No.&nbsp;000-29103</FONT>) of STATS ChipPAC Ltd., as filed with the Securities and Exchange Commission on
May&nbsp;9, 2006</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2.1.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Specimen ordinary share certificate of STATS ChipPAC Ltd. issued on and after January&nbsp;30,
2006 in respect of new issuances of shares issued after January&nbsp;30, 2006 &#151; incorporated by
reference to Exhibit&nbsp;3.2 of Amendment No.&nbsp;2 to the Registration Statement on <FONT style="white-space: nowrap">Form&nbsp;8-A</FONT> (File
<FONT style="white-space: nowrap">No.&nbsp;000-29103</FONT>) of STATS ChipPAC Ltd., as filed with the Securities and Exchange Commission on
May&nbsp;9, 2006</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Deposit Agreement dated February&nbsp;8, 2000 among ST&nbsp;Assembly Test Services Ltd, Citibank, N.A.,
as depositary, and the holders from time to time of American Depositary Receipts (ADRs) issued thereunder (including the form
of ADR) &#151; incorporated by reference to Exhibit&nbsp;2.2 of <FONT style="white-space: nowrap">Form&nbsp;20-F</FONT> (File <FONT style="white-space: nowrap">No.&nbsp;333-93661</FONT>) of ST
Assembly Test Services Ltd filed with the Securities and Exchange Commission on March&nbsp;30, 2001</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Lease Agreement dated November&nbsp;18, 1996 by and between the Housing and Development Board and
ST&nbsp;Assembly Test Services Ltd &#151; incorporated by reference to Exhibit&nbsp;10.4 of Amendment No.&nbsp;1
to <FONT style="white-space: nowrap">Form&nbsp;F-1</FONT> (File <FONT style="white-space: nowrap">No.&nbsp;333-93661</FONT>) of ST Assembly Test Services Ltd filed with the Securities
and Exchange Commission on January&nbsp;3, 2000</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Program Agreement dated January&nbsp;10, 2002 by and between Citicorp Investment Bank (Singapore)
Limited and ST&nbsp;Assembly Test Services Ltd establishing a S$500,000,000 Multicurrency Medium
Term Note Program &#151; incorporated by reference to Exhibit&nbsp;4.6 of <FONT style="white-space: nowrap">Form&nbsp;20-F</FONT> (File No. <FONT style="white-space: nowrap">333-75080</FONT>)
of ST&nbsp;Assembly Test Services Ltd filed with the Securities and Exchange Commission
on February&nbsp;28, 2002</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.3
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Trust Deed dated January&nbsp;10, 2002 by and between British and Malayan Trustees Limited and ST&nbsp;Assembly Test Services Ltd establishing a S$500,000,000 Multicurrency Medium Term Note
Program&#151; incorporated by reference to Exhibit&nbsp;4.7 of <FONT style="white-space: nowrap">Form&nbsp;20-F</FONT> (File <FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>)
of ST&nbsp;Assembly Test Services Ltd filed with the Securities and Exchange Commission on February&nbsp;28,
2002</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.4
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Agency Agreement dated January&nbsp;10, 2002 by and between British and Malayan Trustees Limited,
Citicorp Investment Bank (Singapore) Limited and ST&nbsp;Assembly Test Services Ltd establishing a
S$500,000,000 Multicurrency Medium Term Note</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">95
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Program &#151; incorporated by reference to Exhibit
4.8 of <FONT style="white-space: nowrap">Form&nbsp;20-F</FONT> (File <FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>) of ST&nbsp;Assembly Test Services Ltd filed with the
Securities and Exchange Commission on February&nbsp;28, 2002</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.5
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Indenture dated March&nbsp;18, 2002 by and between ST&nbsp;Assembly Test Services Ltd and the Bank of
New York relating to the 1.75% Convertible Notes Due 2007 &#151; incorporated by reference to
Exhibit&nbsp;4.10 of <FONT style="white-space: nowrap">Form&nbsp;20-F</FONT> (File <FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>) of ST&nbsp;Assembly Test Services Ltd filed with the
Securities and Exchange Commission on March&nbsp;31, 2003</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.6
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US$168 Million Reg&nbsp;S Global Note issued by ST&nbsp;Assembly Test Services Ltd in relation to the
1.75% Convertible Notes Due 2007 &#151; incorporated by reference to Exhibit&nbsp;4.11 of <FONT style="white-space: nowrap">Form&nbsp;20-F</FONT>
(File <FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>) of ST&nbsp;Assembly Test Services Ltd filed with the Securities and Exchange
Commission on March&nbsp;31, 2003</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.7
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US$25 Million Reg S Global Note issued by ST&nbsp;Assembly Test Services Ltd in relation to the
1.75% Convertible Notes Due 2007 &#151; incorporated by reference to Exhibit&nbsp;4.12 of <FONT style="white-space: nowrap">Form&nbsp;20-F</FONT>
(File <FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>) of ST&nbsp;Assembly Test Services Ltd filed with the Securities and Exchange
Commission on March&nbsp;31, 2003</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.8
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US$7 Million Restricted Global Note issued by ST&nbsp;Assembly Test Services Ltd in relation to
the 1.75% Convertible Notes Due 2007 &#151; incorporated by reference to Exhibit&nbsp;4.13 of <FONT style="white-space: nowrap">Form&nbsp;20-F</FONT>
(File <FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>) of ST&nbsp;Assembly Test Services Ltd filed with the Securities and Exchange
Commission on March&nbsp;31, 2003</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.9
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">ChipPAC, Inc. Employee Retention and Severance Plan &#151; incorporated by reference to Exhibit&nbsp;10.41 to the annual report on <FONT style="white-space: nowrap">Form&nbsp;10-K</FONT> (File <FONT style="white-space: nowrap">No.&nbsp;000-31173</FONT>) of ChipPAC, Inc. for the fiscal
year ended December&nbsp;31, 2003, as filed with the Securities and Exchange Commission on March&nbsp;12, 2004</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.10&#035;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amendment Agreement dated April&nbsp;22, 2003 renewing the Immunity Agreement dated October&nbsp;18,
1996 by and between Motorola Inc. and ST&nbsp;Assembly Test Services Ltd &#151; incorporated by
reference to Exhibit&nbsp;4.12 of <FONT style="white-space: nowrap">Form&nbsp;20-F</FONT> (File <FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>) of ST&nbsp;Assembly
Test Services Ltd filed with the Securities and Exchange Commission on March&nbsp;19, 2004</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.11
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Agreement and Plan of Merger and Reorganization dated February&nbsp;10, 2004 by and between ST&nbsp;Assembly Test
Services Ltd, ChipPAC, Inc. and Camelot Merger, Inc. &#151; incorporated by
reference to Exhibit&nbsp;4.15 of <FONT style="white-space: nowrap">Form&nbsp;20-F</FONT> (File <FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>) of ST&nbsp;Assembly
Test Services Ltd filed with the Securities and Exchange Commission on March&nbsp;19, 2004</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.12
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Strategic Assistance Loan Agreement dated June&nbsp;20, 2003 by and between ST&nbsp;Assembly Test
Services Ltd and Simmtech Co. Ltd &#151; incorporated by reference to Exhibit&nbsp;4.16 of <FONT style="white-space: nowrap">Form&nbsp;20-F</FONT>
(File <FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>) of ST&nbsp;Assembly Test Services Ltd filed with the Securities and Exchange
Commission on March&nbsp;19, 2004</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.13
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Yangdo Tambo Agreement dated June&nbsp;20, 2003 by and between ST&nbsp;Assembly Test Services Ltd
and Simmtech Co. Ltd &#151; incorporated by reference to Exhibit&nbsp;4.17 of <FONT style="white-space: nowrap">Form&nbsp;20-F</FONT> (File <FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>) of ST&nbsp;Assembly
Test Services Ltd filed with the Securities and Exchange Commission on March&nbsp;19, 2004</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.14
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Pledge Agreement dated June&nbsp;20, 2003 by and between ST&nbsp;Assembly Test Services Ltd and
Simmtech Co. Ltd &#151; incorporated by reference to Exhibit&nbsp;4.18 of <FONT style="white-space: nowrap">Form&nbsp;20-F</FONT> (File <FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>) of ST&nbsp;Assembly
Test Services Ltd filed with the Securities and Exchange Commission
on March&nbsp;19, 2004</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.15
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Loan Agreement dated December&nbsp;26, 2003 by and between ST&nbsp;Assembly Test Services Ltd and
Simmtech Co. Ltd and <FONT style="white-space: nowrap">Se-Ho</FONT> Chun &#151; incorporated by reference to Exhibit&nbsp;4.19 of <FONT style="white-space: nowrap">Form&nbsp;20-F</FONT>
(File <FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>) of ST&nbsp;Assembly Test Services Ltd filed with the Securities and Exchange
Commission on March&nbsp;19, 2004</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.16
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Yangdo Tambo Agreement dated December&nbsp;26, 2003 by and between ST&nbsp;Assembly Test Services Ltd
and Simmtech Co. Ltd &#151; incorporated by reference to Exhibit&nbsp;4.20 of <FONT style="white-space: nowrap">Form&nbsp;20-F</FONT> (File <FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>) of ST&nbsp;Assembly Test
Services Ltd filed with the Securities and Exchange Commission
on March&nbsp;19, 2004</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.17
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Share Pledge Agreement dated December&nbsp;26, 2003 by and between ST&nbsp;Assembly Test Services Ltd
and <FONT style="white-space: nowrap">Mr.&nbsp;Se-Ho</FONT> Chun &#151; incorporated by reference to Exhibit&nbsp;4.21 of <FONT style="white-space: nowrap">Form&nbsp;20-F</FONT>
(File <FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>) of ST&nbsp;Assembly Test Services Ltd filed with the Securities and Exchange Commission
on March&nbsp;19, 2004</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">96
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.18
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Factory <FONT style="white-space: nowrap">Kun-Mortgage</FONT> Agreement dated December&nbsp;26, 2003 by and between ST&nbsp;Assembly Test
Services Ltd and Simmtech Co. Ltd &#151; incorporated by reference to Exhibit&nbsp;4.22 of <FONT style="white-space: nowrap">Form&nbsp;20-F</FONT>
(File <FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>) of ST&nbsp;Assembly Test Services Ltd filed with the Securities and Exchange
Commission on March&nbsp;19, 2004</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.19
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Base Capacity and Continuing Support Agreement dated December&nbsp;26, 2003 by and between ST&nbsp;Assembly
Test Services Ltd and Simmtech Co. Ltd &#151; incorporated by reference to Exhibit&nbsp;4.23
of <FONT style="white-space: nowrap">Form&nbsp;20-F</FONT> (File <FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>) of ST&nbsp;Assembly Test Services Ltd filed with the Securities
and Exchange Commission on March&nbsp;19, 2004</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.20
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Indenture dated November&nbsp;7, 2003 by and between ST&nbsp;Assembly Test Services Ltd and the Bank of
New York relating to the $115&nbsp;million zero-rated Convertible Notes Due 2008 &#151; incorporated by
reference to Exhibit&nbsp;4.24 of <FONT style="white-space: nowrap">Form&nbsp;20-F</FONT> (File <FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>) of ST&nbsp;Assembly Test Services Ltd
filed with the Securities and Exchange Commission on March&nbsp;19, 2004</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.21
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US$115 Million Reg&nbsp;S Global Note issued by ST&nbsp;Assembly Test Services Ltd under the Indenture
relating to the US$115&nbsp;million <FONT style="white-space: nowrap">zero-rated</FONT> Convertible Notes Due 2008 &#151; incorporated by
reference to Exhibit&nbsp;4.25 of <FONT style="white-space: nowrap">Form&nbsp;20-F</FONT> (File <FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>) of ST&nbsp;Assembly Test Services Ltd
filed with the Securities and Exchange Commission on March&nbsp;19, 2004</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.22
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Indenture dated as of May&nbsp;28, 2003 by and between ChipPAC, Inc. and U.S.&nbsp;Bank National
Association, as trustee relating to the 2.50% Convertible Subordinated Notes Due 2008 &#151;
incorporated by reference to Exhibit&nbsp;10.40 to the Quarterly Report on <FONT style="white-space: nowrap">Form&nbsp;10-Q</FONT> (File <FONT style="white-space: nowrap">No.
000-31173</FONT>) of ChipPAC, Inc. filed with the Securities and Exchange Commission on August&nbsp;8,
2003 for the three months ended June&nbsp;30, 2003</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.23
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Employment Agreement dated as of March&nbsp;17, 2004 among ST&nbsp;Assembly Test Services Ltd, ChipPAC,
Inc. and Michael G. Potter &#151; incorporated by reference to Exhibit&nbsp;4.8 of <FONT style="white-space: nowrap">Form&nbsp;F-4</FONT> (File <FONT style="white-space: nowrap">No.&nbsp;333-114232</FONT>) of STATS ChipPAC Ltd., as filed with the Securities and Exchange Commission on
April&nbsp;6, 2004</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.24
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">First Supplemental Indenture dated August&nbsp;4, 2004 to the Indenture dated as of May&nbsp;28, 2003
among ChipPAC Inc., ST&nbsp;Assembly Test Services Ltd and U.S.&nbsp;Bank National Association relating
to the 2.50% Convertible Subordinated Securities Due 2008 &#151; incorporated by reference to
Exhibit&nbsp;4.2 of <FONT style="white-space: nowrap">Form&nbsp;F-3</FONT> (File <FONT style="white-space: nowrap">No.&nbsp;333-119705</FONT>) of
STATS ChipPAC, Inc. filed with the Securities
and Exchange Commission on October&nbsp;13, 2004</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.25
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">STATS ChipPAC Ltd. Substitute Equity Incentive Plan &#151; incorporated by reference to Exhibit
4.4 to Post-Effective Amendment No.&nbsp;1 on <FONT style="white-space: nowrap">Form&nbsp;S-8</FONT> (File <FONT style="white-space: nowrap">No.&nbsp;333-114232</FONT>)
of STATS ChipPAC Ltd., as filed with the Securities and Exchange Commission on August&nbsp;25, 2004</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.26
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">STATS ChipPAC Ltd. Substitute Share Purchase and Option Plan &#151; incorporated by reference to
Exhibit&nbsp;4.5 to Post-Effective Amendment No.&nbsp;1 on <FONT style="white-space: nowrap">Form&nbsp;S-8</FONT> (File <FONT style="white-space: nowrap">No.&nbsp;333-114232</FONT>) of STATS
ChipPAC Ltd., as filed with the Securities and Exchange Commission on August&nbsp;25, 2004</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.27
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">STATS ChipPAC Ltd. Employee Share Purchase Plan 2004 &#151; incorporated by reference to Appendix&nbsp;1 to STATS ChipPAC
Ltd.&#146;s Proxy Statement which was filed as Exhibit&nbsp;99.1 on <FONT style="white-space: nowrap">Form&nbsp;6-K</FONT> (File
<FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>) of STATS ChipPAC Ltd., as filed with the Securities and Exchange Commission on
March&nbsp;30, 2006</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.28**
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">STATS ChipPAC Ltd. Share Option Plan</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.29
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">STATS ChipPAC Ltd. Restricted Share Plan &#151; incorporated by reference to Appendix&nbsp;2 to STATS
ChipPAC Ltd.&#146;s Proxy Statement which was filed as Exhibit&nbsp;99.1 on <FONT style="white-space: nowrap">Form&nbsp;6-K</FONT> (File <FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>) of STATS ChipPAC Ltd., as filed with the Securities and Exchange Commission on
March&nbsp;30, 2006</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.30**
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">STATS ChipPAC Ltd. Performance Share Plan</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.31
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Indenture dated November&nbsp;18, 2004 by and between STATS ChipPAC Ltd. and U.S.&nbsp;Bank National
Association relating to the 6.75% Senior Notes Due 2011 &#151; incorporated by reference to
Exhibit&nbsp;4.40 of <FONT style="white-space: nowrap">Form&nbsp;20-F</FONT> (File <FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>) of STATS ChipPAC Ltd., as filed with the
Securities and Exchange Commission on March&nbsp;18, 2005</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">97
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.32
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Subsidiary Guarantee Agreement dated November&nbsp;18, 2004 by and between STATS ChipPAC Ltd., the
Subsidiary Guarantors party thereto and U.S.&nbsp;Bank National Association relating to the 6.75%
Senior Notes Due 2011 &#151; incorporated by reference to Exhibit&nbsp;4.43 of <FONT style="white-space: nowrap">Form&nbsp;20-F</FONT> (File <FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>) of
STATS ChipPAC Ltd., as filed with the Securities and Exchange Commission on
March&nbsp;18, 2005</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.33
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Second Supplemental Indenture dated October&nbsp;7, 2004 to the Indenture dated as of November&nbsp;18,
2004 among ChipPAC International Company Limited, ChipPAC, Inc. and U.S.&nbsp;Bank National
Association relating to the 6.75% Senior Notes Due 2011&#151; incorporated by reference to Exhibit&nbsp;4.44 of <FONT style="white-space: nowrap">Form&nbsp;20-F</FONT>
(File <FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>) of STATS ChipPAC Ltd., as filed with the Securities and
Exchange Commission on March&nbsp;18, 2005</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.34
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Second Supplemental Indenture dated October&nbsp;11, 2004 to the Indenture dated as of May&nbsp;28,
2003 among ChipPAC Inc., STATS ChipPAC Ltd. and U.S.&nbsp;Bank National Association relating to the
2.50% Convertible Subordinated Notes Due 2008 &#151; incorporated by reference to Exhibit&nbsp;4.45 of
<FONT style="white-space: nowrap">Form&nbsp;20-F</FONT> (File <FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>) of STATS ChipPAC Ltd., as filed with the Securities and
Exchange Commission on March&nbsp;18, 2005</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.35
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Third Supplemental Indenture dated November&nbsp;2, 2004 to the Indenture dated as of May&nbsp;28, 2003
among ChipPAC Inc., STATS ChipPAC Ltd. and U.S.&nbsp;Bank National Association relating to the
2.50% Convertible Subordinated Notes Due 2008 &#151; incorporated by reference to Exhibit&nbsp;4.46 of
<FONT style="white-space: nowrap">Form&nbsp;20-F</FONT> (File <FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>) of STATS ChipPAC Ltd., as filed with the Securities and
Exchange Commission on March&nbsp;18, 2005</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.36
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Indenture dated as of July&nbsp;19, 2005 by and between STATS ChipPAC Ltd. and U.S.&nbsp;Bank National
Association relating to the 7.5% Senior Notes Due 2010 &#151; incorporated by reference to Exhibit&nbsp;4.1 of <FONT style="white-space: nowrap">Form&nbsp;6-K</FONT> (File <FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>) of STATS ChipPAC Ltd., as filed with the Securities and
Exchange Commission on August&nbsp;25, 2005</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.37
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Terms and Conditions of Appointment of Tan Lay Koon as President and Chief Executive Officer
of STATS ChipPAC Ltd. dated August&nbsp;5, 2004 by and between Tan Lay Koon and STATS ChipPAC Ltd.
&#151; incorporated by reference to Exhibit&nbsp;4.46 of <FONT style="white-space: nowrap">Form&nbsp;20-F</FONT> (File <FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>) of STATS
ChipPAC Ltd., as filed with the Securities and Exchange Commission on February&nbsp;28, 2006</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.38
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Subsidiary Guarantee Agreement dated as of July&nbsp;19, 2005 by and between STATS ChipPAC Ltd.,
the Subsidiary Guarantors party thereto and U.S.&nbsp;Bank National Association relating to the
7.5% Senior Notes Due 2010 &#151; incorporated by reference to Exhibit&nbsp;4.3 of <FONT style="white-space: nowrap">Form&nbsp;6-K</FONT> (File <FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>) of STATS ChipPAC Ltd., as filed with the Securities and Exchange Commission on
August&nbsp;25, 2005</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.39
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Supplemental Subsidiary Guarantee Agreement dated as of February&nbsp;21, 2006 by and between
STATS ChipPAC Ltd., the Subsidiary Guarantors party thereto and U.S.&nbsp;Bank National Association
with respect to the 7.5% Senior Notes Due 2010 &#151; incorporated by reference to Exhibit&nbsp;4.48 of
<FONT style="white-space: nowrap">Form&nbsp;20-F</FONT> (File <FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>) of STATS ChipPAC Ltd., as filed with the Securities and
Exchange Commission on February&nbsp;28, 2006</TD>
</TR>

<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.40
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Supplemental Subsidiary Guarantee Agreement dated as of February&nbsp;21, 2006 by and between
STATS ChipPAC Ltd., the Subsidiary Guarantors party thereto and U.S.&nbsp;Bank National Association
with respect to the 63/4% Senior Notes due 2011 &#151; incorporated by reference to Exhibit&nbsp;4.49
of <FONT style="white-space: nowrap">Form&nbsp;20-F</FONT> (File <FONT style="white-space: nowrap">No.&nbsp;333-75080</FONT>) of STATS ChipPAC Ltd., as filed with the Securities and
Exchange Commission on February&nbsp;28, 2006</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.41**
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Subscription Agreement dated June&nbsp;22, 2006 between STATS ChipPAC Ltd., China Resources Logic
Limited, Micro Assembly Technologies Limited and Wuxi China Resources Microelectronics
(Holdings) Limited</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.42**
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Deed of Indemnity dated June&nbsp;22, 2006 between STATS ChipPAC Ltd., China Resources Logic
Limited, Micro Assembly Technologies Limited and Wuxi China Resources Microelectronics
(Holdings) Limited</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.43**
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joint Venture Agreement dated June&nbsp;22, 2006 between STATS ChipPAC Ltd., China Resources
Logic Limited, Wuxi China Resources Microelectronics (Holdings) Limited, Micro Assembly
Technologies Limited and Wuxi CR <FONT style="white-space: nowrap">Micro-Assembly</FONT> Technology Ltd.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">98
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.44**
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Asset Sale and Purchase Agreement dated June&nbsp;22, 2006 between STATS ChipPAC Shanghai Co.,
Ltd., STATS ChipPAC Ltd., Wuxi CR
<FONT style="white-space: nowrap">Micro-Assembly</FONT> Technology Ltd. and China Resources Logic
Limited</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.45**
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amendment Number One dated July&nbsp;14, 2006 to the Asset Sale and Purchase Agreement dated June
22, 2006 between STATS ChipPAC Shanghai Co., Ltd., STATS ChipPAC
Ltd., Wuxi CR <FONT style="white-space: nowrap">Micro-Assembly</FONT>
Technology Ltd. and China Resources Logic Limited</TD>
</TR>

<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.46**
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Manufacturer&#146;s Representative
Agreement dated June&nbsp;22, 2006 between Wuxi CR
<FONT style="white-space: nowrap">Micro-Assembly</FONT>
Technology Ltd., China Resources Logic Limited, STATS ChipPAC (BVI)&nbsp;Limited and STATS ChipPAC
Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.47**##
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US$125,000,000 Syndicated Facility Agreement dated August&nbsp;10, 2006 between STATS ChipPAC
Ltd. and <FONT style="white-space: nowrap">Oversea-Chinese</FONT> Banking Corporation Limited</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.48**##
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">English language translation of
Korean language US$25,000,000 Term Loan Agreement dated May&nbsp;29, 2006 between STATS ChipPAC Korea Ltd. and Hana Bank</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.49**
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">English language summary of Chinese
language NT$1.8 Billion Syndicated Loan
Agreement dated March&nbsp;2, 2004 between Winstek Semiconductor Corporation and Mega Bank</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.50**
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">English language summary of Chinese
language NT$3.6 Billion Syndicated Loan
Agreement dated August&nbsp;18, 2006 between Winstek Semiconductor Corporation and Taishin Bank</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">8.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">List of subsidiaries &#151; incorporated
by reference to Exhibit&nbsp;8.1 of
<FONT style="white-space: nowrap">Form&nbsp;20-F</FONT> <FONT style="white-space: nowrap">(File
no.&nbsp;333-75080)</FONT> of STATS ChipPAC Ltd., as filed with the
Securities and Exchange Commission on February&nbsp;28, 2006</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">12.1**
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification by the Chief
Executive Officer pursuant to 17 CFR 240.
<FONT style="white-space: nowrap">15d-14(a)</FONT>, as adopted
pursuant to Section&nbsp;302 of the
<FONT style="white-space: nowrap">Sarbanes-Oxley</FONT> Act of 2002</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">12.2**
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification by the Chief
Financial Officer pursuant to 17 CFR 240.
<FONT style="white-space: nowrap">15D-14(a)</FONT>, as adopted
pursuant to Section&nbsp;302 of the
<FONT style="white-space: nowrap">Sarbanes-Oxley</FONT> Act of 2002</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">13.1**
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section&nbsp;1350, as adopted
pursuant to Section&nbsp;906 of the
<FONT style="white-space: nowrap">Sarbanes-Oxley</FONT> Act of 2002</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">13.2**
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section&nbsp;1350, as adopted
pursuant to Section&nbsp;906 of the
<FONT style="white-space: nowrap">Sarbanes-Oxley</FONT> Act of 2002</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">15.1**
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consent of Pricewaterhouse Coopers, Singapore, independent registered public accounting firm</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">#</TD>
    <TD>&nbsp;</TD>
    <TD>Certain portions of this exhibit have been omitted pursuant
to a confidential treatment order of the SEC. The
omitted portions have been filed separately with the SEC.</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">##</TD>
    <TD>&nbsp;</TD>
    <TD>Certain portions of this exhibit have been omitted pursuant
to a request for confidential treatment filed with the SEC. The
omitted portions have been filed separately with the SEC.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">**</TD>
    <TD>&nbsp;</TD>
    <TD>Filed herewith.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">99
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="125"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SIGNATURES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
registrant hereby certifies that it meets all of the requirements for
filing on Form <FONT style="white-space: nowrap">20-F</FONT> and that it has duly caused and authorized the undersigned to sign this annual report on its
behalf.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Date:
March&nbsp;12, 2007
</DIV>


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">STATS CHIPPAC LTD.<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">&nbsp;/s/&nbsp;Tan
Lay Koon</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">Name:</TD>
    <TD colspan="2" align="left">Tan Lay Koon</TD>
</TR>
<TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">Title:</TD>
    <TD colspan="2" align="left">President and Chief Executive Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>

<TD colspan="2" style="border-bottom: 1px solid #000000" align="left">&nbsp;/s/&nbsp;Michael
G.&nbsp;Potter</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD align="left">&nbsp;</TD>
    <TD>Name:</TD>
    <TD colspan="2" align="left">Michael G. Potter</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">Title:</TD>
    <TD colspan="2" align="left">Senior Vice President, Chief Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
</TABLE>

<P align="center" style="font-size: 10pt">100
</DIV>



<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="left">
<A name="126"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>INDEX TO FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left">
<!-- TOC -->
</DIV>
<DIV align="left">
<A name="tocpage"></A>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Page</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>FINANCIAL STATEMENTS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#300">Report of Independent Registered Public Accounting Firm
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">F-2</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#301">Consolidated Balance Sheets
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">F-4</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#302">Consolidated Statements of Operations
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">F-5</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#303">Consolidated
Statements of Comprehensive Income (Loss)
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">F-6</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#304">Consolidated Statements of Shareholders&#146; Equity
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">F-7</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#305">Consolidated Statements of Cash Flows
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">F-8</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#306">Notes to the Consolidated Financial Statements
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">F-9</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-1
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<!-- /TOC -->
</DIV>
<DIV align="left">
<A name="300"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Board of Directors and Shareholders<BR>
STATS ChipPAC Ltd.:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have completed an integrated audit of STATS ChipPAC Ltd.&#146;s 2006 consolidated financial
statements and of its internal control over financial reporting as of December&nbsp;31, 2006, and audits
of its 2005 and 2004 consolidated financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are
presented below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Consolidated financial statements </U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In our opinion, the accompanying consolidated balance sheets and the related consolidated
statements of operations, of comprehensive income, of shareholders&#146; equity and of cash flows,
present fairly, in all material respects, the financial position of STATS ChipPAC Ltd. and its
subsidiaries as of December&nbsp;31, 2006 and December&nbsp;25, 2005, and the results of their operations and
their cash flows for each of the three years in the period ended December&nbsp;31, 2006 in conformity
with accounting principles generally accepted in the United States of America. These financial
statements are the responsibility of the Company&#146;s management. Our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our audits of these
statements in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As
discussed in Notes&nbsp;1(x) and&nbsp;23 to the financial statements,
the Company changed the manner in which it accounts for
<FONT style="white-space: nowrap">share-based</FONT> compensation in 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Internal control over financial reporting</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Also, in
our opinion, management&#146;s assessment, included in
Management&#146;s Annual Report on Internal Control
Over Financial Reporting, that the Company maintained effective internal control over financial
reporting as of December&nbsp;31, 2006 based on criteria established in Internal Control &#151; Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is
fairly stated, in all material respects. Furthermore, in our opinion, the
Company maintained, in all material respects, effective internal control over financial reporting
as of December&nbsp;31, 2006, based on criteria established in Internal Control &#151; Integrated Framework
issued by the COSO. The Company&#146;s management is responsible for maintaining effective internal
control over financial reporting and for its assessment of the effectiveness of internal control
over financial reporting. Our responsibility is to express opinions on management&#146;s assessment and
on the effectiveness of the Company&#146;s internal control over financial reporting based on our audit.
We conducted our audit of internal control over financial reporting in accordance with the
standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether effective internal
control over financial reporting was maintained in all material respects. An audit of internal
control over financial reporting includes obtaining an understanding of internal control over
financial reporting, evaluating management&#146;s assessment, testing and evaluating the design and
operating effectiveness of internal control, and performing such other procedures as we consider
necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A company&#146;s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A company&#146;s
internal control over financial reporting includes those policies and procedures that (i)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii)&nbsp;provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of management and directors of the company;
and (iii)&nbsp;provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company&#146;s assets that could have a material effect on the
financial statements.
</DIV>

<P align="center" style="font-size: 10pt">F-2
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 32pt">PricewaterhouseCoopers
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Singapore<BR>
March&nbsp;12, 2007

</DIV>


<P align="center" style="font-size: 10pt">F-3
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>

<DIV align="left">
<A name="301"></A>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>CONSOLIDATED BALANCE SHEETS</B>

</DIV>
<DIV align="center" style="font-size: 10pt"><B>In thousands of U.S. Dollars (except per share data)</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Note</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">3</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">224,720</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">171,457</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:30px; text-indent:-15px"><FONT style="white-space: nowrap">Short-term</FONT> marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,648</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,126</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts receivable, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">240,990</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">243,779</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amounts due from affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,810</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,506</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,336</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,975</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Inventories</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79,483</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">111,614</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">

<TD><DIV style="margin-left:30px; text-indent:-15px"><FONT style="white-space: nowrap">Short-term</FONT> restricted cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">376</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prepaid expenses and other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,351</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,364</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&nbsp;</DIV></TD>
        <TD nowrap colspan="2" align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">607,714</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">599,821</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="white-space: nowrap">Long-term</FONT> marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,803</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,358</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property, plant and equipment, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,107,031</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,192,830</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Investment in equity investee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,292</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Intangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72,780</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,846</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Goodwill</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">522,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">513,512</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">

<TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="white-space: nowrap">Long-term</FONT> restricted cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,232</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">981</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Prepaid
expenses and other
<FONT style="white-space: nowrap">non-current</FONT> assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,197</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">83,640</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD nowrap colspan="2" align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,393,382</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,458,280</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD nowrap colspan="2" align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>LIABILITIES AND SHAREHOLDERS&#146; EQUITY</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts and other payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">136,058</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">167,722</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Payables related to property, plant and equipment purchases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79,425</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,277</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">96,932</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">97,627</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income taxes payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,235</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,810</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:30px; text-indent:-15px"><FONT style="white-space: nowrap">Short-term
borrowings</FONT></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,891</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">592</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amounts due to affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current obligations under capital leases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,091</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,680</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current
installments of <FONT style="white-space: nowrap">long-term</FONT> debts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,651</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,101</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD nowrap colspan="2" align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">357,345</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">371,854</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Obligations under capital leases, excluding current installments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,680</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="white-space: nowrap">Long-term</FONT> debts, excluding current installments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">775,425</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">697,523</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other
<FONT style="white-space: nowrap">non-current</FONT> liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66,611</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,807</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD nowrap colspan="2" align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,203,061</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,154,184</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,669</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,946</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Share capital:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ordinary shares &#151; 2005: Authorized 3,200,000,000 shares, par value
S$0.25; 2006: Unlimited shares with no par value</DIV></TD>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Issued ordinary shares &#151; 1,976,292,025 in 2005 and 2,002,814,117 in 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">20,&nbsp;21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">303,052</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,847,002</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additional
<FONT style="white-space: nowrap">paid-in</FONT> capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,517,118</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accumulated other comprehensive loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">22</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,572</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,714</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accumulated deficit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(669,946</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(593,138</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD nowrap colspan="2" align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,141,652</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,246,150</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Commitments and contingencies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD nowrap colspan="2" align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total liabilities and shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,393,382</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,458,280</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&nbsp;</DIV></TD>
        <TD nowrap colspan="2" align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>




<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">See accompanying notes to consolidated financial statements.

</DIV>

<P align="center" style="font-size: 10pt">F-4
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>

<DIV align="left">
<A name="302"></A>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>CONSOLIDATED STATEMENTS OF OPERATIONS</B>

</DIV>
<DIV align="center" style="font-size: 10pt"><B>In thousands of U.S. Dollars (except per share data)</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Note</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">769,121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,157,253</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,616,933</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(643,540</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(968,023</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,290,773</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD nowrap colspan="2" align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">125,581</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">189,230</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">326,160</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD nowrap colspan="2" align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Selling, general and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,501</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">135,751</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">139,466</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,637</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,071</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,446</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Restructuring charges</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">830</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,938</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Goodwill impairment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">453,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD nowrap colspan="2" align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">555,138</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">162,652</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">171,850</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD nowrap colspan="2" align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(429,557</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,578</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">154,310</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD nowrap colspan="2" align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income (expense), net:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,430</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,414</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,401</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(28,816</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(42,629</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(45,816</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Foreign currency exchange gain (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,122</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">531</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,578</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity income from investment in equity investee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">152</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other
<FONT style="white-space: nowrap">non-operating</FONT> income (expense), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">26</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(936</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,076</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">108</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD nowrap colspan="2" align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total other income (expense), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(26,444</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(36,760</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(41,733</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD nowrap colspan="2" align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(456,001</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,182</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112,577</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">14</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,894</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,689</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(25,759</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD nowrap colspan="2" align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;before minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(463,895</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(19,871</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">86,818</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,828</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,440</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,010</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD nowrap colspan="2" align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(467,723</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(26,311</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">76,808</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD nowrap colspan="2" align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)&nbsp;per ordinary share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.33</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.01</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.04</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.33</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.01</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.04</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)&nbsp;per ADS:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(3.27</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.13</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(3.27</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.13</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.37</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ordinary shares (in thousands) used in per
ordinary share calculation:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,428,954</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,961,950</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,991,110</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,428,954</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,961,950</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,161,545</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ADS (in thousands) used in per ADS calculation:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">142,895</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">196,195</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">199,111</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">142,895</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">196,195</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">216,154</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">See accompanying notes to consolidated financial statements.

</DIV>

<P align="center" style="font-size: 10pt">F-5
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>

<DIV align="left">
<A name="303"></A>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)</B>

</DIV>
<DIV align="center" style="font-size: 10pt"><B>In thousands of U.S. Dollars</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(467,723</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(26,311</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">76,808</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other comprehensive income (loss):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unrealized
loss on <FONT style="white-space: nowrap">available-for-sale</FONT> marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(548</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(247</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Realized
(gain)&nbsp;loss on
<FONT style="white-space: nowrap">available-for-sale</FONT> marketable securities included in net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unrealized gain on hedging instruments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,953</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">133</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,058</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Realized gain on hedging instruments included in
net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(168</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,143</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,157</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Foreign currency translation adjustment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,287</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,455</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">967</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Comprehensive income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(460,662</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(32,023</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">77,666</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">See accompanying notes to consolidated financial statements.

</DIV>

<P align="center" style="font-size: 10pt">F-6
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>

<DIV align="left">
<A name="304"></A>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>CONSOLIDATED STATEMENTS OF SHAREHOLDERS&#146; EQUITY</B>

</DIV>
<DIV align="center" style="font-size: 10pt"><B>In thousands of U.S. Dollars</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Accumulated</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Additional</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Other</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Total</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="2"><B><FONT style="white-space: nowrap">Paid-in</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Comprehensive</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Accumulated</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Shareholders&#146;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Ordinary Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Capital</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Loss</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Deficit</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Equity</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>No.</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(In thousands)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balances at January&nbsp;1, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,076,620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">172,434</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">489,355</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(9,921</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(175,912</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">475,956</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Share issuances</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,802</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">856</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,112</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,968</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Share issuances and assumption
of share options in connection
with acquisition</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">861,908</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">124,943</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,016,549</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,141,492</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="white-space: nowrap">Share-based
compensation</FONT></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">658</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">658</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of subsidiary&#146;s equity
transaction</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(62</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(62</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(467,723</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(467,723</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,061</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,061</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balances at December&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,944,330</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">298,233</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,507,612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,860</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(643,635</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,159,350</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Share issuances</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,962</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,819</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,702</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,521</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="white-space: nowrap">Share-based
compensation</FONT></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">743</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">743</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of subsidiary&#146;s equity
transaction</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(26,311</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(26,311</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other comprehensive loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,712</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,712</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balances at December&nbsp;25, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,976,292</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">303,052</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,517,118</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,572</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(669,946</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,141,652</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Share issuances</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,522</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,197</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,254</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="white-space: nowrap">Share-based
compensation</FONT></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,688</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,688</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of abolition of the
share par value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,517,175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,517,175</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of subsidiary&#146;s equity
transaction</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(110</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(110</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,808</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,808</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">858</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">858</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balances at December&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,002,814</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,847,002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(7,714</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(593,138</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,246,150</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>




<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">See accompanying notes to consolidated financial statements.

</DIV>

<P align="center" style="font-size: 10pt">F-7
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>

<DIV align="left">
<A name="305"></A>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>CONSOLIDATED STATEMENTS OF CASH FLOWS</B>

</DIV>
<DIV align="center" style="font-size: 10pt"><B>In thousands of U.S. Dollars</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash Flows From Operating Activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(467,723</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(26,311</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">76,808</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjustments to reconcile net income (loss)&nbsp;to net cash provided by
operating activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">188,683</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">254,138</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">266,317</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Goodwill impairment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">453,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amortization of leasing prepayments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,718</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,790</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,386</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Debt issuance cost amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,913</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,961</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,371</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">(Gain) loss on sale of property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(656</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,529</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,251</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accretion of discount on convertible notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,437</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,414</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,618</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loss from repurchase and redemption of senior and convertible notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">797</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,653</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Foreign currency exchange (gain)&nbsp;loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(830</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(134</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">758</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:30px; text-indent:-15px"><FONT style="white-space: nowrap">Share-based
compensation expense</FONT></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">658</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">743</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,688</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,351</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,853</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Minority interest in income of subsidiary</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,828</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,440</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,010</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity income from investment in equity investee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(152</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">(Gain) loss on sale of marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">371</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">535</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,009</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Changes in operating working capital:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,149</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(91,340</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,789</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amounts due from affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,427</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,187</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,304</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Inventories</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,171</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(24,793</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(32,268</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other receivables, prepaid expenses and other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(64,421</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,516</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,355</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts payable, accrued operating expenses and other
payables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(41,406</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104,499</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,774</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amounts due to affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,699</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(75</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136,617</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">270,729</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">427,771</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash Flows From Investing Activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from sales of marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">130,497</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15,726</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">35,391</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from maturity of marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,687</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">787</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,841</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchases of marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(160,943</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(32,017</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(80,866</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Investment in equity investee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,154</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Acquisition of intangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,428</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,853</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,419</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Acquisition of subsidiary, net of cash acquired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,208</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchases of property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(287,574</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(245,775</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(393,643</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">729</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,139</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,067</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash used in investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(264,824</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(262,993</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(425,783</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash Flows From Financing Activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">

<TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="white-space: nowrap">Repayment
of short-term debts</FONT></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(72,006</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(143,276</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(42,290</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="white-space: nowrap">Repayment
of long-term debts</FONT></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,982</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(37,670</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(27,627</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from issuance of shares, net of expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,968</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,521</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,254</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from issuance of senior and convertible notes, net of expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">210,458</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">146,535</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Repurchase and redemption of senior and convertible notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(193,647</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(167,263</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(50,500</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from bank borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107,620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">188,085</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,308</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">(Increase) decrease in restricted cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,927</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,487</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,627</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Grants received</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">246</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital lease payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,210</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,737</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,091</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Distribution to minority interest in subsidiary</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,542</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Contribution by minority interest in subsidiary, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,623</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,423</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(54,861</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net decrease in cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(87,079</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,687</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(52,873</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of exchange rate changes on cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,425</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,102</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(390</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents at beginning of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">313,163</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">227,509</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">224,720</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents at end of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">227,509</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">224,720</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">171,457</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Supplementary Cash Flow Information</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">21,974</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">40,738</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">28,307</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income taxes paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,023</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">185</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,418</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="white-space: nowrap">Non-cash
items</FONT></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Issuance of shares and assumption of share options in connection
with acquisition</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,066,994</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equipment acquired under capital leases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">See accompanying notes to consolidated financial statements.

</DIV>


<P align="center" style="font-size: 10pt">F-8
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>

<DIV align="left">
<A name="306"></A>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>

</DIV>
<DIV align="center" style="font-size: 10pt"><B>In thousands of U.S. Dollars (except per share data)</B></DIV>



<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>1.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Background and Summary of Significant Accounting Policies</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(a)&nbsp;Business and Organization</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">STATS ChipPAC Ltd. (&#147;STATS ChipPAC&#148; or &#147;STATS&#148; prior to consummation of the merger, and, together
with its subsidiaries, the &#147;Company&#148;) is an independent provider of a full range of semiconductor
test and packaging services. The Company was formed in connection with the merger of ST Assembly
Test Services Ltd and ChipPAC, Inc. (&#147;ChipPAC&#148;), which was consummated on August&nbsp;5, 2004. In the
merger, former ChipPAC stockholders received 0.87 American Depositary Shares of STATS for each
share of ChipPAC Class&nbsp;A common stock, par value $0.01 per share, owned by such stockholder. Upon
consummation of the merger, STATS&#146; and ChipPAC&#146;s former shareholders owned approximately 56% and
44%, respectively, of the Company&#146;s total shares outstanding. As a result of the merger, ChipPAC
became a <FONT style="white-space: nowrap">wholly-owned</FONT> subsidiary of STATS. The transaction was accounted for using the purchase
method. Subsequent to the merger, STATS was renamed STATS ChipPAC Ltd.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In 2005, the Company&#146;s Taiwan subsidiary, Winstek Semiconductor Corporation (&#147;Winstek&#148;), issued
10,555,556 shares of its capital stock, par value NT$10 per share, in a public offering at an
offering price of NT$12.80 per share. The shares of Winstek are listed on the Taiwan
<FONT style="white-space: nowrap">over-the-counter</FONT> securities market. The Company recognized a gain of $61 on the resulting dilution
of interest within shareholders&#146; equity. The Company owned approximately 52% of Winstek&#146;s total
shares outstanding as of December&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company has operations in Singapore, South Korea, China, Malaysia, Taiwan, the United Kingdom,
the Netherlands, Japan and in the United States of America, its principal market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Temasek Holdings (Private) Limited (&#147;Temasek Holdings&#148;), through its <FONT style="white-space: nowrap">wholly-owned</FONT> subsidiary,
Singapore Technologies Semiconductors Pte Ltd (&#147;STSPL&#148;), beneficially owned approximately 36% of
the Company as of December&nbsp;31, 2006. Temasek Holdings, a private limited company incorporated in
Singapore, is <FONT style="white-space: nowrap">wholly-owned</FONT> by the Minister for Finance (Incorporated) of Singapore, a body
constituted by the Minister for Finance (Incorporation) Act (Cap. 183).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(b)&nbsp;Fiscal Year</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Since the beginning of fiscal 2005, the Company has employed fiscal year and fiscal quarter
reporting periods. STATS ChipPAC&#146;s <FONT style="white-space: nowrap">52-53&nbsp;week</FONT> fiscal year ends on the Sunday nearest to December
31. STATS ChipPAC&#146;s fiscal quarters end on a Sunday and are generally thirteen weeks in length.
Fiscal year 2006, a <FONT style="white-space: nowrap">53-week</FONT> year, ended on December&nbsp;31, 2006, and fiscal year 2005, a <FONT style="white-space: nowrap">52-week</FONT> year,
ended on December&nbsp;25, 2005. Unless otherwise stated, all years and dates refer to STATS ChipPAC&#146;s
fiscal years.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(c)&nbsp;Accounting Principles</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America (&#147;U.S. GAAP&#148;) consistently applied for all
periods.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(d)&nbsp;Principles of Consolidation</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The consolidated financial statements include the consolidated accounts of STATS ChipPAC and its
<FONT style="white-space: nowrap">majority-owned</FONT> subsidiaries. Significant intercompany accounts and transactions have been
eliminated in consolidation.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(e)&nbsp;Issuances of Stock by Subsidiaries</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Changes in the Company&#146;s proportionate share of the underlying net equity of a subsidiary, which
result from the issuance of additional stocks to third parties, are recognized as increases or
decreases to shareholders&#146; equity.
</DIV>


<P align="center" style="font-size: 10pt">F-9
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(f)&nbsp;Use of Estimates</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The preparation of the consolidated financial statements in accordance with U.S. 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. Significant
estimates made by management include: the useful lives of property, plant and equipment and
intangible assets as well as future cash flows to be generated by those assets; discounts and allowances relating to volume purchases and other
incentive programs offered to customers, allowances for doubtful accounts, sales returns; valuation
allowances for deferred tax assets; provision for inventory losses; fair value of reporting units;
and contingent liabilities, among others. Determining the fair value of purchased intangible
asset is judgmental in nature and involves the use of significant estimates and assumptions. These
estimates and assumptions include revenue growth rates and operating margins used to calculate
projected future cash flows,
<FONT style="white-space: nowrap">risk-adjusted </FONT>discount rates, assumed royalty rates, future economic
and market conditions and determination of appropriate market comparables. Actual results could
differ from these estimates.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(g)&nbsp;Reclassifications</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Certain reclassifications have been made in prior years&#146; financial statements to conform with
classifications used in the current year.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(h)&nbsp;Foreign Currency Transactions</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company predominantly utilizes the U.S. dollar as its functional currency. Assets and
liabilities which are denominated in foreign currencies are converted into the functional currency
at the rates of exchange prevailing at the balance sheet date. Income and expenses which are
denominated in foreign currencies are converted at the average rates of exchange prevailing during
the period. Foreign currency transaction gains or losses are included in results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Winstek designates the New Taiwan Dollar as its functional currency. Where the functional currency
of a subsidiary is other than the Company&#146;s U.S. dollar reporting currency, the financial
statements are translated into U.S. dollars using exchange rates prevailing at the balance sheet
date for assets and liabilities and average exchange rates for the reporting period for the results
of operations. Adjustments resulting from translation of such foreign subsidiary financial
statements are reported within accumulated other comprehensive loss, which is reflected as a
separate component of shareholders&#146; equity.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(i)&nbsp;Certain Risks and Concentrations</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company&#146;s customers are comprised of companies in the semiconductor industry located primarily
in the United States of America, Europe and Asia. The semiconductor industry is highly cyclical and
experiences significant fluctuations in customer demand, evolving industry standards, competitive
pricing pressure that leads to steady declines in average selling prices, rapid technological
changes, risk associated with foreign currencies and enforcement of intellectual property rights.
Additionally, the market in which the Company operates is very competitive. As a result of these
industry and market characteristics, key elements of competition in the independent semiconductor
packaging market include breath of packaging offerings,
<FONT style="white-space: nowrap">time-to-market</FONT>, technical competence,
design services quality, production yields, reliability of customer service and price.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company&#146;s largest customer accounted for approximately 21%, 12% and 11% of revenues in 2004,
2005 and 2006, respectively. The Company&#146;s five largest customers collectively accounted for
approximately 56%, 49% and 43% of revenues in 2004, 2005 and 2006, respectively. The decommitment
from any major customer for products, or the loss of or default by any of these major customers
could have an adverse effect upon the Company&#146;s financial position, results of operations and cash
flows. The Company mitigates the concentration of credit risk in trade receivables through the
Company&#146;s credit evaluation process, credit policies, credit control and collection procedures.
</DIV>


<P align="center" style="font-size: 10pt">F-10
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Cash and cash equivalents are deposited with financial institutions primarily in Singapore, South
Korea, China, Malaysia, British Virgin Islands, Taiwan and the United States of America. Deposits
in the financial institutions may exceed the amount of insurance provided on such deposits, if any.
The Company utilizes forward contracts to protect against the effects of foreign currency
fluctuations. Such contracts involve the risk of
<FONT style="white-space: nowrap">non-performance</FONT> by the counterparty, which could
result in a material loss. The Company has not experienced any losses to date from instruments held
with financial institutions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">South Korean, Chinese and Malaysian foreign currency exchange regulators may place restrictions on
the flow of foreign funds into and out of those countries. The Company is required to comply with
these regulations when entering into transactions in foreign currencies in South Korea, China and
Malaysia.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(j)&nbsp;Cash and Cash Equivalents</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Cash equivalents consist of highly liquid investments that are readily convertible into cash and
have original maturities of three months or less. Cash and cash equivalents consisted of cash,
deposit accounts, money market funds and foreign government treasury bills at December&nbsp;31, 2006.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(k)&nbsp;Restricted Cash</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Restricted cash consists of time deposits and government bonds held in connection with foreign
regulatory requirement and as collateral for bank loans. As of December&nbsp;25, 2005 and December&nbsp;31,
2006, there were $376 and $nil of
<FONT style="white-space: nowrap">short-term</FONT> restricted cash
and $2,232 and $981 of
<FONT style="white-space: nowrap">long-term</FONT> restricted cash, respectively.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(l)&nbsp;Derivative Instruments and Hedging Activities</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company recognizes all derivatives as either assets or liabilities in the statement of
financial position and measures those instruments at fair value. Changes in the fair value of those
instruments will be reported in earnings or other comprehensive income depending on the use of the
derivative and whether it qualifies for hedge accounting. The accounting for gains and losses
associated with changes in the fair value of derivatives and the effect on the consolidated
financial statements will depend on the derivatives&#146; hedge designation and whether the hedge is
highly effective in achieving offsetting changes in the fair values of cash flows of the asset or
liability hedged.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company has established risk management policies for committed or forecasted exposures to
protect against volatility of future cash flows. These programs reduce, but do not always entirely
eliminate, the impact of the currency exchange or commodity price movements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In 2005 and 2006, the Company entered into foreign currency forward contracts to protect the
Company from fluctuations in exchange rates. At December&nbsp;25, 2005, and December&nbsp;31, 2006, the
Company had a series of foreign currency forward contracts qualifying as cash flow hedges with
total contract value of approximately $68,000 and $147,000, respectively. In 2005, the Company
entered into a series of gold forward contracts qualifying as cash flow hedges with total contract
value of approximately $7,000 to reduce exposure of the commodity price risk related to gold usage
in the cost of materials. The duration of these instruments are generally less than 12&nbsp;months. At
December&nbsp;31, 2006, the Company had realized and unrealized gain of $3,157 and $3,058, respectively,
on its foreign currency forward contracts. At December&nbsp;25, 2005, the Company had realized and
unrealized gain of $3,143 and $133, respectively, on its foreign currency forward and gold forward
contracts. Certain foreign currency forward contracts to economically hedge certain committed
exposures are not designated as hedges. Accordingly, the changes in fair value of these foreign
currency forward contracts are reported in earnings.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(m)&nbsp;Marketable Securities</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Marketable securities at December&nbsp;25, 2005 and December&nbsp;31, 2006 consist of corporate debt
securities and certificates of deposits denominated in U.S. dollars, Singapore dollars, Chinese
Renminbi and New Taiwan dollars. The Company classifies its securities in one of three categories:
trading, <FONT style="white-space: nowrap">available-for-sale</FONT>,
or <FONT style="white-space: nowrap">held-to-maturity</FONT>. Trading securities are bought and held
principally for the purpose of selling them in the near term.
<FONT style="white-space: nowrap">Held-to-maturity</FONT> securities are
those securities in which the Company has the ability and intent to hold the security until
maturity. All securities not included in trading or <FONT style="white-space: nowrap">held-to-maturity</FONT> are classified as
<FONT style="white-space: nowrap">available-for-sale</FONT>.
</DIV>


<P align="center" style="font-size: 10pt">F-11
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Trading and <FONT style="white-space: nowrap">available-for-sale</FONT> securities are recorded at fair value. <FONT style="white-space: nowrap">Held-to-maturity</FONT> securities
are recorded at amortized cost, adjusted for the amortization or accretion of premiums or
discounts. Unrealized holding gains and losses on trading securities are included in earnings.
Unrealized holding gains and losses, net of the related tax effect if any, on <FONT style="white-space: nowrap">available-for-sale</FONT>
securities are excluded from earnings and are reported as a separate component of other
comprehensive loss until realized. Realized gains and losses from the sale of <FONT style="white-space: nowrap">available-for-sale</FONT>
securities are determined on a specific identification basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A decline in the market value of individual <FONT style="white-space: nowrap">available-for-sale</FONT> or <FONT style="white-space: nowrap">held-to-maturity</FONT> securities below
cost that is deemed to be other than temporary results in a reduction in its carrying amount to
fair value, with the impairment charged to earnings and a new cost basis for the security being
established. Premiums and discounts are amortized or accreted over the life of the related
<FONT style="white-space: nowrap">held-to-maturity</FONT> security as an adjustment to yield using the effective interest method. Dividend
and interest income are recognized when earned.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(n)&nbsp;Inventories</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Inventories are stated at the lower of standard cost, which approximates actual cost determined on
the weighted average basis, or market value. The Company generally does not take ownership of
customer supplied semiconductors, and accordingly does not include them as part of the Company&#146;s
inventories.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(o)&nbsp;Equity Method Investments</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Investments in entities in which the Company can exercise significant influence, but owns less
than a majority equity interest are accounted for using the equity method of accounting. The
Company&#146;s unrealized profit arising from sales by the Company to equity method investee are
eliminated to the extent of the Company&#146;s ownership. In 2006, the Company acquired a 25%
shareholding in Micro Assembly Technologies Limited (&#147;MAT&#148;) for $10,154.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(p)&nbsp;Business Combination</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Business combinations are accounted for using the purchase method accounting. Business combinations
which are accounted for under the purchase method accounting include the results of operations of
the acquired business from the effective date of acquisition. Any excess of the purchase price over
estimated fair values of the net assets acquired is recorded as goodwill.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(q)&nbsp;Goodwill</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company tests goodwill for impairment on an annual basis in the designated quarters for its
different reporting units, and whenever circumstances indicate the carrying value of the goodwill
may have been impaired. The impairment test is performed by first comparing the fair value of the
applicable reporting unit to its carrying value. If the carrying value of the reporting unit
exceeds its fair value, the second step of the impairment test is performed to determine the amount
of impairment loss, if any. The second step of the test involves the comparison of the implied
fair value of the goodwill to its carrying value. If the carrying value of reporting unit goodwill
exceeds its implied fair value, an impairment loss is recognized for an amount equal to the excess.
The implied fair value of reporting unit is determined in the same manner as the amount of
goodwill recognized in a purchase business combination.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The estimates of fair value of a reporting unit are determined using various valuation techniques
with the primary technique being a discounted cash flow analysis. A discounted cash flow analysis
requires the Company to make various judgmental assumptions including assumptions about future cash
flows, growth rates and discount rates. The assumptions about future cash flows and growth rates
are based on the Company&#146;s budget and <FONT style="white-space: nowrap">long-term</FONT> plans. In estimating fair values of its reporting
units, the Company also uses comparable market analyses.
</DIV>


<P align="center" style="font-size: 10pt">F-12
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(r)&nbsp;Intangible Assets</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company acquires patent rights and technology licenses from other companies for use in its
processes. Cost of the technology licenses is amortized over the shorter of the useful life or
license period. In addition, intangible assets acquired in business combinations accounted for
under the purchase method of accounting are recorded at fair value on the Company&#146;s consolidated
balance sheet at the date of acquisition. In connection with the merger with ChipPAC, the cost of
intangible assets acquired comprising tradenames, technology, intellectual property and customer
relationships, software and licenses, were recorded based on the fair values of those intangible
assets on August&nbsp;5, 2004 based on management&#146;s estimate of the fair value of these intangible
assets. Management considered a number of factors when estimating fair value, including appraisals,
discounted cash flow analysis, estimated royalty rates and appropriate market comparables.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Acquired intangible assets are stated at cost less accumulated amortization. Amortization is
calculated on the straight-line method over the following periods:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="75%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tradenames</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">7 years</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Technology and intellectual property</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">10 years</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer relationships</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">2 years</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Software and licenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">3 to 5 years</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(s)&nbsp;Property, Plant and Equipment</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is
calculated on the <FONT style="white-space: nowrap">straight-line</FONT> method over the following periods:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="75%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Land use rights</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">50 to 99 years</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Building, mechanical and electrical installation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">3 to 25 years</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">2 to 8 years</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">No depreciation is provided on property, plant and equipment under installation or construction and
freehold land. Repairs and replacements of a routine nature are expensed, while those that extend
the life of an asset are capitalized.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Plant and equipment under capital leases are stated at the present value of minimum lease payments
and are amortized <FONT style="white-space: nowrap">straight-line</FONT> over the estimated useful life of the assets.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(t)&nbsp;<FONT style="white-space: nowrap">Long-Lived Assets</FONT></I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company reviews <FONT style="white-space: nowrap">long-lived</FONT> assets for impairment whenever events or changes in circumstances
indicate that its carrying amount may not be recoverable. Recoverability of a <FONT style="white-space: nowrap">long-lived</FONT> asset is
measured by a comparison of the carrying amount to the sum of the undiscounted cash flows expected
to result from the use and eventual disposition of the asset. If such asset is considered to be
impaired, the impairment loss is measured as the amount by which the carrying amount of a
<FONT style="white-space: nowrap">long-lived</FONT> asset exceeds its fair value.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For <FONT style="white-space: nowrap">long-lived</FONT> assets held for sale, the carrying value is measured at the lower of its carrying
amount or fair value less cost to sell and depreciation is ceased. <FONT style="white-space: nowrap">Long-lived</FONT> assets to be
abandoned will be considered held and used until it is disposed of.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(u)&nbsp;Comprehensive
Income (Loss)</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company applies SFAS No.&nbsp;130, &#147;Reporting Comprehensive Income&#148; with respect to reporting and
presentation of comprehensive income (loss) and its components in a full set of financial statements.
Comprehensive income (loss) consists of net income, foreign currency translation adjustments and
unrealized gain or loss on <FONT style="white-space: nowrap">available-for-sale</FONT> marketable securities and hedging instruments, and is
presented in the consolidated statements of comprehensive income (loss).
</DIV>


<P align="center" style="font-size: 10pt">F-13
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(v)&nbsp;Revenue Recognition</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Revenue is derived primarily from wafer probe and bumping, packaging and testing of semiconductor
integrated circuits. Net revenues represent the invoiced value of services rendered net of
returns, trade discounts and allowances, and excluding goods and services tax.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Revenue is recognized when there is evidence of an arrangement, fees are fixed or determinable,
collectibility is reasonably assured, the service has been rendered, the revenue to be recognized
is billable under the terms of the arrangement and not contingent upon completion of undelivered
services, and, where applicable, delivery has occurred and risk of loss has passed to the customer.
Such policies are consistent with the provisions in Securities Exchange Commission&#146;s Staff
Accounting Bulletin No.&nbsp;104, &#147;Revenue Recognition in Financial Statements.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company&#146;s sales arrangement include probe, bumping, packaging or test services sold on a
standalone basis, as well as <FONT style="white-space: nowrap">multiple-element</FONT> arrangements where probe, bumping, packaging, test,
and in some cases, <FONT style="white-space: nowrap">pre-production</FONT> and <FONT style="white-space: nowrap">post-production</FONT> services are provided together. Where
arrangements provide for multiple elements, elements are either combined into one single unit of
accounting or treated as separate units of accounting depending on whether certain specified
criteria are met. Revenue is allocated to each unit of accounting based on fair value, determined
by reference to prices of services sold on a standalone basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company generally does not take ownership of customer supplied semiconductors as these
materials are sent to the Company on a consignment basis. Accordingly, the values of the customer
supplied materials are neither reflected in revenue nor in cost of revenue.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Provisions are made for estimates of potential sales returns and discounts allowance for volume
purchases and early payments and are recorded as a deduction from gross revenue based upon
historical experience and expectations of customers&#146; ultimate purchase levels and timing of
payment. Actual revenues may differ from estimates if future customer purchases or payment timing
differ, which may happen as a result of changes in general economic conditions, market demand for
the customers&#146; products, or by customers&#146; desire to achieve payment timing discounts. Actual
returns and discounts have not historically been significantly different from estimates. In
addition, specific returns and discounts are provided for at the time their existence is known and
the amounts are estimable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following sets forth the percentage of net revenues by packaging products group and testing
services:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Year Ended</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; packaging &#151; array</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">40.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">50.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">55.5</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; packaging &#151; leaded</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; test and other services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Provisions are made for collectibility of accounts receivable when there is doubt as to the
collectibility of individual accounts. Collectibility is assessed based on the age of the balance,
the customer&#146;s historical payment history, its current <FONT style="white-space: nowrap">credit-worthiness</FONT> and current economic
trends.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(w)&nbsp;Grants</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="white-space: nowrap">Asset-related</FONT> government grants consist of grants for the purchase of equipment used for research
and development activities. <FONT style="white-space: nowrap">Asset-related</FONT> grants are presented in the consolidated balance sheet
as deferred grants and are credited to income on the <FONT style="white-space: nowrap">straight-line</FONT> basis over the estimated useful
lives of the relevant assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="white-space: nowrap">Income-related</FONT> government grants are subsidies of training and research and development expenses.
<FONT style="white-space: nowrap">Income-related</FONT> grants are credited to income when it becomes probable that expenditures already
incurred will constitute qualifying expenditures for purposes of reimbursement under the grants,
which is typically substantially concurrent with the expenditures.
</DIV>


<P align="center" style="font-size: 10pt">F-14
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">There are no restrictions on transferring technology or manufacturing products developed with
government grants.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(x)&nbsp;<FONT style="white-space: nowrap">Share-Based Compensation</FONT></I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="white-space: nowrap">Share-based</FONT> compensation represents the cost related to <FONT style="white-space: nowrap">share-based</FONT> awards made to employees and
directors. Effective December&nbsp;26, 2005, the Company adopted the provisions of SFAS No.&nbsp;123(R),
&#147;<FONT style="white-space: nowrap">Share-Based</FONT> Payment&#148; (&#147;SFAS 123(R)&#148;), which requires the measurement of <FONT style="white-space: nowrap">share-based</FONT> compensation
expense for all <FONT style="white-space: nowrap">share-based</FONT> payment awards based on estimated fair value. The Company measures
<FONT style="white-space: nowrap">grant-date</FONT> fair value estimates, and recognizes the <FONT style="white-space: nowrap">share-based</FONT> compensation expense on a graded
vesting basis net of estimated forfeitures over the requisite service period. Prior to December&nbsp;26,
2005, the Company measured <FONT style="white-space: nowrap">share-based</FONT> employee compensation expense in accordance with the
intrinsic method of APB No.&nbsp;25, &#147;Accounting for Stock Issued to Employees&#148; (&#147;APB 25&#148;), and its
related interpretations, and included pro forma information in accordance with SFAS No.&nbsp;123,
&#147;Accounting for <FONT style="white-space: nowrap">Stock-Based</FONT> Compensation&#148; (&#147;SFAS 123&#148;) as amended by SFAS No.&nbsp;148, <I>&#147;</I>Accounting for
<FONT style="white-space: nowrap">Stock-Based</FONT> Compensation &#151; Transition and Disclosure.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In March&nbsp;2005, the Securities and Exchange Commission released SEC Staff Accounting Bulletin No.
107, &#147;<FONT style="white-space: nowrap">Share-Based</FONT> Payment&#148; (&#147;SAB 107&#148;). SAB 107 contains interpretive guidance related to the
interaction between SFAS 123(R) and certain SEC rules and regulations, as well as provides the
SEC&#146;s views regarding the valuation of <FONT style="white-space: nowrap">share-based</FONT> payment. The Company has applied the provisions
of SAB 107 in its adoption of SFAS 123(R). At December&nbsp;31, 2006, the Company has four <FONT style="white-space: nowrap">share-based</FONT>
compensation plans, which are more fully described in Note 23.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(y)&nbsp;Employee Benefit Plans</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Winstek operates a defined benefit retirement plan for a substantial portion of its employees in
Taiwan in accordance with the Labor Standards Law in Taiwan. Pension benefits are generally based
on years of service and average salary for the six months prior to the approved retirement date.
Winstek revised its contribution in 2006 from 2% to 6% of eligible wages and salaries on a monthly
basis to a pension fund maintained with the Central Trust of China, as required by the Labor
Standards Law. At each year end, Winstek actuarially determines pension benefit costs and
obligations using the projected unit credit method, and the amounts calculated depend on a variety
of assumptions. These assumptions include discount rates, rates for expected returns on plan
assets, mortality rates and retirement rates. The funding of the pension plan is determined in
accordance with statutory funding requirements. Winstek is obligated to make up any shortfall in
the plan&#146;s assets in meeting the benefits accrued to the participating staff. As at December&nbsp;31,
2006, there was no shortfall in the plan&#146;s assets. Total pension plan expenses in 2004, 2005 and
2006 were approximately $76, $55 and $5, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">STATS ChipPAC, Inc. and STATS ChipPAC Test Services, Inc. have a 401(k) savings plan where the
Company matches 50% of employee contributions up to 6% of eligible employee compensation. The
Company&#146;s matching contributions under the 401(k) plan were $320, $395 and $457 in 2004, 2005 and
2006, respectively. The matching contributions are accrued monthly and adjusted when the actual
amounts are calculated. The expenses relating to the plan are $15 per person per quarter and are
accrued on a monthly basis. Returns of the 401(k) plan from investments in mutual funds are
calculated daily by an external administrator who administers the plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Employees with more than one year of service are entitled to receive a <FONT style="white-space: nowrap">lump-sum</FONT> payment upon
termination of their employment with STATS ChipPAC Korea Ltd. (&#147;STATS ChipPAC Korea&#148;), based on
their length of service and rate of pay at the time of termination. Accrued severance benefits are
adjusted annually for all eligible employees based on their employment as of balance sheet date. In
accordance with the National Pension Act of South Korea, a certain portion of severance benefits
has been deposited with the Korean National Pension Fund and deducted from accrued severance
benefits. The amount contributed will be refunded to employees from the Korean National Pension
Fund upon retirement. Annual severance benefits expense charged to operations is based upon the
change in the accrued severance benefits payable at the balance sheet date. The expense for
severance benefits for the period from August&nbsp;5, 2004 to December&nbsp;31, 2004 and for the years ended
December&nbsp;25, 2005 and December&nbsp;31, 2006 were approximately $1,793, $6,333 and $9,119, respectively.
</DIV>


<P align="center" style="font-size: 10pt">F-15
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company participates in a number of defined contribution retirement benefit plans in certain
countries of operations. Contributions are based on a percentage of each eligible employee&#146;s salary
and are expensed as the related salaries are incurred. The Company incurred expenses of
approximately $7,226, $10,711 and $12,849 with respect to these retirement plans in 2004, 2005 and
2006, respectively.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(z)&nbsp;Operating Leases</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Rental payments under operating leases are expensed on a <FONT style="white-space: nowrap;">straight-line</FONT> basis over the periods of
the respective leases.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(aa)&nbsp;Product Warranties</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company guarantees that work performed will be free from any defects in workmanship, materials
and manufacture generally for a period ranging from three to twelve months to meet the stated
functionality as agreed to in each sales arrangement. Products are tested against specified
functionality requirements prior to delivery, but the Company nevertheless from time to time
experiences claims under its warranty guarantees. The Company accrues for estimated warranty costs
under those guarantees based upon historical experience, and for specific items at the time their
existence is known and the amounts are determinable. Warranty costs incurred in 2004, 2005 and
2006 were insignificant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(bb)&nbsp;Research and Development</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Research and development costs are expensed as incurred.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(cc)&nbsp;Income Taxes</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Income taxes are accounted for under the asset and liability method. Deferred tax assets and
liabilities are recognized for the future tax consequences attributable to differences between the
carrying amounts of existing assets and liabilities in the financial statements and their respective tax bases, and
operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that includes the
enactment date. A valuation allowance is recorded for loss carryforwards and other deferred tax
assets where it is more likely than not that such loss carryforwards and deferred tax assets will
not be realized.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(dd)&nbsp;Net Income (Loss) Per Share</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Basic net income (loss)&nbsp;per share is computed using the weighted average number of ordinary shares
outstanding. Diluted net income (loss)&nbsp;per share is computed using the weighted average number of
ordinary shares outstanding and dilutive potential ordinary shares from the assumed exercise of
share options outstanding during the period, if any, using the treasury stock method plus other
potentially dilutive securities outstanding, such as convertible notes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company excluded certain potentially dilutive securities for each period presented from its
diluted net income (loss)&nbsp;per share computation because either the exercise price of the securities
exceeded the average fair value of the Company&#146;s ordinary shares or the Company had net losses, and
therefore these securities were <FONT style="white-space: nowrap;">anti-dilutive</FONT>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A summary of the excluded potentially dilutive securities outstanding and the range of related
exercise prices follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Convertible debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">369,235</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">287,999</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82,454</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Share options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">131,997</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">124,175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103,508</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The conversion price of convertible debt outstanding was approximately $0.93 to $1.87 per
share (equivalent to approximately $9.30 to $18.70 per ADS) as of December&nbsp;31, 2006. The weighted
average exercise prices
</DIV>


<P align="center" style="font-size: 10pt">F-16
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">of share options outstanding were approximately $1.01, $1.01 and $0.99
(equivalent to $10.10, $10.10 and $9.90 per ADS) as of December&nbsp;31, 2004, December&nbsp;25, 2005 and
December&nbsp;31, 2006, respectively. The excluded share options have per share exercise prices ranging
from approximately $0.14 to $3.99 (equivalent to $1.40 to $39.90 per ADS) as of December&nbsp;31, 2004
and December&nbsp;25, 2005 and $0.68 to $3.99 (equivalent to $6.80 and $39.90 per ADS) as of December&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following is a reconciliation of the numerators and denominators of the basic and diluted net
income (loss)&nbsp;per ordinary share computations for the periods presented below:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Year Ended</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(467,723</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(26,311</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">76,808</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjusted net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(467,723</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(26,311</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79,058</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="13">&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average number
of ordinary shares
outstanding (basic)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,428,954</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,961,950</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,991,110</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average dilutive
shares from share plans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,564</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average dilutive
convertible notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">161,871</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average number
of ordinary shares and
equivalent ordinary
shares outstanding
(diluted)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,428,954</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,961,950</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,161,545</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(ee)&nbsp;New Accounting Pronouncements</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In December&nbsp;2004, the FASB issued SFAS No.&nbsp;123(R), <FONT style="white-space: nowrap;">&#147;Share-Based</FONT>
Payment&#148; (&#147;SFAS 123(R)&#148;). This
statement revises SFAS No.&nbsp;123, &#147;Accounting for <FONT style="white-space: nowrap;">Stock-Based</FONT> Compensation,&#148; amends SFAS No.&nbsp;95,
&#147;Statement of Cash Flows,&#148; and supersedes APB No.&nbsp;25, &#147;Accounting for Stock Issued to Employees.&#148;
SFAS 123(R) requires companies to apply a <FONT style="white-space: nowrap;">fair-value</FONT> based measurement method in accounting for
<FONT style="white-space: nowrap;">share-based</FONT> payment transactions with employees and to record compensation expense for all share
awards granted, and to awards modified, repurchased or cancelled after the required effective date.
In addition, companies are required to record compensation expense (as previous awards continue to
vest) for the unvested portion of previously granted awards that remain outstanding at the date of
adoption. SFAS&nbsp;123(R) is effective for annual periods beginning after June&nbsp;15, 2005, which is the Company&#146;s fiscal 2006. In March&nbsp;2005,
the Securities and Exchange Commission released SEC Staff Accounting Bulletin No.&nbsp;107, <FONT style="white-space: nowrap;">Share-Based</FONT>
Payment (&#147;SAB 107&#148;). SAB&nbsp;107 contains interpretive guidance related to the interaction between SFAS&nbsp;123(R) and
certain SEC&nbsp;rules and regulations, as well as provides the SEC&#146;s views regarding the
valuation of <FONT style="white-space: nowrap;">share-based</FONT> payment arrangements for public companies. SAB&nbsp;107 also highlights the
importance of disclosures made related to the accounting for <FONT style="white-space: nowrap;">share-based</FONT> payment transactions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The adoption of SFAS&nbsp;123(R) had a material impact on our consolidated financial statements for the
year ended December&nbsp;31, 2006, and is expected to continue to materially impact our financial
statements in the foreseeable future. See note&nbsp;23 below for more information on the impact of the
adoption of SFAS&nbsp;123(R).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In July&nbsp;2006, the FASB issued FASB Interpretation No.&nbsp;48, &#147;Accounting for Uncertainty in Income
Taxes&#148; (&#147;FIN&nbsp;48&#148;). FIN&nbsp;48 is an interpretation of SFAS No.&nbsp;109, &#147;Accounting for Income Taxes,&#148; and
prescribes a recognition threshold and measurement process for financial statement recognition and
measurement of uncertain tax positions taken or expected to be taken in a tax return. In addition,
FIN&nbsp;48 requires expanded disclosure with respect to the uncertainty in income taxes and is
effective for fiscal year beginning after December&nbsp;15, 2006. The Company is currently evaluating
the impact, if any, that FIN&nbsp;48 will have on the consolidated financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In September&nbsp;2006, the FASB issued SFAS No.&nbsp;157, &#147;Fair Value Measurements&#148; (&#147;SFAS&nbsp;157&#148;), which
defines fair value, establishes guidelines for measuring fair value and expands disclosures
regarding fair value measurements. SFAS&nbsp;157 does not require any new fair value measurements but
rather eliminates inconsistencies in guidance found in various prior accounting pronouncements.
SFAS&nbsp;157 is effective for fiscal years beginning after November&nbsp;15, 2007. Earlier adoption is
permitted, provided the company has not yet issued financial statements, including for interim
periods, for that fiscal year. The Company is currently evaluating the impact of SFAS&nbsp;157, but do
not expect the adoption of SFAS&nbsp;157 to have a material impact on the Company&#146;s consolidated
financial statements.
</DIV>


<P align="center" style="font-size: 10pt">F-17
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In September&nbsp;2006, the FASB issued SFAS&nbsp;No.&nbsp;158, &#147;Employers&#146; Accounting for Defined Benefit Pension
and Other Postretirement Plans an amendment of FASB Statements No.&nbsp;87, 88, 106, and 132(R)&#148; (&#147;SFAS&nbsp;158&#148;). This standard requires employers to recognize the underfunded or overfunded status of a
defined benefit postretirement plan as an asset or liability in its statement of financial position
and to recognize changes in the funded status in the year in which the changes occur through
accumulated other comprehensive income, which is a component of stockholders&#146; equity. The new reporting requirements and related new footnote disclosure
rules of SFAS&nbsp;158 are effective for fiscal years ending after December&nbsp;15, 2006. The adoption of
SFAS&nbsp;158 does not have a material impact on the Company&#146;s consolidated financial statements. Additionally,
SFAS&nbsp;158 requires employers to measure the funded status of a plan as of the date of its <FONT style="white-space: nowrap;">year-end</FONT>
statement of financial position effective for fiscal year ending
after December&nbsp;15, 2008.
</DIV>


<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>2.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Related Party Transactions</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of December&nbsp;31, 2006, Temasek Holdings, through its wholly-owned subsidiary, Singapore
Technologies Semiconductors Pte Ltd (&#147;STSPL&#148;), beneficially owns approximately 36% of the Company&#146;s
outstanding ordinary shares. Singapore Technologies Pte Ltd (&#147;STPL&#148;), a <FONT style="white-space: nowrap;">wholly-owned</FONT> subsidiary of
Temasek Holdings, was the holding company of STSPL prior to
a restructuring completed on December&nbsp;31, 2004 pursuant to which all the assets of STPL were transferred to Temasek Holdings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company&#146;s operations in Singapore are conducted in a building constructed on land held on a
<FONT style="white-space: nowrap;">long-term</FONT> operating lease from a statutory board of the Government of Singapore. The lease is for
a <FONT style="white-space: nowrap;">30-year</FONT> period commencing March&nbsp;1, 1996 and is renewable for a further 30&nbsp;years subject to the
fulfillment of certain conditions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">STPL previously provided management and corporate services to the Company. Under a service
agreement effective January&nbsp;1, 2000, annual management fees were payable for the provision of
specified services on mutually agreed terms which the Company believed approximated the cost of
providing those services. The fees were subjected to review by the parties every three years. The
service fee expense amounted to $1,146 in 2004. The service agreement was terminated on December&nbsp;31, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company has contracts with Chartered Semiconductor Manufacturing Ltd (&#147;Chartered&#148;), majority
owned by Temasek Holdings through STSPL, to provide wafer sort, packaging and test services and priority usage
of the Company&#146;s testers in return for minimum loads and orders. Net revenues earned from Chartered
in 2004, 2005 and 2006 were $18,537, $12,647 and $11,109, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company also engages in transacting with other companies, directly or indirectly controlled by
Temasek Holdings, in the ordinary course of business. These transactions which include transactions
for gas, water and electricity, facilities management, transportation and telecommunication
services are at their prevailing market rates or prices and on customary terms and conditions.
These expenses amounted to $24,095, $14,672 and $18,375 in 2004, 2005 and 2006, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The amounts owing by (to)&nbsp;affiliates were as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amounts due from affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts receivable, net of allowance for sales returns</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,810</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,506</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amounts due to affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD nowrap>&nbsp;</TD>


</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(62</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(45</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In 2006, the Company entered into an agreement to sell packaging and test equipment related to
specific low lead count packages to Wuxi CR <FONT style="white-space: nowrap;">Micro-Assembly</FONT> Technology Ltd. (&#147;ANST&#148;) for $35,000
payable over 4&nbsp;years and a <FONT style="white-space: nowrap;">performance-based</FONT> contingent <FONT style="white-space: nowrap;">earn-out</FONT> of $5,000. ANST is a wholly owned
subsidiary of MAT, of which the Company has a 25% shareholding. As a result of the planned
sale of these assets to ANST, the Company has separately classified the related assets of
$28,688 to assets held for sale, a component of other <FONT style="white-space: nowrap;">non-current</FONT> assets. During 2006, $2,429 of
the related assets have been transferred to ANST and $430 of gain has been recognized in year ended
December&nbsp;31, 2006. In addition to the transfer of assets, the
</DIV>


<P align="center" style="font-size: 10pt">F-18
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Company entered into an agreement to provide sales and technical
support to ANST on a quarterly commission basis from 2007 to 2009.
</DIV>


<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>3.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Cash and Cash Equivalents</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Cash and cash equivalents consist of the following:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash at banks and on hand</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">29,126</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">62,551</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Bank fixed deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">153,991</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,309</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Money market funds</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,891</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,039</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Foreign government treasury bills</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,712</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,558</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">224,720</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">171,457</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>4.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Marketable Securities</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Marketable securities consist of the following:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14" style="border-bottom: 1px solid #000000"><B>December 25, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14" style="border-bottom: 1px solid #000000"><B>December 31, 2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Gross</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Gross</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Gross</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Gross</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Amortized</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unrealized</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unrealized</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Fair</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Amortized</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unrealized</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unrealized</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Fair</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Cost</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Gains</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Losses</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Value</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Cost</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Gains</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Losses</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Value</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="white-space: nowrap;">Available-for-sale</FONT><BR>corporate debt securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">27,562</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,027</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">26,535</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">61,521</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,072</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">60,484</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="white-space: nowrap;">Held-to-maturity</FONT><BR>certificates of deposit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,916</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,916</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Maturities of marketable securities (at fair value) are as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Marketable securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Due in one year or less</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">17,648</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">45,126</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Due after one year through five years</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,803</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,358</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">35,451</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">60,484</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Gross realized gains and losses in 2004 were $86 and $623, respectively. Gross realized gains
and losses in 2005 were $nil and $nil, respectively. Gross realized gains and losses in 2006 were
$5 and $nil, respectively. Proceeds from the sales or maturities of <FONT style="white-space: nowrap;">available-for-sale</FONT> marketable securities
during 2004, 2005 and 2006 were $177,184, $16,513 and $56,232, respectively.
</DIV>


<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>5.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Accounts Receivable</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Accounts receivable consists of the following:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accounts receivable &#151; third parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">243,830</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">247,185</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Allowance for sales returns</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,840</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,406</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">240,990</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">243,779</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-19
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Movements in the allowance for sales returns are as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Beginning</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,362</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,899</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,840</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Utilized during the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,511</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,094</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Charged during the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,048</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,517</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,034</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Writeback during the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(482</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,468</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ending</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,899</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,840</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,406</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>6.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Other Receivables</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Other receivables consist of the following:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deposits and staff advances</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">718</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Grants receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,313</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Forward contract receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,051</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">196</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Taxes receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,796</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,533</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,947</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,528</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,336</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,975</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>7.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Inventories</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Inventories consist of the following:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Raw materials</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">63,079</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">88,339</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="white-space: nowrap;">Work-in-progress</FONT></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,727</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,395</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Finished goods</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">677</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,880</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">79,483</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">111,614</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>8.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Prepaid Expenses and Other Assets</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Prepaid expenses and other current assets consist of the following:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Leasing prepayments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10,054</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other prepayments and assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,543</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,035</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred income tax assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,425</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">289</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loans to a vendor</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,329</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,029</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">26,351</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">18,364</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Prepaid expenses and other non-current assets consist of the following:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Leasing prepayments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,623</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred income tax assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,879</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,028</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">289</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">285</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loans to a vendor</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,441</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,412</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Debt issuance cost, net of
accumulated amortization of
$3,026 and $5,397</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,895</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,510</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Assets held for sale</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,259</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,146</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">63,197</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">83,640</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-20
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Leasing prepayments represent prepayments of lease rental obligations for certain plant and
machinery leased under sale and <FONT style="white-space: nowrap;">lease-back</FONT> arrangements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company extended $5,000 and $15,000 loans to a vendor in June&nbsp;2003 and January&nbsp;2004,
respectively, to secure a specified minimum quantity of substrates up to December&nbsp;2008. The loans
are <FONT style="white-space: nowrap;">interest-free</FONT> and are collateralized by equipment purchased by the loan monies, mortgage on the
factory of the vendor and 2,400 shares of the vendor. The loans of $5,000 and $15,000 are repayable
in quarterly installments of $450 and $882 up to June&nbsp;2007 and December&nbsp;2008, respectively. During
the year ended December&nbsp;31, 2006, $5,329 was repaid.
</DIV>


<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>9.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Property, Plant and Equipment</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Property, plant and equipment consist of the following:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Freehold land</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,857</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,972</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Land and land use rights</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,864</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,864</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Buildings, mechanical and electrical installation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">170,206</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">236,179</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,660,504</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,880,982</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,856,431</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,142,997</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total accumulated depreciation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">749,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">950,167</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property, plant and equipment, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,107,031</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,192,830</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Depreciation charged to results of operations, including depreciation related to assets under
capital leases, amounted to $163,975, $195,923 and $229,067 in 2004, 2005 and 2006, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the third quarter of 2004, following the consummation of the merger, the Company adopted
ChipPAC&#146;s policy to depreciate equipment on a <FONT style="white-space: nowrap;">straight-line</FONT> basis over 8&nbsp;years, from
5&nbsp;years previously. The impact of this change was depreciation savings of $23,373 in 2004. The
change resulted in an increase in net income of $19,698, net of tax effects of $3,675. This also
resulted in a decrease in loss per share and ADS by $0.01 and $0.14, respectively, in 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company routinely reviews the remaining estimated useful lives of its equipment to determine if
such lives should be adjusted due to the likelihood of technological obsolescence arising from
changes in production techniques or in market demand for the use of its equipment. However, due to
the nature of the packaging and testing operations, which may include sudden changes in demand in
the end markets, and due to the fact that certain equipment is dedicated to specific customers, the
Company may not be able to accurately anticipate declines in the utility of its equipment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Land use rights represent payments to secure, on a <FONT style="white-space: nowrap;">fully-paid</FONT> up basis, the use of properties where
the Company&#146;s facilities are located in Shanghai, China and Kuala Lumpur, Malaysia for a period of
50 and 99&nbsp;years, respectively. The land use rights expire in the year 2044 for Shanghai, China and
in the year 2086 for Kuala Lumpur, Malaysia. The Company&#146;s Singapore facilities are located in a
building constructed on land held on a <FONT style="white-space: nowrap;">30-year</FONT> operating lease which is renewable for a further
<FONT style="white-space: nowrap;">30-year</FONT> period subject to the fulfillment of certain conditions. The facilities in <FONT style="white-space: nowrap;">Hsin-Chu</FONT> Hsien,
Taiwan are located on a freehold land.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Included in property, plant and equipment are equipment acquired under capital lease at a cost of
$20,406 and $20,891 as of December&nbsp;25, 2005 and December&nbsp;31, 2006, respectively. The accumulated
depreciation for these leased assets as of December&nbsp;25, 2005 and December&nbsp;31, 2006 amounted to
$3,775 and $6,397, respectively.
</DIV>



<P align="center" style="font-size: 10pt">F-21
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>


<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>10.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Intangible Assets</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Intangible assets consist of the following:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>December 25, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>December 31, 2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Gross</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Accumulated</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Net</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Gross</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Accumulated</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Net</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Assets</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amortization</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Assets</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Assets</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amortization</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Assets</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tradenames</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,558</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,142</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,658</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,042</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Technology and
intellectual property</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,533</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,467</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,733</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,267</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer relationships</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(70,338</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,962</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(99,300</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Software, licenses
and others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,528</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,319</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,209</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,855</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12,318</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,537</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">157,528</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(84,748</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">72,780</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">163,855</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(122,009</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">41,846</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Amortization
expense related to <FONT style="white-space: nowrap">finite-lived </FONT>intangible assets is summarized as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 31,<BR>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 25,<BR>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 31,<BR>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tradenames</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">458</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,100</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Technology and intellectual property</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,200</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer relationships</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,688</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,650</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,962</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Software, licenses and others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,265</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,988</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">24,708</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">58,215</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">37,250</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Finite-lived intangible assets are generally being amortized over estimated useful lives of
two to ten years. Estimated future amortization expense as of December&nbsp;31, 2006 is summarized as
follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,592</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,069</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,237</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,995</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2011</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,281</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,672</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">41,846</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>11.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Goodwill</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The changes in the carrying value of goodwill are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 25,<BR>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 31,<BR>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Beginning</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">523,598</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">522,625</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchase adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(973</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,113</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ending</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">522,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">513,512</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of December&nbsp;31, 2006, the Company had goodwill of $2,209 related to the acquisition of
Winstek and $511,303 related to the acquisition of ChipPAC. In 2005, purchase adjustments of $973
related to the cost of acquisition of $453 and fair value of liabilities acquired of $520 were
recorded. In 2006, purchase adjustments of $9,113 related to the deferred taxes valuation were
recorded.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pursuant to business combination accounting rules, the goodwill associated with the acquisition of
ChipPAC was recorded based on share prices at the time the merger was announced. The Company
performed its annual test for impairment of goodwill related to ChipPAC during the fourth quarter
of 2004, 2005 and 2006. Goodwill was allocated to reporting units associated with the Company&#146;s
acquisitions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In 2005 and 2006, the Company performed its annual test for impairment and determined that the fair
value of the reporting units exceeds their carrying value, and therefore goodwill was not impaired.
</DIV>

<P align="center" style="font-size: 10pt">F-22
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The annual impairment review completed in 2004 indicated that the reported book value of the
ChipPAC reporting units exceeded its fair value, with the determination of fair value supplemented
by independent appraisal using a combination of discounted cash flows and market multiples
methodologies. The Company believed that the decline in the fair values of the ChipPAC reporting
units in 2004 were primarily due to:-
</DIV>

<DIV style="margin-top: 0pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>longer than expected
<FONT style="white-space: nowrap">slow-down</FONT> in the industry beginning late 2004 as customers corrected
excess inventory position. This reduction in demand, coupled with the competitive pressures in
the packaging and testing business had affected the
<FONT style="white-space: nowrap">short-term</FONT> earnings expectation of the
Company; and</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a revision of the industry outlook beyond 2005 as compared to the time the merger was
announced.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company compared the fair values of the ChipPAC reporting units to the fair values of their
tangible and identifiable intangible net assets for purposes of determining the implied fair value
of goodwill in 2004. Upon completion of the assessment, the Company
recorded a <FONT style="white-space: nowrap">non-cash</FONT> impairment
charge of $453,000 to reduce the carrying value of goodwill related to the acquisition of ChipPAC
to its estimated fair value of $521,389 in 2004.
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>12.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Business Combination</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On August&nbsp;5, 2004, STATS and ChipPAC consummated the previously announced merger which resulted in
ChipPAC becoming a <FONT style="white-space: nowrap">wholly-owned
</FONT>subsidiary of STATS. The transaction had been accounted for using
the purchase method. ChipPAC is a full portfolio provider of semiconductor packaging, design, test
and distribution services. By combining the testing expertise of STATS with the packaging expertise
of ChipPAC, STATS ChipPAC offers its global customers one of the broadest portfolios of
comprehensive <FONT style="white-space: nowrap">end-to-end</FONT> packaging and test services in the semiconductor industry.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The number of STATS ChipPAC ADSs issued pursuant to the merger was 86,190,753, determined based
upon the exchange ratio of 0.87 STATS ADS for each share of ChipPAC Class&nbsp;A common stock and the
number of outstanding shares of ChipPAC Class&nbsp;A common stock as of August&nbsp;5, 2004. The average
market price per STATS ADS of $12.402 is based upon an average of the closing prices for a range of
trading days (February 8 through 12, 2004) around February&nbsp;10, 2004, the date on which the merger
was announced.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The fair values of STATS ChipPAC substitute options, both vested and unvested, were determined
using a Black-Scholes valuation model with the following assumptions: no dividend yield, an
expected volatility of 62.47%, and a
<FONT style="white-space: nowrap">risk-free</FONT> interest rate of 3.12%. The model assumed an
expected life of five to seven years for vested and unvested options.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The number of STATS ChipPAC ordinary shares that were subjected to STATS ChipPAC substitute options
in connection with the merger was 76,492,951, based upon the total number of shares of ChipPAC
Class&nbsp;A common stock subjected to outstanding ChipPAC options as of August&nbsp;5, 2004, at an exercise
price range of $0.15 to $1.47 per STATS ChipPAC ordinary share.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Based on the above, the estimated total purchase price of the ChipPAC acquisition was as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Value of STATS ChipPAC ADSs issued</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,068,955</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Value of STATS ChipPAC substitute options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,548</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total value of STATS ChipPAC securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,143,503</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Estimated direct transaction costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,369</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total estimated purchase price</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,152,872</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the purchase method of accounting, the total estimated purchase price as shown in the
table above was allocated to ChipPAC&#146;s net tangible and identifiable intangible assets based on
their estimated fair values as at merger date. In determining the price allocation, management
considered, among other factors, its intention for use of acquired assets as well as historical
demand and estimates of future demand for ChipPAC&#146;s products and services. Based on these
assumptions, the estimated purchase price was allocated as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current and other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">170,332</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">447,568</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(161,203</TD>
    <TD nowrap>)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-23
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">

<TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="white-space: nowrap">Long-term
debts</FONT></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(375,519</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other
<FONT style="white-space: nowrap">long-term </FONT>liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(51,924</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,254</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortizable intangible assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tradenames</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,700</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Technology and intellectual property</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer relationships</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99,300</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Software and licenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,218</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unearned compensation on unvested options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,011</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Goodwill</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">974,389</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,152,872</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Certain adjustments were made to goodwill subsequent to the acquisition date and are described
in Note 11, Goodwill.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Of the total estimated purchase price, an estimate of $29,254 had been allocated to net assets
assumed and $147,218 had been allocated to amortizable identifiable intangible assets acquired. The
final allocation of purchase price was subjected to adjustments as described in Note&nbsp;11.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The fair value of tangible assets was estimated primarily based on the cost and sales comparison
approaches. In applying the cost approach, the replacement or reproduction cost estimates for the
buildings, machinery and other equipment were based on indexed original costs or manufacturer
reported replacement costs. Original historical cost data was segregated by appraisal class and
year of acquisition, and indexed to estimated reproduction cost. Inflation trend factors were
derived using indices from nationally recognized indexes. Replacement or reproduction costs were
reduced by depreciation factors that reflect the estimated physical deterioration and functional
obsolescence of assets. The sales comparison approach was used for tangible assets that have an
active resale market. Similar assets recently sold or offered for sale were analyzed and their
prices adjusted to reflect the difference between the comparable asset and the asset and the
conditions of the sale to estimate the value of the acquired assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The fair value assigned to intangible assets was estimated by discounting the estimated future cash
flows of the intangibles assets to their present value. The cash flow estimates used for
technology and intellectual property were based on estimates of product revenue and appropriate
royalty rates (based on an analysis of rates for similar technologies and forecast product
margins). The cash flow estimates used for customer relationships were based on estimates of
revenue attributed to the current customers and the programs they have been qualified on as well as
the profitability attributed to each customer related asset. The rate used to discount these net
cash flows was determined after consideration of market returns on debt and equity capital, the
weighted average return on invested capital, the nature of each asset and the risk associated with
achieving the forecast.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The fair
value of the ChipPAC tradename was amortized on a
<FONT style="white-space: nowrap">straight-line </FONT>basis over an estimated
life of seven years. Technology and intellectual property were related to ChipPAC&#146;s technology for
ball grid array, <FONT style="white-space: nowrap">lead-frame </FONT>and chip scale package. The fair value of these assets was amortized
on a <FONT style="white-space: nowrap">straight-line </FONT>basis over an average estimated life of ten years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Customer relationships represent those customers with which ChipPAC had current sales
relationships. The fair value of these assets was amortized on a
<FONT style="white-space: nowrap">straight-line </FONT>basis over an
average estimated life of two years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company recorded $2,011 of unearned compensation on unvested options, in accordance with FASB
Interpretation No.&nbsp;44, &#147;Accounting for Certain Transactions Involving Stock Compensation.&#148; This
amount represents the intrinsic value of stock options assumed that is earned as the employees
provide services over the next four years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Of the total estimated purchase price, $974,389 had been allocated to goodwill. Goodwill
represents the excess of the purchase price of an acquired business over the fair value of the
underlying net tangible and identifiable intangible assets. In accordance with SFAS No.&nbsp;142,
&#147;Goodwill and Other Intangible Assets,&#148;
</DIV>

<P align="center" style="font-size: 10pt">F-24
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">goodwill and intangible assets with indefinite lives resulting from business combinations will not
be amortized but instead will be tested for impairment at least annually or more frequently if
certain indicators are present.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following pro forma financial information presents a summary of the results of operations of
the Company assuming the merger was consummated on January&nbsp;1, 2004. The pro forma financial
information is not necessarily indicative of the operating results or financial position that would
have occurred if the merger had been consummated on January&nbsp;1, 2004, nor is it necessarily
indicative of future operating results or financial position of the Company.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,084,165</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(484,695</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss per ordinary share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic and diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.25</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss per ADS:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic and diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2.52</TD>
    <TD nowrap>)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The
proforma financial information above included the following material,
<FONT style="white-space: nowrap">non-recurring</FONT> charges: impairment of goodwill of $453,000 and merger related expenses of $5,399 in 2004.
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>13.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Accrued Operating Expenses</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Accrued operating expenses consist of the following:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 25,<BR>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 31,<BR>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Staff costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">31,324</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">33,957</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchase of raw materials</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,082</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,875</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Maintenance fees, license fees and royalties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,378</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,828</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,780</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,553</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for vacation liability</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,732</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,299</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,636</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,115</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">96,932</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">97,627</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>14.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Income Taxes</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Income (loss)&nbsp;before income taxes consists of the following:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 31,<br>2004</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 25,<br>2005</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 31,<br>2006</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Singapore</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,674</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,698</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">951</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(462,675</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16,880</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">111,626</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(456,001</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(10,182</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">112,577</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">F-25
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Income tax benefit (expense)&nbsp;consists of the following:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 31,<br>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 25,<br>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 31,<br>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current tax:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Singapore</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,283</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(72</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Foreign</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(172</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(373</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,935</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total current tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,111</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(445</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(5,935</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred tax:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Singapore</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(9,145</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(617</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,400</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Foreign</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,860</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,627</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18,424</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total deferred tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(15,005</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(9,244</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(19,824</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(7,894</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(9,689</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(25,759</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A reconciliation of the expected tax expense (benefit)&nbsp;at the Singapore statutory rate of tax
to actual tax expense (benefit)&nbsp;is as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 31,<br>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 25,<br>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 31,<br>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense (benefit)&nbsp;computed at Singapore
statutory rate of 20.0% (2005 and 2004: 20.0%)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(91,200</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,036</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">22,515</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="white-space: nowrap">Non-deductible
</FONT>expenses, including goodwill
impairment charges</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91,488</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,989</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,892</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">

<TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="white-space: nowrap">Non-taxable
income</FONT></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,212</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,194</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(461</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Differences in tax rates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,898</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,434</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,550</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of recognizing deferred tax assets at
concessionary tax rate and tax credits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13,199</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,539</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13,926</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change in statutory tax rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(651</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tax benefits from employee share option plans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,084</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(665</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Reinvestment allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,415</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,755</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,632</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change in valuation allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,137</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,133</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,114</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of tax loss carryforwards and unutilized
capital allowance previously not recognized</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(21,685</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Benefit of tax status change</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(935</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Taxable foreign exchange adjustment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,639</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,283</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,575</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">All other items, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">693</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,143</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">448</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,894</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><I>$</I></TD>
    <TD align="right">9,689</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">25,759</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Deferred income taxes reflect the net tax effects of (a)&nbsp;temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used
for income tax purposes, and (b)&nbsp;operating loss, unutilized capital allowance and investment tax
credit carryforwards. The tax effect of significant items comprising the Company&#146;s deferred income
tax assets and liabilities at December&nbsp;25, 2005 and December&nbsp;31, 2006 are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 25,<br>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 31,<br>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred income tax assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Operating loss carryforwards</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">34,787</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">27,079</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Investment, and research and development tax credits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,136</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,804</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Reinvestment allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,336</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,968</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,551</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,185</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,165</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,066</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150,975</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">159,102</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Valuation allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(110,671</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(119,785</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">40,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">39,317</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred income tax liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">26,386</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">34,147</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Allowances and reserves</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,618</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,610</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56,757</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net deferred income tax assets (liabilities)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(6,700</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(17,440</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-26
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In 2004, as part of the acquisition of ChipPAC, the Company acquired approximately $103,351 of
net operating loss carryforwards, $32,185 of tax credit carryforwards and $47,023 of reinvestment
allowance that were recognized as deferred tax assets upon acquisition. The Company established a
valuation allowance of $53,973 against all of the net operating loss carryforwards and reinvestment
allowance, and a portion of the Korean tax credit carryforwards. If utilized, these attributes will
be treated as a reduction in acquired goodwill. In 2004, $5,916 of the South Korea tax credit
carryforwards was utilized. In 2006, a further $9,113 of the South Korea and China net operating
loss carryforwards and tax credit carryforwards was utilized.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The deferred tax assets as of December&nbsp;25, 2005 and December&nbsp;31, 2006 arose principally as a result
of the deferred tax benefit associated with operating loss carryforwards, investment, and research
and development tax credits, reinvestment allowance and deductible temporary differences on
property, plant and equipment. The Company recorded a valuation allowance of $110,671 and $119,785
as of December&nbsp;25, 2005 and December&nbsp;31, 2006, respectively, which represents an increase of
$30,133 and $9,114 in 2005 and 2006, respectively, to reduce the assets to the amounts that the
Company deemed, more likely than not, that the deferred tax asset will not be realized. In
assessing the realizability of deferred tax assets, management considers whether it is more likely
than not that some portion or all of the deferred tax assets will not be realized. The ultimate
realization of deferred tax assets is dependent upon the generation of future taxable income during
the periods in which those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning
strategies in making this assessment. Based upon the level of historical taxable income and
projections for future taxable income over the periods which the deferred tax assets are
deductible, the Company establish a partial valuation allowance against its gross deferred tax
assets to reduce the assets to the amount the Company deemed, more likely than not, to be
recoverable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As at December&nbsp;31, 2006, the Company has approximately $113,197 of tax loss carryforwards available
to offset against future taxable income, certain amounts of which will expire in varying amounts
from 2007 to 2024. Changes in stock ownership can result in a limitation on the amount of net
operating loss that is available as carryforwards. The Company determined it had undergone such an
ownership change in 2004 in connection with its merger with ChipPAC. In 2005, the limitations in
connection with the merger with ChipPAC related to the carryforward of certain Singapore tax losses
and capital allowances for offset against future taxable profits of the Company were waived by the
Singapore tax authorities, subject to fulfillment of certain continuing conditions. Consequently,
approximately $21,685 of such tax loss and capital allowance carryforwards were recognized as
deferred tax assets in 2005. As at December&nbsp;31, 2006, the Company has approximately $2,960 of tax
deductions in the United States as a result of the exercise of employee share options reflected in
net operating loss carryforwards and valuation allowance, of which the tax benefit has not been
realized.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As at December&nbsp;31, 2006, the Company has approximately $7,969, $303,600, $49,834 and $134,493 of
research and development, unutilized capital allowances, investment tax credits and reinvestment
allowance, respectively, which can be used to offset income tax payable in future years. Certain
credits will expire in varying amounts from 2007 through 2013.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company&#146;s pioneer trade was in an adjusted tax loss position due to the substantial amount of
capital allowances claimed arising from capital expenditure on its plant and machinery and trade
losses in certain years. As a result, the Company had not enjoyed any tax exemption in respect of
its income arising from the pioneer activities. On the other hand, the Company had paid taxes in
respect of its interest and rental income as losses arising from the pioneer trade cannot be
<FONT style="white-space: nowrap">set-off</FONT> against the <FONT style="white-space: nowrap">non-qualifying</FONT> income during the pioneer incentive period due to the
application of the law in respect of the pioneer incentive. In September&nbsp;2004, the application for
the revocation of the Company&#146;s pioneer status granted from January&nbsp;1, 1996 to December&nbsp;31, 2003
under the Singapore Economic Expansion Incentives (Relief from Income Tax) Act, Chapter&nbsp;86, for
&#147;Subcontract Assembly And Testing Of Integrated Circuits Including Wafer Probing
Services&#148; was approved by the Singapore Economic Development Board (&#147;EDB&#148;), an agency of the
Government of Singapore. Accordingly, the Company recorded $5,039 of tax recoverable in 2004
related to expected tax refund of taxes paid previously on interest and rental income as the
unutilized tax losses and capital allowances arising from the trading activities would then be
allowed to <FONT style="white-space: nowrap">set-off</FONT> against the income derived in the previous years, of which $4,559 has been
refunded in 2005. The remaining $480 has been refunded in 2006. The Company is in the process of
working with the EDB for a new tax incentive for its Singapore operations.
</DIV>

<P align="center" style="font-size: 10pt">F-27
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>15.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="white-space: nowrap"><B>Short-Term Borrowings</B></FONT></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The <FONT style="white-space: nowrap">short-term</FONT> borrowings relate to the lines of credit with Shin Han Bank (formerly known as Cho
Hung Bank), Hana Bank and the National Agricultural Cooperation Federation Bank in South Korea,
with credit limits of $25,000, $5,000 and $14,000, respectively, and
<FONT style="white-space: nowrap">short-term</FONT> borrowings from Mega Bank of $544. These facilities bore average
interest rates of 4.8% and 4.6% in 2005 and 2006, respectively. As of December&nbsp;25, 2005 and
December&nbsp;31, 2006, $16,891 and $592 were borrowed against these
facilities, and $27,109 and
$43,952 of unutilized South Korean lines of credit were available,
respectively. These South Korean lines of credit are subject to
annual review by the lenders for the continued use of the facilities.
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>16.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Capital Leases</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Future minimum lease payments under capital leases for equipment as of December&nbsp;31, 2006 are as
follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payable in year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,729</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total minimum obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,729</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less amounts representing interest at rates ranging from 4.4% to
4.7% per annum</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(49</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Present value of minimum obligations and current installments of
obligations under capital lease</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,680</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">All leasing arrangements are for testers with <FONT style="white-space: nowrap">3-year</FONT> terms. At the end of the lease term, the
Company may choose to terminate, renew the lease or purchase the equipment at fair market value.
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>17.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="white-space: nowrap"><B>Long-term Debts</B></FONT></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="white-space: nowrap">Long-term</FONT> debts consist of the following:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 25,<br>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 31,<br>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">1.75% convertible senior <FONT style="white-space: nowrap">fixed-rate</FONT> notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">31,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">31,500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">0% convertible senior <FONT style="white-space: nowrap">fixed-rate</FONT> notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2.5% convertible subordinated <FONT style="white-space: nowrap">fixed-rate</FONT> notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">8% convertible subordinated <FONT style="white-space: nowrap">fixed-rate</FONT> notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">6.75% senior <FONT style="white-space: nowrap">fixed-rate</FONT> notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">215,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">215,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">7.5% senior <FONT style="white-space: nowrap">fixed-rate</FONT> notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">U.S. dollars bank loan at floating rates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,760</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,070</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Taiwan dollar loans at floating rates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53,987</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58,615</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Taiwan dollar loans and commercial papers at fixed rates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,866</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,859</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrued <FONT style="white-space: nowrap">yield-to-maturity</FONT> interest on convertible notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,963</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,580</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">794,076</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">758,624</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less current amounts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18,651</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(61,101</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">775,425</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">697,523</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In March, 2002, the Company issued $200,000 of senior, unsecured and unsubordinated
convertible notes due March&nbsp;18, 2007 for net proceeds of $195,032. The convertible notes bear
interest at the rate of 1.75% per annum payable <FONT style="white-space: nowrap">semi-annually</FONT> on March&nbsp;18 and September&nbsp;18 of each
year and have a yield to maturity of 4.91%. At the maturity date, the Company will pay to the note
holders 117.665% of the principal amount. The notes can be converted into the Company&#146;s ordinary
shares or, subject to certain limitations, ADSs, each of which currently represents ten ordinary
shares, at a conversion price of S$3.408 per ordinary share (at a fixed exchange rate of US$1.00 =
S$1.8215). The Company may elect to satisfy its obligations to deliver ordinary shares or ADSs
through delivery of cash in accordance with the terms of the notes. The Company may redeem all or
a portion of the convertible notes at any time on or after March&nbsp;18, 2004 at a price to yield of
4.91% per annum to the redemption date if the Company&#146;s shares or ADSs trade at or above 125% of
the conversion price for a period of 20 trading days in any 30 consecutive trading day period. In
2004, the
</DIV>

<P align="center" style="font-size: 10pt">F-28
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Company repurchased $16,500 aggregate principal of these convertible notes for $18,150 and recorded
a loss of $266. In 2005, the Company repurchased a further $26,080 aggregate principal amount of
these convertible notes for $28,796 and recorded a loss of $390. Holders of these convertible notes
had the right to require the Company to repurchase all or a portion of their notes on March&nbsp;18,
2005 at a price equal to 110.081% (to arrive at effective yield of 4.91%) of the principal amount
of the notes being redeemed, plus any accrued and unpaid interest accrued to the date of
redemption. In addition, upon the occurrence of certain repayment events, including a change in
control, on or prior to March&nbsp;18, 2007, each note holder may require the Company to repurchase all
or a portion of such holder&#146;s notes at a price to yield 4.91% per year to the redemption date. The
Company received notices of demand for redemption of $125,920 aggregate principal amount of these
convertible notes which the Company redeemed in March&nbsp;2005 at a loss of $1,263. The Company
financed the redemption from cash and <FONT style="white-space: nowrap">short-term</FONT> borrowings. In July&nbsp;2005, the Company repurchased and cancelled
$42,580 aggregate principal amount of these convertible notes. Following
the redemption and cancellation, $31,500 aggregate principal amount of these convertible notes
remained outstanding at December&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On November&nbsp;7, 2003, the Company issued $115,000 of senior, unsecured and unsubordinated
convertible notes due November&nbsp;7, 2008, for net proceeds of $112,345. The convertible notes have a
yield to maturity of 4.25%. At the maturity date, the Company will pay to the note holders 123.4%
of the principal amount, comprising principal and redemption interest. The notes can be converted
into the Company&#146;s ordinary shares or, subject to certain limitations, ADSs, each of which
currently represents ten ordinary shares, at an initial conversion price of S$3.05 per ordinary
share (equivalent to an initial number of 570.5902 ordinary shares per $1,000 principal amount of
convertible notes, based on a fixed exchange rate of US$1.00 = S$1.7403). The Company may elect to
satisfy its obligations to deliver ordinary shares or ADSs through delivery of cash in accordance
with the terms of the notes. The Company may redeem all or a portion of the convertible notes at
any time on or after November&nbsp;7, 2006 at a price to yield of 4.25% per annum to the redemption date
if the Company&#146;s shares or ADSs trade at or above 130% of the conversion price for a period of 20
trading days in any 30 consecutive trading day period. The note holders may require the Company to
repurchase all or a portion of their notes on November&nbsp;7, 2007 at a price equal to 118.32% (to
arrive at effective yield of 4.25%) of the principal amount of the notes being redeemed, plus any
accrued and unpaid interest accrued to the date of redemption. In addition, upon the occurrence of
certain repayment events, including a change in control, on or prior to November&nbsp;7, 2008, each note
holder may require the Company to repurchase all or a portion of such holder&#146;s notes at a price to
yield of 4.25% per year to the redemption date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The conversion price of the 1.75% convertible senior notes and zero coupon convertible senior notes
may be subject to adjustments upon occurrence of the following: (1)&nbsp;on share distribution,
share split or share consolidation; (2)&nbsp;on issue or distribution of the Company&#146;s ordinary shares,
or subsidiaries&#146; issue of any securities or rights which are convertible into or exchangeable for
the Company&#146;s ordinary shares, to all or substantially all holders of the Company&#146;s ordinary shares
for below the reasonable range of fair market value; (3)&nbsp;on issue or distribution to all or
substantially all holders of the Company&#146;s ordinary shares of warrants or rights to purchase or
subscribe for the Company&#146;s ordinary shares for below the reasonable range of fair market value;
(4)&nbsp;on issue or distribution to all or substantially all holders of the Company&#146;s ordinary shares
of assets or other securities, including rights to acquire those assets or other securities, for
below the reasonable range of the assets or other securities&#146; fair market value; (5)&nbsp;on issue or
distribution of &#147;extraordinary dividends&#148; (defined as a total dividend that is equal to or exceeds
(i)&nbsp;2% of the one year average closing price of the Company&#146;s ordinary shares if the Company has
never paid cash dividends, or (ii)&nbsp;the lower of (a)&nbsp;two times the largest aggregate cash dividends
in any previous year, and (b)&nbsp;the largest aggregate cash dividends in any previous year plus 1% of
the one year average closing price of the Company&#146;s ordinary shares if the Company has paid cash
dividends at least once); and (6)&nbsp;on <FONT style="white-space: nowrap">spin-off</FONT> of any of the Company&#146;s subsidiaries or other
business units.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The terms of the indentures governing the 1.75% convertible senior notes and zero coupon
convertible senior notes provide that the ordinary shares deliverable upon conversion would not be
registered under the Securities Act of 1933.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The $50,000 8.0% convertible subordinated notes due 2011 are ChipPAC&#146;s unsecured and subordinated
obligations. These convertible notes will mature on June&nbsp;15, 2011 and bear interest rate of 8.0%
per annum payable <FONT style="white-space: nowrap">semi-annually</FONT> on June&nbsp;15 and December&nbsp;15 of each year. On the maturity date of
these convertible notes, ChipPAC will pay to the note holders of these convertible notes 100% of
the principal amount. These convertible notes can be converted into the Company&#146;s ADSs at a
conversion price of $11.448 per ADS.
</DIV>


<P align="center" style="font-size: 10pt">F-29
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">ChipPAC may redeem all or a portion of these convertible notes at any time on or after June
15, 2004 at the designated redemption price, expressed as a percentage of principal amount of the
convertible notes, plus, in each case, accrued interest to the date of redemption:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Year</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Percentage</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">104.00</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">103.33</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">102.67</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">102.00</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">101.33</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">101.67</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2010 and thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.00</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Upon the occurrence of specified change in control events, each holder of these convertible
notes may require ChipPAC to repurchase all or a portion of such holder&#146;s notes at a purchase price
equal to 100% of the principal amount thereof plus accrued and unpaid interest. In October&nbsp;2006,
the Company repurchased the outstanding $50,000 aggregate principal amount of these convertible
notes for $50,500 and recorded a loss of $500. The repurchase was financed with current working
capital, including the Company&#146;s cash and cash equivalents.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The $150,000 2.5% convertible subordinated notes due 2008 are ChipPAC&#146;s unsecured and subordinated
obligations. These convertible notes will mature on June&nbsp;1, 2008 and bear interest rate of 2.5% per
annum payable <FONT style="white-space: nowrap">semi-annually</FONT> on June 1 and December 1 of each year. On the maturity date of these
convertible notes, ChipPAC will pay to the note holders of these convertible notes 100% of the
principal amount. These convertible notes can be converted into the Company&#146;s ADSs at a
conversion price of $9.267 per ADS. These convertible notes are not redeemable at the option of
ChipPAC. Upon the occurrence of specified change in control events, each holder of these notes may
require ChipPAC to repurchase all or a portion of such holder&#146;s notes at a purchase price equal to
100% of the principal amount thereof on the date of purchase plus accrued and unpaid interest. On
October&nbsp;11, 2004, STATS ChipPAC, ChipPAC and the trustee for these convertible notes entered into a
second supplemental indenture to provide for an unconditional guarantee of these convertible notes
on a subordinated basis by STATS ChipPAC (but not by any of its subsidiaries). On October&nbsp;18, 2004,
ChipPAC commenced a consent solicitation from holders of these convertible notes to amend the
indenture governing these convertible notes to replace ChipPAC&#146;s obligation to file with the SEC
annual reports and such other information, documents and reports specified in Section&nbsp;13 and 15(d)
of the Exchange Act of 1934 with an obligation of STATS ChipPAC to file all such reports with the
SEC as are applicable to a foreign private issuer. The consent solicitation expired on November&nbsp;1,
2004. ChipPAC received valid deliveries of consents from holders of approximately $130,500
aggregate principal amount, or 87%, of these convertible notes outstanding. Accordingly, ChipPAC
obtained the requisite consents authorizing the adoption of the proposed amendment to the
indenture. The consents were accepted and the amendments to the indenture became effective on
November&nbsp;2, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The conversion price of the 8.0% convertible subordinated notes and 2.5% convertible subordinated
notes may be subject to adjustments upon occurrence of the following: (1)&nbsp;on share distribution,
share split or share consolidation; (2)&nbsp;on issue or distribution to all or substantially all
holders of the Company&#146;s ordinary shares of warrants or rights to subscribe for or purchase the
Company&#146;s ordinary shares, or securities convertible into the Company&#146;s ordinary shares, at a price
per share or a conversion price per share below the reasonable range of fair market value; (3)&nbsp;on
issue or distribution to all or substantially all holders of the Company&#146;s ordinary shares any
shares of capital stock of the Company, evidences of indebtedness or other <FONT style="white-space: nowrap">non-cash</FONT> assets
(excluding (i)&nbsp;dividends, distributions and rights or warrants referred to above, and (ii)
dividends or distributions paid in cash), or rights or warrants to subscribe for, or purchase any
of the Company&#146;s securities (excluding those rights or warrants referred to above); (4)&nbsp;on issue or
distribution to all or substantially all holders of the Company&#146;s ordinary shares of all cash
distributions in an aggregate amount that, together with (a)&nbsp;any cash and any other consideration
payable in respect of any purchase by the Company of the Company&#146;s ordinary shares
consummated within the preceding 12&nbsp;months not triggering a conversion price adjustment and (b)&nbsp;all
cash distributions to all or substantially all holders of the Company&#146;s ordinary shares made within
the preceding 12&nbsp;months not triggering a conversion price adjustment, exceeds, in the case of the
2.5% convertible subordinated notes, 10% of the Company&#146;s then market capitalization, and in the
case of the 8.0% convertible subordinated notes, 12.5% of the Company&#146;s then market capitalization;
and (5)&nbsp;on purchase by the Company of the Company&#146;s ordinary shares to the extent it involves
aggregate consideration that, together with (a)&nbsp;any cash and any other consideration payable in
respect of any purchase by the Company of the Company&#146;s ordinary shares consummated within the
</DIV>

<P align="center" style="font-size: 10pt">F-30
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">preceding 12&nbsp;months not triggering a conversion price adjustment and (b)&nbsp;all cash distributions to
all or substantially all holders of the Company&#146;s ordinary shares made within the preceding 12
months not triggering a conversion price adjustment, exceeds, in the case of the 2.5% convertible
subordinated notes, 10% of the Company&#146;s then market capitalization, and in the case of the 8%
convertible subordinated notes, 12.5% of the Company&#146;s then market capitalization.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The terms of the indentures governing the 2.5% convertible subordinated notes and the 8.0%
convertible subordinated notes permits only issuance of new shares. There is no net cash or net
share settlement provisions. Also, pursuant to the registration rights agreement relating to the
2.5% convertible subordinated notes and the 8.0% convertible subordinated notes, shelf registration
is required to be maintained for a period of two years. The shelf registration requirement of the
8.0% convertible subordinated notes had expired as of the date of the merger of the Company and
ChipPAC, and the shelf registration requirement of the 2.5% convertible subordinated notes has been
continued via a registration statement on Form <FONT style="white-space: nowrap">F-3/S-3</FONT> filed on October&nbsp;13, 2004 and which offering
had been terminated on October&nbsp;11, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The various provisions of the convertible notes were evaluated by the Company to determine whether
any specific conversion features should be bifurcated from the debt host instrument and accounted
for as separate derivatives. The Company concluded that conversion options, conversion price
adjustments, option to settle for cash upon conversion, the Company&#146;s call option and note holders&#146;
put option embedded in the convertibles notes may be classified as equity and therefore do not need
to be accounted for separately from the debt host instruments. The change in control put options
are determined to be clearly and closely related to the debt host instrument and are not required
to be accounted for separately. Further, the conversion prices were <FONT style="white-space: nowrap">out-of-the-money</FONT> at the
commitment dates and did not result in bifurcation of beneficial conversion features.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On November&nbsp;18, 2004, the Company issued $215,000 of senior unsecured notes due November&nbsp;15, 2011,
for net proceeds of $210,458. The senior notes bears interest of 6.75% per annum payable
<FONT style="white-space: nowrap">semi-annually</FONT> on May&nbsp;15 and November&nbsp;15 of each year. At the maturity date, the Company will pay to
the note holders 100.0% of the principal amount, comprising principal and redemption interest.
Prior to November&nbsp;15, 2008, the Company may redeem all or a part of the senior notes at any time by
paying a &#147;make whole&#148; premium plus accrued and unpaid interest. The Company may redeem all, but not
less than all, of these notes at any time in the event of certain changes affecting withholding
taxes at 100% of their principal amount plus accrued and unpaid interest. On or after November&nbsp;15,
2008, the Company may redeem all or a part of these notes at any time at the redemption prices
specified under the terms and conditions of the senior notes plus accrued and unpaid interest. In
addition, prior to November&nbsp;15, 2007, the Company may redeem up to 35% of these notes with the net
proceeds of certain equity offerings. Upon a change of control, the Company will be required to
offer to purchase these notes at 101.0% of their principal amount plus accrued and unpaid interest.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On July&nbsp;19, 2005, the Company issued $150,000 of senior unsecured notes due July&nbsp;19, 2010 for net
proceeds of $146,535. The senior notes bear interest rate of 7.5% per annum payable <FONT style="white-space: nowrap">semi-annually</FONT>
on January&nbsp;19 and July&nbsp;19 of each year. At the maturity date, the Company will pay to the note
holders 100.0% of the principal amount, comprising principal and redemption interest. Prior to July
19, 2010, the Company may redeem all or a part of the senior notes at any time by paying a &#147;make
whole&#148; premium plus accrued and unpaid interest. The Company may redeem all,
but not less than all, of these notes at any time in the event of certain changes affecting
withholding taxes at 100% of their principal amount plus accrued and unpaid interest and liquidated
damages, if any. In addition, prior to July&nbsp;19, 2008, the Company may redeem up to 35% of these
notes at a redemption price of 107.5% of the principal amount, plus accrued and unpaid interest and
liquidated damages, if any, to the redemption date, with the net proceeds of certain equity
offerings. Upon a change of control, the Company will be required to offer to purchase these notes
at 101.0% of their principal amount plus accrued and unpaid interest. A portion of the net proceeds
were used to repay the then outstanding $99,000 <FONT style="white-space: nowrap">short-term</FONT> debts with <FONT style="white-space: nowrap">Overseas-Chinese</FONT> Banking
Corporation Limited and Bank of America N.A.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company has two U.S. dollars term loan facilities of $25,000 and $5,000 from Hana Bank in South
Korea, of which $14,070 was outstanding as of December&nbsp;31, 2006. As at December&nbsp;31, 2006, the
average interest rate on the loans was 7.1% per annum. The principal and interest on these loans
are repayable over eight equal quarterly installments from November&nbsp;2006 to June&nbsp;2009.
</DIV>

<P align="center" style="font-size: 10pt">F-31
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Winstek has a NT$1.8&nbsp;billion ($55,232) floating rate New Taiwan dollar term loan facility with a
syndicate of lenders, with Mega Bank (formerly known as Chiao Tung Bank) as the agent bank. As of
December&nbsp;31, 2006, Winstek has drawn down NT$1.6&nbsp;billion ($50,338) under the loan, which is
repayable in eight equal installments commencing February&nbsp;27, 2006 and ending on August&nbsp;27, 2009.
The interest rate on the loan was 3.5% per annum and interest on the loan is payable on a monthly
basis. This loan is secured by a pledge of equipment with net book value of $50,163 as of December
31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In August&nbsp;2006, Winstek obtained another floating rate New Taiwan dollar term loan facility of
NT$3.6&nbsp;billion ($110,463) with a syndicate of lenders, with Taishin bank as the agent bank. The
loan drawdowns must be made within 24&nbsp;months from the date of first drawdown, not to be later than
February&nbsp;18, 2007. As of December&nbsp;31, 2006, Winstek has not utilized the term loan facility and
there was no outstanding balance on this facility.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Additionally,
Winstek has NT$1.4&nbsp;billion ($43,449) of other bank and credit facilities from various
banks and financial institutions, of which $18,394 borrowings was outstanding as of December&nbsp;31,
2006. These credit facilities have varying interest rates ranging from 2.1% to 3.6% per annum and
maturities ranging from 2007 through 2012. The $18,394 borrowings are secured by a pledge of
equipment with net book value of $33,487 as of December&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Annual maturities of <FONT style="white-space: nowrap;">long-term</FONT> debts as of December&nbsp;31, 2006 are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payable in year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">61,101</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">312,575</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,050</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150,690</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2011</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">215,690</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">518</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">758,624</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The STATS ChipPAC consolidated group, with the exception of Winstek, the China <FONT style="white-space: nowrap;">non-guarantor</FONT>
entities (comprising STATS ChipPAC Shanghai Co., Ltd., STATS ChipPAC Test Services Shanghai Co.,
Ltd. and STATS ChipPAC Semiconductor Shanghai Co., Ltd.), and, in the case of the 7.5% Senior Notes
due 2010, STATS ChipPAC Korea Ltd., fully and unconditionally guaranteed the obligations under the
indentures of the 6.75% Senior Notes due 2011 or the 7.5% Senior Notes due 2010, on an unsecured
senior basis. See Note 30, Condensed Consolidating Financial Information. The STATS ChipPAC
consolidated group, with the exception of Winstek, are subjected to the covenant restrictions under
the terms of the 6.75% Senior Notes due 2011 or the 7.5% Senior Notes due 2010, which, among other
things, limit the incurrence of additional indebtedness, prepay subordinated debts, investments,
dividends, transaction with affiliates, asset sales, sale and leaseback, liens and encumbrances,
merger and consolidations and other
customary restrictions. The 6.75% Senior Notes due 2011 and the 7.5% Senior Notes due 2010 are
<FONT style="white-space: nowrap;">cross-defaulted</FONT> to the Company&#146;s other indebtedness.
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>18.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Unutilized Credit Facilities</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company established a syndicated <FONT style="white-space: nowrap">3-year</FONT> revolving line of credit of $125,000 in August&nbsp;2006.
The line of credit was arranged by <FONT style="white-space: nowrap">Oversea-Chinese</FONT> Banking Corporation Limited and includes a total
of six lenders. The new facility is irrevocable for the <FONT style="white-space: nowrap">3-year</FONT> period unless the Company is in
breach of covenants, including minimum tangible assets, interest coverage ratios and debt ratios,
or if it commits an event of default, such as failing to pay any amount due under the line of
credit. As of December&nbsp;31, 2006, the Company had not used this line of credit and there was no
outstanding balance on this facility.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">At December&nbsp;31, 2006, the Company had other undrawn banking and credit facilities consisting of
<FONT style="white-space: nowrap">long-term</FONT> loans and bank guarantees of $337,624 with financial institutions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The notional letters of credit amounts outstanding at December&nbsp;25, 2005 and December&nbsp;31, 2006 were
$8,951 and $122, respectively.
</DIV>

<P align="center" style="font-size: 10pt">F-32
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>19.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Other <FONT style="white-space: nowrap;">Non-Current</FONT> Liabilities</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Other <FONT style="white-space: nowrap;">non-current</FONT> liabilities consist of the following:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 25,<br>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 31,<br>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred tax liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">46,654</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">56,747</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrued severance benefits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,957</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,892</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,168</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">66,611</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">84,807</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Changes in accrued severance benefits in 2004, 2005 and 2006 are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 31,<br>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 25,<br>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 31,<br>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Beginning</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">16,587</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">20,210</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Increase due to acquisition</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,819</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for severance benefits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,793</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,334</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,119</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Severance payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(704</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,138</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,172</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign currency loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,679</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">427</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,997</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ending</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">16,587</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">20,210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">27,154</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payments on deposits with Korean
National Pension Fund</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(262</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(253</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(262</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ending, net of payments on deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">16,325</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">19,957</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">26,892</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>20.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Share Capital and Additional <FONT style="white-space: nowrap;">Paid-in</FONT> Capital</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On August&nbsp;5, 2004, the Company issued 861,907,530 new ordinary shares and assumed options to
purchase 76,492,951 ordinary shares to effect the acquisition of ChipPAC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As a result of the employees exercising their share options and purchase rights in 2004, 2005 and
2006, 5,802,800, 31,961,575 and 26,522,092 ordinary shares were issued, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Additional <FONT style="white-space: nowrap;">paid-in</FONT> capital represents principally the excess of proceeds received from issues of
share capital (net of the costs of issue) over the par value of shares issued, which under
Singapore law must be credited to the share premium account. The share premium may only be applied
in paying up unissued shares to be issued to shareholders, paying up in whole or in part the
balance unpaid on shares in issue, in payment of dividends, if such dividends are satisfied by the
issue of shares to members of the Company, in writing off preliminary expenses and share and
debenture issue expenses and by provision for premiums payable on the redemption of redeemable
preferred shares. The Company has not utilized any amounts in the share premium account for the
above mentioned purposes. As of December&nbsp;25 2005, the Company&#146;s share premium account amounted to
$1,414,721.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under Singapore law, all increases in share capital (including rights issues) require prior
shareholders&#146; approval. Effective January&nbsp;30, 2006, the Company was subjected to the amendments
promulgated under the Companies (Amendment) Act of 2005 of Singapore. These amendments included the
abolition of the ordinary share par value and authorized capital. The relevant amendments have
resulted in all ordinary shares being recorded with no par value. The amendments do not affect the
actual number of ordinary shares issued and the paid up capital of the Company. As a result of the
abolition of the ordinary share par value, the balance of the additional <FONT style="white-space: nowrap;">paid-in</FONT> capital amounting
to $1,517,175 became part of the share capital as of January&nbsp;30, 2006 and increased the share
capital account on that date to $1,820,277.
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>21.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Share Repurchase</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Companies (Amendment) Act 2005 of Singapore was made effective on January&nbsp;30, 2006. As a result
of these amendments, a Singapore company can now repurchase shares out of capital, as well as from
distributable profits, and ordinary shares repurchased by a company can be held by that company as
treasury shares instead of being cancelled. In light of these amendments, at the annual general
meeting in April&nbsp;2006, the Company obtained shareholders&#146; approval for the repurchase of up to
approximately 50
</DIV>

<P align="center" style="font-size: 10pt">F-33
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">million ordinary shares (2.5% of the issued ordinary share capital as of the date of the annual
general meeting) and the amendment of its employee share plans to, among other things, allow the
Company the flexibility to deliver repurchased ordinary shares held in treasury (instead of issuing
new shares) to eligible plan participants. The approved amount for share repurchases under this
shareholders&#146; mandate will terminate on the earlier of the date on which the next annual general
meeting is held or the date which the approval is revoked or varied. As of December&nbsp;31, 2006, the
Company had not repurchased any shares.
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>22.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Accumulated Other Comprehensive Loss</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The components of accumulated other comprehensive loss are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 25,<br>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 31,<br>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Currency translation loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(8,320</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(7,353</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unrealized gain on hedging instruments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">775</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">676</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unrealized loss on <FONT style="white-space: nowrap;">available-for-sale</FONT> marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,027</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,037</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(8,572</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(7,714</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>23.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Share Options and Incentive Plans</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In April&nbsp;2006, the Company&#146;s shareholders authorized the Company to issue restricted share units of
the Company in respect of ordinary shares of the Company and grant performance shares under the
STATS ChipPAC Ltd. Restricted Share Plan (&#147;RSP&#148;) and the STATS ChipPAC Ltd. Performance Share Plan
(&#147;PSP&#148;), respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the RSP, the Company is permitted to grant Restricted Share Units (&#147;RSUs&#148;) to eligible
participants. The RSP is intended to replace the STATS ChipPAC Ltd. Share Option Plan, as amended,
by 2007. The RSUs are share awards that entitle the grantee to ordinary shares of the Company or
their equivalent cash value or combinations thereof as the award vests in accordance with a
schedule determined by the Board of Directors or committee thereof. The unvested portions of the
RSUs are generally subject to forfeiture if employment terminates prior to vesting. A grantee of
RSU has no rights as a shareholder with respect to any ordinary shares covered by the RSP until
such ordinary shares have been issued or transferred pursuant to the terms of the RSP. The PSP is
intended to supplement the Company&#146;s long term compensation strategy of senior level employees,
under which the number of ordinary shares or their equivalent cash value or combinations thereof
ultimately received by the employee depends on the Company&#146;s performance against specified targets
over a period of time to be determined by the Board of Directors or committee thereof. The ordinary
shares covered by a grant under the PSP shall vest in accordance with a schedule determined by the
Board of Directors or committee thereof. A grantee of any ordinary shares under the PSP has no
rights as a shareholder with respect to any ordinary shares covered by the grantee&#146;s PSP award
until such ordinary shares have been issued or transferred pursuant to the terms of the PSP. The
number of ordinary shares that may be issued under the STATS ChipPAC RSP and the STATS ChipPAC PSP
may not exceed, in the aggregate, 50&nbsp;million and 15&nbsp;million ordinary shares of the Company,
respectively. As of December&nbsp;31, 2006, no grant of share awards under the RSP and PSP had been
made.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In April&nbsp;2006, the shareholders approved the resolution to limit the aggregate number of ordinary
shares that may be issued under the STATS ChipPAC Ltd. Share Option Plan, as amended, (&#147;STATS
ChipPAC Option Plan&#148;) to not exceed 198&nbsp;million ordinary shares (subject to adjustment under the
plan), including the 80&nbsp;million ordinary shares subject to the STATS ChipPAC Ltd. Substitute
Purchase and Option Plan (&#147;Substitute Option Plan&#148;) and STATS ChipPAC Ltd. Substitute Equity
Incentive Plan (&#147;Substitute EIP&#148;). The purpose of the STATS ChipPAC Option Plan is to offer
selected individuals an opportunity to acquire or increase an ownership interest in the Company
through the grant of options to purchase ordinary shares. Options granted under the STATS ChipPAC
Option Plan may be either nonqualified options or incentive stock options intended to qualify under
Section&nbsp;422 of the United States Internal Revenue Code. The options typically vest over a four-year
period. Option periods may not exceed 10&nbsp;years from the date of grant.
</DIV>


<P align="center" style="font-size: 10pt">F-34
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The plan is administered by a committee appointed by the directors. Employees, outside
directors and consultants are eligible for the grant of options except for (i)&nbsp;employees of
affiliates, outside directors and consultants, who are not eligible for the grant of incentive
stock options; and (ii)&nbsp;employees, outside directors and consultants of affiliates resident in the
United States, who are not eligible for the grant of options. The exercise price of an incentive
stock option is the fair market value of the shares at the date of the grant. In certain
circumstances, the exercise price may be higher than the fair market value but in no event will the
exercise price be below the par value of the share.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In August&nbsp;2004, the Company adopted the STATS ChipPAC Ltd. Employee Share Purchase Plan 2004
(&#147;ESPP&#148;) for the benefit of its employees. Under the ESPP, substantially all employees could
purchase the Company&#146;s ordinary shares through periodic payroll deductions or lump sum payments at
a price equal to 85% of the lower of the fair market value at the beginning or the end of the
specified <FONT style="white-space: nowrap;">six-month</FONT> offering period commencing on each February&nbsp;15 and August&nbsp;16, except for the
first purchase period which commenced on September&nbsp;1, 2004 and ended on February&nbsp;14, 2005. Share
purchases are limited to 15% of an employee&#146;s eligible compensation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In April&nbsp;2006, changes to the terms of the ESPP were approved by the shareholders. The Company
eliminated the provision that the purchase price of the shares to be purchased under the ESPP be
determined on the lower of the fair market value at the beginning or the end of the specified
purchase period, and instead provided that the purchase price be determined by reference to the
fair market value of the shares based on the quoted market price on the date of the purchase, or,
if the shares are acquired through an open market purchase, the price actually paid for the shares.
Further, instead of providing for a 15% discount on the purchase price, the Company may match up to
20% of the contributions of the ESPP participants by transferring or issuing newly issued shares,
existing shares (including treasury shares), shares acquired on the open market or providing cash
contribution for the purchase of shares. As a result of these changes, the ESPP no longer qualifies
under Section&nbsp;423 of the United States Internal Revenue Code. The maximum aggregate of ordinary
shares that may be issued under the ESPP has been revised from 130&nbsp;million ordinary shares in 2005
to not exceed 92&nbsp;million ordinary shares of the Company in 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Prior to December&nbsp;26, 2005, the Company measured <FONT style="white-space: nowrap;">share-based</FONT> employee compensation expense in
accordance with the intrinsic method of APB 25 and its related interpretations, and includes pro
forma information in accordance with SFAS 123, as amended by SFAS No.&nbsp;148, &#147;Accounting for
<FONT style="white-space: nowrap;">Stock-Based</FONT> Compensation &#151; Transition and Disclosure.&#148; In the Company&#146;s pro forma information, the
Company accounted for forfeitures as they occurred.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Effective December&nbsp;26, 2005, the Company adopted the fair value recognition provisions of SFAS
123(R). The Company has elected to adopt the <FONT style="white-space: nowrap;">modified-prospective</FONT> transition method permitted by
SFAS 123(R) and accordingly prior periods have not been restated to reflect, and do not include,
the impact of SFAS 123(R). The <FONT style="white-space: nowrap;">modified-prospective</FONT> transition method requires that <FONT style="white-space: nowrap;">share-based</FONT>
compensation expense be recorded for (a)&nbsp;any <FONT style="white-space: nowrap;">share-based</FONT> payments granted through, but not yet
vested as of December&nbsp;25, 2005 based on the <FONT style="white-space: nowrap;">grant-date</FONT> fair value estimated in accordance with the
pro forma provisions of SFAS 123, and (b)&nbsp;any <FONT style="white-space: nowrap;">share-based</FONT> payments granted subsequent to December
25, 2005, based on the <FONT style="white-space: nowrap;">grant-date</FONT> fair value estimated, and adjusted for estimated forfeitures. For
share option awards, the Company continued to recognize compensation expense on a graded vesting
basis over the requisite service period of the award. The impact of recording <FONT style="white-space: nowrap;">share-based</FONT>
compensation expense related to share options and employee share purchase rights as a result of the
adoption of SFAS 123(R) was as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,965</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Selling, general and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,143</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,580</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">13,688</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As a result of adopting SFAS 123(R), the Company&#146;s net income for the year ended December&nbsp;31,
2006 was $13,307 lower than if it had continued to account for <FONT style="white-space: nowrap;">share-based</FONT> compensation under APB
25.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If the Company had not adopted SFAS 123(R), basic and diluted earnings per share for the year ended
December&nbsp;31, 2006 would have been $0.05 and $0.04, respectively, compared to reported basic and
diluted
</DIV>


<P align="center" style="font-size: 10pt">F-35
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">earnings per share of $0.04 and $0.04, respectively. This is equivalent to basic and diluted
earnings per ADS of $0.45 and $0.43, respectively, for the year ended December&nbsp;31, 2006,
respectively, compared to reported basic and diluted earnings per ADS of $0.39 and $0.37,
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table illustrates the pro forma amounts if the Company had applied the fair value
recognition provisions of SFAS 123 to <FONT style="white-space: nowrap;">share-based</FONT> compensation in 2004 and 2005:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 31,<br>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 25,<br>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss as reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(467,723</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(26,311</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Add: Total <FONT style="white-space: nowrap;">share-based</FONT> employee
compensation expenses included in
reported net loss, net of related
tax effects</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">658</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">743</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deduct: Total <FONT style="white-space: nowrap;">share-based</FONT> employee
compensation expenses determined
under fair value method for all
awards, net of related tax effects</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18,492</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(19,612</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Pro forma net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(485,557</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(45,180</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic and diluted net loss per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">As reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.33</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.01</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.34</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.02</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic and diluted net loss per ADS:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">As reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(3.27</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.13</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(3.40</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.23</TD>
    <TD nowrap>)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company estimates the <FONT style="white-space: nowrap;">grant-date</FONT> fair value of employee share purchase rights granted
prior to August&nbsp;16, 2006, and share options using the <FONT style="white-space: nowrap;">Black-Scholes</FONT> <FONT style="white-space: nowrap;">option-pricing</FONT> model. The
<FONT style="white-space: nowrap;">Black-Scholes</FONT> <FONT style="white-space: nowrap;">option-pricing</FONT> model incorporates various and highly subjective assumptions including
expected volatility, expected term and interest rates. The expected volatility is based on the
implied volatility and trading history of the Company&#146;s shares over the most recent period that
commensurates with the estimated expected term of the Company&#146;s employee share purchase rights or
share options. The estimated term of the Company&#146;s share options is derived from historical
experience. Estimates of fair value are not intended to predict actual future events or the value
ultimately realized by persons who receive equity awards.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The terms of the STATS ChipPAC Ltd. Employee Share Purchase Plan 2004 (&#147;ESPP&#148;) for the purchase
period which commenced on August&nbsp;16, 2006 and ends on February&nbsp;14, 2007 were based on the changes
approved by the shareholders in April&nbsp;2006. For these employee share purchase rights, the total
number of shares to be purchased under the plan and the Company matching of up to 20% of the
contribution of the ESPP participants, by transferring or issuing shares or providing cash
contribution for the purchase of shares, can vary as the purchase price per share is determined
based on the fair market value at the end of the purchase period. Therefore the final measure of
compensation cost for these rights is determined at the end of the purchase period, on which the
number of shares an employee is entitled and the purchase price are determinable. The Company
calculates estimated compensation cost as of the balance sheet date prior to the end of the
purchase period based on the current estimation of the number of shares and the level of
contribution, as determined in accordance with the terms of the ESPP.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The fair value of share options granted in 2004, 2005 and 2006 is estimated on the date of grant
using the <FONT style="white-space: nowrap;">Black-Scholes</FONT> <FONT style="white-space: nowrap;">option-pricing</FONT> model with the following assumptions:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Year Ended</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>December 31,<br>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>December 25,<br>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>December 31,<br>2006</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Expected term
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right" valign="top">5 &#151; 10&nbsp;years
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right" valign="top">5 &#151; 9&nbsp;years
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right" valign="top">3 &#151; 7&nbsp;years
</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Dividend yield
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="right" valign="top" colspan="3">0.0%</TD>
    <TD>&nbsp;</TD>

    <TD align="right" valign="top" colspan="3">0.0%</TD>

    <TD>&nbsp;</TD>
    <TD align="right" valign="top" colspan="3">0.0%</TD>

</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Risk free interest rate
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top" colspan="3">0.8% &#151; 4.3%</TD>
    <TD>&nbsp;</TD>

    <TD align="right" valign="top" colspan="3">2.6% &#151; 3.3%</TD>

    <TD>&nbsp;</TD>

    <TD align="right" valign="top" colspan="3">3.0% &#151; 3.4%</TD>

</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Weighted average volatility
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="right" valign="top" colspan="3">61.0%</TD>

    <TD>&nbsp;</TD>

    <TD align="right" valign="top" colspan="3">55.9%</TD>

    <TD>&nbsp;</TD>

    <TD align="right" valign="top" colspan="3">39.1%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">SFAS 123(R) requires the cash flows resulting from the tax benefits for tax deductions in
excess of the compensation expense recorded for those options (excess tax benefits) to be
classified as financing cash flows. For the year ended December&nbsp;31, 2006, the windfall tax benefit
realized from exercised employee share options was insignificant.
</DIV>

<P align="center" style="font-size: 10pt">F-36
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table summarizes share option activity in 2004, 2005 and 2006:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Average</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Aggregate</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Options</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Exercise Price</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Intrinsic Value</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(In thousands)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(In thousands)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Options outstanding at January&nbsp;1, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,022</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.58</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Assumed through ChipPAC acquisition</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,493</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,523</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.87</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lapsed and forfeited</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,239</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,802</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Options outstanding at December&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">131,997</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,299</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.59</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lapsed and forfeited</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16,972</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18,149</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Options outstanding at December&nbsp;25, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">124,175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,498</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.68</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lapsed and forfeited</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17,596</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,277</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Options outstanding at December&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">116,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,670</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercisable at December&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66,097</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercisable at December&nbsp;25, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62,785</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercisable at December&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,732</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,136</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The aggregate intrinsic value in the table above is based on the difference between the market
price and the price payable by option holders to exercise their share options. During the year
ended December&nbsp;31, 2006, the total amount of cash received from the exercise of share options was
$2,575.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table summarizes information about share options outstanding at December&nbsp;31, 2006:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Options Outstanding</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Options Exercisable</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Average</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Average</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Remaining</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Average</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Remaining</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Average</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Range of Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Outstanding at</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Contractual</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Exercisable at</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Contractual</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Prices</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>12/31/2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Life</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Price</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>12/31/2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Life</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Price</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(In thousands)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(In thousands)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$0.14 to $0.15</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">2.8 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">2.8 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$0.21 to $0.29</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,751</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">5.6 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,299</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">5.4 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.26</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$0.33 to $0.47</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,740</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">4.3 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.43</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,709</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">4.3 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.43</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$0.53 to $0.89</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66,764</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">6.9 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.69</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,547</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">6.1 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.74</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$0.91 to $1.09</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,606</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">4.9 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.96</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,189</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">4.1 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.97</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$1.16 to $1.66</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,321</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">5.1 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.37</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,370</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">4.9 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$2.01 to $2.61</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,692</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">2.9 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,692</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">2.9 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.05</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$3.99</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,837</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">3.3 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,837</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">3.3 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3.99</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">116,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">6.0 years</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,732</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">5.2 years</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The fair value of employee share purchase rights granted prior to August&nbsp;16, 2006 is estimated
on the date of grant using the <FONT style="white-space: nowrap;">Black-Scholes</FONT> <FONT style="white-space: nowrap;">option-pricing</FONT> model with the following assumptions:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="70%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Year Ended</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>December 25,<br>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>December 31,<br>2006</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Expected term
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right" valign="top">0.5&nbsp;years
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right" valign="top">0.5&nbsp;years
</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Dividend yield
</DIV></TD>
    <TD>&nbsp;</TD>


    <TD align="right" valign="top" colspan="3">0.0%</TD>

    <TD>&nbsp;</TD>


    <TD align="right" valign="top" colspan="3">0.0%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Risk free interest rate
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="right" valign="top" colspan="3">1.3 &#151; 1.9%</TD>

    <TD>&nbsp;</TD>


    <TD align="right" valign="top" colspan="3">2.7%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Weighted average volatility
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="right" valign="top" colspan="3">39.4%</TD>

    <TD>&nbsp;</TD>

    <TD align="right" valign="top" colspan="3">35.4%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of December&nbsp;31, 2006, there was $8,420 of unrecognized <FONT style="white-space: nowrap;">share-based</FONT> compensation expenses
related to approximately 46.1&nbsp;million of unvested share option awards net of $716 of estimated
share option award forfeitures. This cost is expected to be recognized over a <FONT style="white-space: nowrap;">weighted-average</FONT>
period of 1.6&nbsp;years.
</DIV>


<P align="center" style="font-size: 10pt">F-37
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Total <FONT style="white-space: nowrap;">grant-date</FONT> fair value of share options that vested during the year ended December&nbsp;31, 2006
was $15,306, respectively. Total intrinsic value of share options exercised during the year ended
December&nbsp;31, 2006 was $1,912. For the year ended
December&nbsp;31, 2006, the value of the 20,245,050 shares issued
for ESPP purchases was $10,679 and the employees contributed $10,139 to the ESPP.
</DIV>


<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>24.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Commitments and Contingencies</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(a)&nbsp;Commitments</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of December&nbsp;25, 2005 and December&nbsp;31, 2006, unconditional purchase obligations consist of the
following:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Capital commitments</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Building, mechanical and electrical installation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,204</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,039</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">144,169</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,893</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Other commitments</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Inventories</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">121,822</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">80,049</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">These unconditional purchase obligations include agreements to purchase goods or services that
are enforceable and legally binding on the Company and specify all significant terms, including
fixed or minimum quantities to be purchased, fixed or variable price provisions and the approximate
timing of transactions. The duration of these purchase obligations are generally less than 12
months.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company is party to certain royalty and licensing agreements which have anticipated payments of
approximately $7,363 per annum for 2007 through 2011. Following the acquisition of ChipPAC, the
Company assumed the obligation to pay until September&nbsp;30, 2007 additional contingent incentive
payments to Cirrus Logic, Inc. of up to approximately $750 subject to achievement of certain
milestones.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company leases certain of its facilities in Singapore, South Korea and the United States under
operation lease arrangements and has lease agreements for the land located in Singapore, Malaysia
and China related to its facilities in these locations. Operating lease rental expense in 2004,
2005 and 2006 was $4,781, $8,499 and $11,084, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company has leased certain plant and equipment under operating leases and under sale and
<FONT style="white-space: nowrap;">lease-back</FONT> arrangements. These leases extend through 2009. Operating lease rental expenses,
including amortization of lease prepayments, in respect of these leases for in 2004, 2005 and 2006
were $39,543, $30,514 and $21,749, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Future minimum lease payments under <FONT style="white-space: nowrap;">non-cancelable</FONT> operating leases as of December&nbsp;31, 2006 were:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payable in year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">29,945</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,473</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,753</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,534</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2011</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,027</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,261</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">131,993</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(b)&nbsp;Contingent Liabilities</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company is subject to claims and litigations, which arise in the normal course of business.
These claims may include allegations of infringement of intellectual property rights of others as
well as other claims of liability. The Company accrues liabilities associated with these claims and
litigations when they are probable and reasonably estimable.
</DIV>


<P align="center" style="font-size: 10pt">F-38
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In February&nbsp;2006, the Company, ChipPAC and STATS ChipPAC (BVI)&nbsp;Limited were named as defendants in
a patent infringement lawsuit filed in United States Federal Court for the Northern District of
California. The plaintiff, Tessera Technologies, Inc. (&#147;Tessera&#148;), has asserted that semiconductor
chip packaging, specifically devices having Ball Grid Array (&#147;BGA&#148;) and <FONT style="white-space: nowrap;">multi-chip</FONT> BGA
configurations used by the defendants infringe certain patents of Tessera. Tessera has further
asserted that the Company is in breach of an existing license agreement between Tessera and
ChipPAC, which agreement has been assigned by ChipPAC to the Company. The Company believes that it
has a meritorious defense to the claims and intend to defend the
lawsuit vigorously. A court determination that the Company&#146;s products or
processes infringe the intellectual property rights of others could
result in significant liability and/or require the Company to make material
changes to its products and/or processes. Due to the
inherent uncertainties of the lawsuit, the Company cannot accurately
predict the ultimate outcome and it could result in significant
liability and/or injunctions and could have a material
adverse effect on the business, financial condition and results of operations of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In addition, the Company is subject to various taxes in the different jurisdictions in which it
operates. These include taxes on income, property, goods and services, and other taxes. The
Company submits tax returns and claims with the respective government taxing authorities, which are
subject to examination and agreement by those taxing authorities. The Company will regularly assess
the likelihood of adverse outcomes resulting from these examinations to determine adequacy of
provision for taxes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In connection with the merger with ChipPAC, the Company assumed certain contingent liabilities. In
2002, an assessment of approximately 16.0&nbsp;billion South Korean Won (approximately $17,233 as of
December&nbsp;31, 2006) was made by the South Korean National Tax Service, or NTS, relating to
withholding tax not collected on the interest income on the loan between the ChipPAC&#146;s subsidiaries
in South Korea and Hungary for the period from 1999 to September&nbsp;2001. The prevailing tax treaty
does not require withholding tax on the transactions in question. ChipPAC has appealed the assessment
through the NTS&#146;s Mutual Agreement Procedure (&#147;MAP&#148;) and believes that the assessment will be
overturned. On July&nbsp;18, 2002, the Icheon tax office of the NTS approved a suspension of the
proposed assessment until resolution of the disputed assessment. The NTS required a corporate
guarantee amounting to the tax assessment in exchange for the suspension. ChipPAC complied with
the guarantee request on July&nbsp;10, 2002. A further assessment of 2.7&nbsp;billion South Korean Won
(approximately $2,871 as of December&nbsp;31, 2006) was made on January&nbsp;9, 2004 for interest expense
from October&nbsp;2001 to May&nbsp;2002. ChipPAC has applied for the MAP and obtained an approval for a
suspension of the proposed assessment by providing a corporate guarantee amounting to the
additional taxes. The MAP will terminate on July&nbsp;3, 2007 if not extended by the NTS. In the event
that the Company is not successful with the appeal, the maximum amount payable including potential
interest and local surtax as of December&nbsp;31, 2006 is estimated to be 36.5&nbsp;billion South Korean Won
(approximately $39,235 as of December&nbsp;31, 2006). As of December&nbsp;31, 2006, no accrual has been made.
However, the Company&#146;s evaluation of the likely impact of the above contingent liabilities could
change in the future and may result in additional liability assumed in the initial purchase of
ChipPAC. The final outcome of the resolution of this matter could result in significant liability
and could have a material adverse effect on the business, financial condition and results of
operations of the Company.
</DIV>


<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>25.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Restructuring Charges</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the first quarter of 2005 and third quarter of 2006, certain restructuring plans were executed
to realign the Company&#146;s organization and reduce operating costs to better align the Company&#146;s
expenses with revenues, which resulted in a total reduction in workforce of 88 and 556 employees,
respectively, related to the restructuring. Severance and related charges of $830 and $1,938 were
incurred and expensed in the first quarter of 2005 and third quarter of 2006, respectively.
</DIV>


<P align="center" style="font-size: 10pt">F-39
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>


<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>26.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Other <FONT style="white-space: nowrap;">Non-Operating</FONT> Income (Expense)</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gain (loss)&nbsp;on sale and maturity of marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(537</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from repurchase and redemption of senior and
convertible notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(797</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,653</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(500</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">398</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">577</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">603</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(936</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,076</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">108</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>27.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Fair Value of Financial Instruments</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>December 25, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>December 31, 2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Carrying</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Estimated</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Carrying</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Estimated</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Fair Value</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Fair Value</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Financial Assets:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">224,720</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">224,720</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">171,457</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">171,457</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,451</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,451</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,484</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,484</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Restricted cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,608</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,608</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">981</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">981</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Financial Liabilities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><FONT style="white-space: nowrap;">Short-term</FONT> borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,891</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,891</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">592</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">592</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><FONT style="white-space: nowrap;">Long-term</FONT> debts, excluding
senior and convertible
notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67,613</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67,476</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75,544</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75,414</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Senior and convertible notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">726,463</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">708,110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">683,080</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">690,217</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The estimated fair value of financial instruments has been determined by the Company using
available market information and appropriate methodologies. However, considerable judgment is
required in interpreting market data to develop the estimates for fair value. Accordingly, these
estimates are not necessarily indicative of the amounts that the Company could realize in a current
market exchange. Certain of these financial instruments are with major financial institutions and
expose the Company to market and credit risks and may at times be concentrated with certain
counterparties or groups of counterparties. The creditworthiness of counterparties is continually
reviewed, and full performance is anticipated.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The methods and assumptions used to estimate the fair value of significant classes of financial
instruments is set forth below:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Cash and cash equivalents</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Cash and cash equivalents are due on demand or carry a maturity date of less than three months when
purchased. The carrying amount of these financial instruments is a reasonable estimate of fair
value.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Marketable securities</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The fair value is estimated based upon the quoted market price on the last business day of the
fiscal year. For securities where there are no quoted market prices, the carrying amount is assumed
to be its fair value.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Restricted cash</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The fair value is based on current interest rates available to the Company for time deposits and
government bonds of similar terms and remaining maturities.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I><FONT style="white-space: nowrap;">Short-term</FONT> borrowings and <FONT style="white-space: nowrap;">long-term</FONT> debts</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The fair value is based on current interest rates available to the Company for issuance of debts of
similar terms and remaining maturities.
</DIV>


<P align="center" style="font-size: 10pt">F-40
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Senior and convertible notes</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The fair value is estimated by obtaining quotes from market and brokers.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Limitations</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Fair value estimates are made at a specific point in time, and are based on relevant market
information and information about the financial instrument. 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.
</DIV>


<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>28.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Business Segment, Geographic and Major Customer Data</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Operating segments, as defined under SFAS No.&nbsp;131, &#147;Disclosures About Segments of an Enterprise and
Related Information&#148; (&#147;SFAS 131&#148;) are components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance. The Company has identified its
individual geographic operating locations as its operating segments. All material geographical
operating locations qualify for aggregation under SFAS 131 due to similarities in economic
characteristics, nature of services, market base and production process. Accordingly, the
operating segments have been aggregated into one reportable segment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Revenues by major service line and by geographical areas (identified by location of customer
headquarters) were:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">United States</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; packaging &#151; array</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">253,595</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">444,066</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">648,258</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; packaging &#151; leaded</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">145,511</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">230,462</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">265,012</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; test and other services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">195,082</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">210,511</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">269,939</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">594,188</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">885,039</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,183,209</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Asia</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; packaging &#151; array</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,506</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">129,082</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">231,946</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; packaging &#151; leaded</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,227</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,861</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; test and other services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,905</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">98,736</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132,720</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">139,826</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">245,045</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">386,527</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Europe</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; packaging &#151; array</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,264</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,672</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,585</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; packaging &#151; leaded</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,172</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,610</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; test and other services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,671</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,747</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,002</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,107</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,169</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,197</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; packaging &#151; array</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">312,365</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">580,820</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">897,789</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; packaging &#151; leaded</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">161,098</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">254,439</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">296,483</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; test and other services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">295,658</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">321,994</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">422,661</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">769,121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,157,253</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,616,933</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="white-space: nowrap;">Long-lived</FONT> assets by geographical area were:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Singapore</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">350,960</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">332,784</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">United States</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,574</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,310</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rest of Asia</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">730,497</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">835,736</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,107,031</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,192,830</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-41
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net assets by geographical area were:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Singapore</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">531,141</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">411,340</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">United States</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,843</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">96,162</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rest of Asia</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">603,668</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">738,648</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,141,652</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,246,150</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Revenues from major customers, as a percentage of net revenues, were as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Year Ended</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 25,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer A</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">20.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">11.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">10.7</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer B</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer C</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>29.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Recent Event</B></TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On
March&nbsp;1, 2007, STSPL, a <FONT style="white-space: nowrap">wholly-owned</FONT> subsidiary of Temasek Holdings, announced its intention to
launch a voluntary conditional cash offer for the remaining ordinary shares and ADSs in the Company
that STSPL does not already own (the &#147;Offer&#148;). As of January&nbsp;31, 2007, STSPL owned approximately
36% of the Company&#146;s outstanding ordinary shares. The information in the following paragraph is
based on STSPL&#146;s Offer announcement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The offer price will be S$1.75 for each ordinary share and S$17.50 for each ADS in cash. The Offer
will be conditioned upon, among other matters, STSPL receiving acceptance of such number of
ordinary shares and ADSs which, together with all other ordinary shares and ADSs owned, acquired or
agreed to be acquired by STSPL, would represent more than 50% of the Company&#146;s outstanding ordinary
shares and ADSs following the close of the Offer. If ordinary shares and ADSs tendered into the
Offer result in STSPL owning at least 90% of the Company&#146;s outstanding ordinary shares and ADSs
(other than those owned by STSPL and its related corporations at the commencement of the Offer), STSPL intends to offer a higher purchase price of S$1.88 per ordinary share or S$18.80 per ADS to
all shareholders who accept the Offer, regardless of when their ordinary shares and ADSs are
tendered. The Offer would also include an offer by STSPL for the Company&#146;s outstanding $115,000
senior, unsecured and unsubordinated convertible notes due 2008 and the $150,000 2.5% convertible
subordinated notes due 2008. The offer for the convertible notes is conditioned on the offer for
the ordinary shares and ADSs becoming unconditional in all respects.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Consummation of the Offer is subject to conditions described above and other customary conditions.
The Company expects in due course to make further announcements on important information about the
Offer, the Company&#146;s board of director&#146;s recommendations, the advice of independent financial
adviser and other related matters.
</DIV>


<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>30.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Condensed Consolidating Financial Information</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In connection with the merger with ChipPAC in 2004, the Company assumed the $150,000 2.5%
Convertible Subordinated Notes due 2008 issued by ChipPAC. In October&nbsp;2004, in connection with the
filing of the prospectus to register the resale of the Convertible Notes issued by ChipPAC, the
Company, but not any of its direct or indirect subsidiaries, provided a full and unconditional
guarantee of the Convertible Notes on a subordinated basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In November&nbsp;2004, the Company issued $215,000 of 6.75% Senior Notes due 2011. The Senior Notes
issued by STATS ChipPAC are fully and unconditionally guaranteed, jointly and severally, on a
senior basis, by the following wholly owned subsidiaries, (1)&nbsp;ChipPAC, (2)&nbsp;STATS ChipPAC (Barbados)
Ltd., STATS ChipPAC (BVI)&nbsp;Limited, ChipPAC International Company Limited, STATS ChipPAC Malaysia
Sdn. Bhd., STATS ChipPAC, Inc., STATS ChipPAC Test Services, Inc., STATS Holdings Limited, ChipPAC
Luxembourg S.a.R.L., ChipPAC Liquidity Management Hungary Limited Liability Company and STATS
ChipPAC Taiwan Co., Ltd. (&#147;Guarantor Subsidiaries&#148;) and (3)&nbsp;STATS ChipPAC Korea Ltd. STATS
ChipPAC Shanghai Co., Ltd., STATS ChipPAC Test Services (Shanghai) Co., Ltd., STATS ChipPAC
Semiconductor Shanghai Co., Ltd. and Winstek (<FONT style="white-space: nowrap">&#147;Non-Guarantor</FONT> Subsidiaries&#148;) did not provide
guarantees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In July&nbsp;2005, the Company issued $150,000 of 7.5% Senior Notes due 2010. The Senior Notes are fully
and unconditionally guaranteed, jointly and severally, on a senior basis, by all of STATS ChipPAC&#146;s
wholly owned subsidiaries, except STATS ChipPAC Shanghai Co., Ltd., STATS ChipPAC Test Services
(Shanghai) Co., Ltd., STATS ChipPAC Semiconductor Shanghai Co., Ltd., Winstek (<FONT style="white-space: nowrap">&#147;Non-Guarantor</FONT>
Subsidiaries&#148;) and STATS ChipPAC Korea Ltd.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following is the consolidated financial information segregated between STATS ChipPAC as the
parent company and guarantor of the Convertible Notes and issuer of the $215,000 6.75% Senior Notes
due 2011 and the $150,000 7.5% Senior Notes due 2010; ChipPAC as issuer of the Convertible Notes
and a guarantor of the $215,000 6.75% Senior Notes due 2011 and the $150,000 7.5% Senior Notes due
2010; STATS ChipPAC Korea Ltd. as a guarantor of the $215,000 6.75% Senior Notes due 2011 and
<FONT style="white-space: nowrap">non-guarantor</FONT> of the $150,000 7.5% Senior Notes due 2010; the other Guarantor Subsidiaries and
other <FONT style="white-space: nowrap">Non-Guarantor</FONT> Subsidiaries of the $215,000 6.75% Senior Notes due 2011 and the $150,000 7.5%
Senior Notes due 2010.
</DIV>



<P align="center" style="font-size: 10pt">F-42
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS<BR>
For the Year Ended December&nbsp;31, 2004</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>STATS</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Non-</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>STATS</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>ChipPAC</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Guarantor</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Guarantor</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>ChipPAC</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>ChipPAC</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Korea</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Subsidiaries</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Subsidiaries</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Eliminations</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Consolidated</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">462,697</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,703</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">148,382</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">259,785</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">83,382</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(194,828</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">769,121</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(390,673</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(203</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(130,630</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(243,295</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(73,690</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">194,951</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(643,540</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72,024</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,752</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,490</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,692</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">123</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">125,581</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Selling, general and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,259</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,803</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,271</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,895</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,501</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,811</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,047</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,933</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,952</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">894</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,637</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Goodwill impairment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">271,734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89,135</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92,131</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">453,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,850</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">277,938</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">116,982</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">98,254</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">555,138</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,954</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">650</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(260,186</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(100,492</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(88,562</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(429,557</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income (expense), net:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,774</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,596</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">123</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,131</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,430</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(19,173</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,875</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,399</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,944</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,556</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,131</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(28,816</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Foreign currency exchange gain (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(206</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,915</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">881</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,122</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity loss from investment in subsidiaries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(472,535</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(67,882</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(87,677</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">628,094</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other <FONT style="white-space: nowrap">non-operating</FONT> income (expense), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(675</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(542</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">258</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(936</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total other income (expense), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(484,815</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(70,736</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,244</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(94,686</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,057</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">628,094</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(26,444</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(465,861</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(70,086</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(263,430</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(195,178</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(89,619</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">628,173</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(456,001</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax benefit (expense)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,862</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,500</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(515</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">997</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,894</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss before minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(467,723</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(70,100</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(269,930</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(195,693</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(88,622</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">628,173</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(463,895</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,828</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,828</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(467,723</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(70,100</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(269,930</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(195,693</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(88,622</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">624,345</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(467,723</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">F-43
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS<BR>
For the Year Ended December&nbsp;31, 2004</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>STATS</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Non-</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>STATS</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>ChipPAC</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Guarantor</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Guarantor</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>ChipPAC</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>ChipPAC</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Korea</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Subsidiaries</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Subsidiaries</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Eliminations</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Consolidated</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash Flows From Operating Activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(467,723</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(70,100</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(269,930</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(195,693</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(88,622</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">624,345</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(467,723</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjustments to reconcile net income (loss)&nbsp;to net cash
provided by operating activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104,141</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">628</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,312</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,638</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(44</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">188,683</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Goodwill impairment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">271,734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89,135</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92,131</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">453,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortization of leasing prepayments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,718</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,718</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Debt issuance cost amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,741</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">172</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,913</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss (gain)&nbsp;on sale of property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(631</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(30</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(656</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accretion of discount on convertible notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,923</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(486</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,437</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from repurchase and redemption of senior and
convertible notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">266</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">531</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">797</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign currency exchange gain</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(516</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(314</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(830</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="white-space: nowrap">Share-based</FONT> compensation expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">582</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">658</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,145</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,204</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">461</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(805</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,005</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest in income of subsidiary</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,828</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,828</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity loss from investment in subsidiaries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">472,535</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67,882</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87,677</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(628,094</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gain on sale and maturity of marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">503</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">537</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">580</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">127</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(193</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(108</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(35</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">371</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Changes in operating working capital:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accounts receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,670</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,789</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,310</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,149</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amounts due from affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(242,237</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,486</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,171</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,976</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,986</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">198,387</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,427</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Inventories</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(77</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(632</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(314</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(148</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,171</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other receivables, prepaid expenses and other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(64,078</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,442</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,459</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,683</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(64,421</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accounts payable, accrued operating expenses and other
payables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,709</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(23,934</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,506</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14,644</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,625</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(41,406</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amounts due to affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,918</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(85</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">94</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">191,182</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(198,387</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,699</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by (used in) operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(150,085</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(438</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,354</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">213,421</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,365</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136,617</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash Flows From Investing Activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from sales of marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">101,323</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">29,174</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">130,497</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from maturity of marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,687</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,687</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchases of marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(137,124</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">222</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(24,041</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(160,943</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Acquisition of intangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(399</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(45</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(510</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(474</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,428</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Acquisition of subsidiary, net of cash acquired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,369</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,577</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,208</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash injection in subsidiary</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,680</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,680</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchases of property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(172,320</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,090</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(35,893</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(24,434</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(81,225</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,388</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(287,574</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,926</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">133</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,014</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(27,388</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">729</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash used in investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(154,557</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,456</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(35,805</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(21,711</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(72,552</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,257</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(264,824</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash Flows From Financing Activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Repayment of <FONT style="white-space: nowrap">short-term</FONT> debts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(50,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(22,006</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(72,006</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Repayment of <FONT style="white-space: nowrap">long-term</FONT> debts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,982</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,982</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from issuance of shares, net of expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,968</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,680</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,680</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,968</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from issuance of senior notes, net of expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">210,458</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">210,458</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Repurchase and redemption of senior and convertible
notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18,083</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(175,564</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(193,647</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from bank borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,016</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107,620</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Decrease in restricted cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,927</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,927</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital lease payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,042</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,727</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,663</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(778</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,210</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by (used in) financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">192,301</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,289</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(178,227</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,445</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,680</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,128</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net increase (decrease)&nbsp;in cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(112,341</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,894</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,162</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,483</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,258</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,577</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(87,079</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of exchange rate changes on cash and cash
equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,425</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,425</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents at beginning of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">297,165</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,427</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,138</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,519</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,491</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16,577</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">313,163</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents at end of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">184,824</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">533</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,976</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">19,002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">21,174</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">227,509</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-44
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>CONDENSED CONSOLIDATING BALANCE SHEETS<BR>
As of December&nbsp;25, 2005</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>STATS</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Non-</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>STATS</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>ChipPAC</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Guarantor</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Guarantor</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>ChipPAC</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>ChipPAC</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Korea</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Subsidiaries</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Subsidiaries</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Eliminations</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Consolidated</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">144,841</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">635</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">32,291</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,865</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">37,088</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">224,720</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Short-term marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,648</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,648</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts receivable, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,825</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">130,129</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,036</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">240,990</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amounts due from affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">360,343</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">202,224</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,575</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">96,148</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(674,092</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,810</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,936</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">245</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,047</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">204</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">904</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,336</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Inventories</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,365</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,024</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,621</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,473</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79,483</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><FONT style="white-space: nowrap">Short-term</FONT> restricted cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">376</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">376</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prepaid expenses and other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,096</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,357</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,468</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,216</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,214</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,351</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">640,406</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">204,461</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82,405</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">242,183</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112,351</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(674,092</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">607,714</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="white-space: nowrap">Long-term</FONT> marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,803</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,803</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property, plant and equipment, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">350,960</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">261,650</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">218,202</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">271,504</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(85</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,107,031</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Investment in subsidiaries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">738,852</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,186</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(751,038</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Intangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,998</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,281</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,615</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,990</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,896</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72,780</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Goodwill</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">312,337</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102,385</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">105,694</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,209</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">522,625</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="white-space: nowrap">Long-term</FONT> restricted cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">745</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,487</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,232</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Prepaid expenses and other <FONT style="white-space: nowrap">non-current</FONT>
assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,850</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">369</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,186</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">202</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,590</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,197</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,778,869</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">224,097</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">686,938</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">626,962</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">499,522</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,423,006</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,393,382</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>LIABILITIES AND SHAREHOLDERS&#146;
EQUITY</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts and other payables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">23,665</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">477</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">63,150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,302</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">37,464</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">136,058</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Payables related to property, plant
and equipment purchases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,404</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,980</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,694</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,347</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79,425</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56,620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,377</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,317</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,334</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,284</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">96,932</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income taxes payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,555</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,235</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><FONT style="white-space: nowrap">Short-term</FONT> borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,891</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,891</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amounts due to affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,065</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,882</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89,351</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">542,979</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,877</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(674,092</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current obligations under capital leases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,091</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,091</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current installments of <FONT style="white-space: nowrap">long-term</FONT> debts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,651</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,651</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">110,754</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,804</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">212,335</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">576,921</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118,623</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(674,092</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">357,345</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Obligations under capital leases,
excluding current installments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,680</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,680</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="white-space: nowrap">Long-term</FONT> debts, excluding current installments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">526,463</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">200,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,760</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,202</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">775,425</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other <FONT style="white-space: nowrap">non-current</FONT> liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,112</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,763</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,736</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66,611</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">637,217</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">212,804</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">268,887</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">588,684</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">169,561</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(674,092</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,203,061</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,669</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,669</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,141,652</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,293</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">418,051</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,278</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">329,961</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(797,583</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,141,652</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total liabilities and shareholders&#146; equity.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,778,869</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">224,097</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">686,938</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">626,962</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">499,522</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,423,006</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,393,382</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-45
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS<BR>
For the Year Ended December&nbsp;25, 2005</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>STATS</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Non-</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>STATS</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>ChipPAC</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Guarantor</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Guarantor</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>ChipPAC</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>ChipPAC</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Korea</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Subsidiaries</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Subsidiaries</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Eliminations</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Consolidated</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">435,630</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">40,268</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">387,830</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">684,290</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">163,870</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(554,635</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,157,253</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(363,092</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(384</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(347,964</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(612,676</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(142,909</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">499,002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(968,023</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72,538</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,884</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,866</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71,614</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,961</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(55,633</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">189,230</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Selling, general and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,488</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,862</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">94,754</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,635</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(46,995</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">135,751</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,779</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,556</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,986</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,015</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,452</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,717</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,071</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Restructuring charges</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">96</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">830</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56,001</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,418</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,993</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104,865</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,087</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(55,712</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">162,652</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,466</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,873</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(33,251</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,874</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,578</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income (expense), net:
Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,292</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">226</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,531</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(20,881</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,414</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(31,358</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,240</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,372</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18,827</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,713</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,881</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(42,629</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Foreign currency exchange gain (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,125</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(535</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,529</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">665</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">531</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity gain (loss)&nbsp;from investment in
subsidiaries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(32,320</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">414</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,906</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other non-operating income (expense), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,648</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(91</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(19</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">93</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">589</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,076</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total other income (expense), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(42,159</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,903</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,700</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14,674</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(230</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,906</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(36,760</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(25,622</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,563</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,173</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(47,925</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,644</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,985</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,182</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax benefit (expense)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(689</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(56</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,767</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,909</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">732</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,689</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;before minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(26,311</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,507</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,406</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(49,834</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,376</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,985</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(19,871</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,440</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,440</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(26,311</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,507</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12,406</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(49,834</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10,376</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">25,545</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(26,311</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-46
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS<BR>
For the Year Ended December&nbsp;25, 2005</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>STATS</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Non-</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>STATS</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>ChipPAC</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Guarantor</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Guarantor</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>ChipPAC</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>ChipPAC</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Korea</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Subsidiaries</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Subsidiaries</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Eliminations</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Consolidated</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash Flows From Operating Activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(26,311</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,507</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12,406</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(49,834</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10,376</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">25,545</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(26,311</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjustments to reconcile net income (loss)&nbsp;to net cash
provided by operating activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">81,823</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,073</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,982</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">86,275</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,064</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(79</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">254,138</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortization of leasing prepayments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,790</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,790</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Debt issuance cost amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,848</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,961</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss (gain)&nbsp;on sale of property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">445</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">220</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(62</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">926</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,529</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accretion of discount on convertible notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,414</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,414</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from repurchase and redemption of convertible notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,653</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,653</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign currency exchange loss (gain)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">168</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(350</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(134</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="white-space: nowrap">Share-based</FONT> compensation expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">703</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">743</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">617</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,767</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,574</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(607</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,351</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest in income of subsidiary</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,440</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,440</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity loss (gain)&nbsp;from investment in subsidiaries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,320</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(414</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(31,906</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">134</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">344</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">311</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(249</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">535</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Changes in operating working capital:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accounts receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(23,950</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(59,685</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,705</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(91,340</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amounts due from affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(109,865</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,564</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,426</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16,358</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,893</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132,067</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,187</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Inventories</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,449</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,156</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(49</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,139</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(24,793</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other receivables, prepaid expenses and other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,357</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">315</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,667</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(153</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,336</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,516</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accounts payable, accrued operating expenses and other
payables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,737</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,918</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,555</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104,499</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amounts due to affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,124</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,709</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,146</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89,352</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,339</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(132,067</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(75</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,299</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">962</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">127,386</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,739</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,343</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">270,729</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash Flows From Investing Activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from sales of marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15,726</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15,726</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from maturity of marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">787</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">787</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchases of marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(32,017</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(32,017</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash injection in subsidiary</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(25,587</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(25,500</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51,087</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Acquisition of intangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(787</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(698</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(812</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(837</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,719</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,853</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchases of property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(53,718</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(187</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(94,163</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(78,419</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(61,648</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,360</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(245,775</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,726</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,927</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,629</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,207</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(42,360</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,139</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash used in investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(61,366</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(875</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(90,048</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(94,340</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(67,451</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51,087</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(262,993</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash Flows From Financing Activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Repayment of <FONT style="white-space: nowrap">short-term</FONT> debts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(100,464</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(35,779</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(7,033</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(143,276</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Repayment of <FONT style="white-space: nowrap">long-term</FONT> debts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,101</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(30,569</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(37,670</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from issuance of shares, net of expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,521</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,479</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,231</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(54,710</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,521</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from issuance of convertible notes, net of
expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">146,535</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">146,535</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Repurchase and redemption of convertible notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(167,263</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(167,263</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from bank borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,464</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,657</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,964</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">188,085</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Increase in restricted cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,469</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,487</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Grants received</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">246</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">246</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital lease payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,955</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,782</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,737</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Contribution by minority interest in subsidiary, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,623</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,623</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by (used in) financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,916</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,023</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,479</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,124</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(51,087</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,423</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net increase (decrease)&nbsp;in cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(39,983</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,315</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,122</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,016</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,687</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of exchange rate changes on cash and cash
equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,102</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,102</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents at beginning of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">184,824</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">548</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,976</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,987</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,174</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">227,509</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents at end of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">144,841</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">635</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">32,291</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,865</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">37,088</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">224,720</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-47
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>CONDENSED CONSOLIDATING BALANCE SHEETS<BR>
As of December&nbsp;31, 2006</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>STATS</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Non-</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>STATS</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>ChipPAC</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Guarantor</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Guarantor</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>ChipPAC</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>ChipPAC</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Korea</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Subsidiaries</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Subsidiaries</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Eliminations</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Consolidated</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">69,057</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">177</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">22,503</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">55,608</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">24,112</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">171,457</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><FONT style="white-space: nowrap">Short-term</FONT> marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,619</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,507</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,126</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts receivable, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75,655</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">153,427</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,697</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">243,779</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amounts due from affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">480,580</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">152,734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,973</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">93,602</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,833</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(765,216</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,506</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,249</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">219</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,092</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">672</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">743</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,975</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Inventories</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,996</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,871</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,514</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,233</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">111,614</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prepaid expenses and other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,805</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,158</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,473</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,328</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,364</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">673,961</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">154,288</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89,039</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">311,296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136,453</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(765,216</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">599,821</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="white-space: nowrap">Long-term</FONT> marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,358</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,358</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property, plant and equipment, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">332,786</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,261</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">285,582</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">237,688</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">332,523</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,192,830</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Investment in equity investee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,292</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,292</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Investment in subsidiaries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">830,366</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,706</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">86,433</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(931,505</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Intangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,630</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,039</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,997</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,716</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,464</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,846</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Goodwill</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">304,557</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102,129</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104,617</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,209</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">513,512</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="white-space: nowrap">Long-term</FONT> restricted cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">629</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">352</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">981</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Prepaid expenses and other <FONT style="white-space: nowrap">non-current</FONT>
assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,256</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">258</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,956</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">319</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,851</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">83,640</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,888,649</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">175,552</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">707,760</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">769,581</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">611,260</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,694,522</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,458,280</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>LIABILITIES AND SHAREHOLDERS&#146;
EQUITY</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts and other payables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">38,967</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">62,945</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10,537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">55,253</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">167,722</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Payables related to property, plant
and equipment purchases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,048</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,340</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,176</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,713</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,277</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,287</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,347</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,171</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">97,627</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income taxes payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">187</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,663</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,326</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,634</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,810</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><FONT style="white-space: nowrap">Short-term</FONT> borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">544</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">592</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amounts due to affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,117</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,252</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75,398</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">633,912</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,582</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(765,216</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current obligations under capital leases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,680</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,680</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current installments of <FONT style="white-space: nowrap">long-term</FONT> debts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,231</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,101</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">146,219</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,806</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">174,354</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">665,122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">140,569</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(765,216</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">371,854</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="white-space: nowrap">Long-term</FONT> debts, excluding current
installments installments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">496,280</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,243</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">697,523</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other <FONT style="white-space: nowrap">non-current</FONT> liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68,518</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,694</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,595</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,807</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">642,499</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">160,806</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">251,872</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">674,816</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">189,407</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(765,216</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,154,184</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,946</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,946</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,246,150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">455,888</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">94,765</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">421,853</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(987,252</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,246,150</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total liabilities and shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,888,649</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">175,552</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">707,760</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">769,581</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">611,260</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,694,522</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,458,280</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-48
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS<BR>
For the Year Ended December&nbsp;31, 2006</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>STATS</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Non-</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>STATS</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>ChipPAC</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Guarantor</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Guarantor</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>ChipPAC</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>ChipPAC</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Korea</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Subsidiaries</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Subsidiaries</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Eliminations</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Consolidated</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">501,660</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">39,870</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">573,502</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,070,609</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">289,434</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(858,142</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,616,933</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(400,330</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(75</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(490,533</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(950,922</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(240,838</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">791,925</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,290,773</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">101,330</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,795</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82,969</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">119,687</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,596</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(66,217</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">326,160</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Selling, general and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,018</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,970</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,453</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">86,268</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,030</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(55,273</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">139,466</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,253</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,781</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,408</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,692</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,334</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,022</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,446</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Restructuring charges</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,938</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,938</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69,209</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,751</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,861</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99,960</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,364</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(66,295</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">171,850</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,044</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,108</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,727</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,232</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">78</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">154,310</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income (expense), net:
Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,468</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">389</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,776</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">811</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,070</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,401</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(35,198</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,145</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,507</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,036</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(45,816</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Foreign currency exchange gain (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,874</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,142</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,578</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity gain from investment in equity
investee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">152</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">152</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity gain from investment in
subsidiaries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,478</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,520</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,741</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(89,739</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Dividend income from subsidiary</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,903</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,903</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other <FONT style="white-space: nowrap">non-operating</FONT> income (expense), net.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">195</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(600</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">219</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">108</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total other income (expense), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,087</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,199</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,994</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,040</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,071</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(92,596</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(41,733</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">78,208</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,845</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54,114</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,767</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,161</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(92,518</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112,577</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,400</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,451</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(19,624</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,840</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,444</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(25,759</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income before minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,808</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">394</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,490</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,927</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,717</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(92,518</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">86,818</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,010</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,010</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">76,808</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">394</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">34,490</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">35,927</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">31,717</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(102,528</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">76,808</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-49
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>STATS CHIPPAC LTD. AND SUBSIDIARIES</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<BR>
In thousands of U.S. Dollars (except per share data)</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS<BR>
For the Year Ended December&nbsp;31, 2006</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>STATS</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Non-</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>ChipPAC</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Guarantor</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Guarantor</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>STATS ChipPAC</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>ChipPAC</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Korea</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Subsidiaries</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Subsidiaries</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Eliminations</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Consolidated</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash Flows From Operating Activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">76,808</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">394</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">34,490</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">35,927</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">31,717</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(102,528</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">76,808</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjustments to reconcile net income (loss)&nbsp;to net cash
provided by operating activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">86,748</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,698</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53,207</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75,173</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,570</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(79</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">266,317</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortization of leasing prepayments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,386</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,386</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Debt issuance cost amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,262</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">109</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,371</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss (gain)&nbsp;on sale of property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">852</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(58</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">473</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,251</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accretion of discount on convertible notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,618</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,618</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss on redemption of convertible notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign currency exchange loss (gain)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(220</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,024</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(46</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">758</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="white-space: nowrap">Share-based</FONT> compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,762</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,244</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,429</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,688</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,069</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(293</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,853</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest in income of subsidiary</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,010</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity (income)&nbsp;loss from investment in subsidiaries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(74,479</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,520</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12,741</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89,740</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity (income)&nbsp;loss from investment in equity investee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(152</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(152</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gain on sale of marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">487</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,009</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Changes in operating working capital:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accounts receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,170</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(23,298</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,339</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,789</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amounts due from affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(120,238</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,490</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,398</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,547</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12,221</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91,124</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,304</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Inventories</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,631</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,984</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,893</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,760</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(32,268</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other receivables, prepaid expenses and other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,358</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">220</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(451</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(518</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,355</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accounts payable, accrued operating expenses and other
payables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,973</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,366</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,781</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,316</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,774</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amounts due to affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,052</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(630</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13,953</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,932</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,706</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(91,124</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,544</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,958</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91,899</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">167,348</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">105,925</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,903</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">427,771</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash Flows From Investing Activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from sales of marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">35,391</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">35,391</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from maturity of marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,841</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,841</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchases of marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(80,866</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(80,866</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash injection in subsidiaries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,517</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(54,500</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62,017</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Investment in equity investee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,154</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,154</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Acquisition of intangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,835</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(698</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,151</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,314</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(421</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,419</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchases of property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(96,176</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(219</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(94,167</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(71,989</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(157,913</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,821</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(393,643</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,139</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,198</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,450</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(26,821</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,067</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash used in investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(103,582</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(916</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(89,179</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(121,605</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(172,518</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62,017</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(425,783</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash Flows From Financing Activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Repayment of <FONT style="white-space: nowrap">short-term</FONT> debts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(21,496</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(20,794</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(42,290</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Repayment of <FONT style="white-space: nowrap">long-term</FONT> debts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(690</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(26,937</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(27,627</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from issuance of shares, net of expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,254</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62,017</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(62,017</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,254</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Repurchase and redemption of senior and convertible notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(50,500</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(50,500</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from bank borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,653</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,655</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,308</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Decrease in restricted cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">116</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,511</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,627</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital lease payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,091</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,091</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Distribution to minority interest in subsidiary</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,445</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,903</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,542</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by (used in) financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,254</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(50,500</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12,508</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54,007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(59,114</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(54,861</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net increase (decrease)&nbsp;in cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(75,784</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(458</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,788</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,743</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12,586</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(52,873</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of exchange rate changes on cash and cash
equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(390</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(390</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents at beginning of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">144,841</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">635</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,291</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,865</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,088</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">224,720</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents at end of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">69,057</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">177</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">22,503</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">55,608</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">24,112</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">171,457</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">F-50
</DIV>


</BODY>
</HTML>
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{"company-data": {"conformed-name": "STATS CHIPPAC LTD.", "cik": "0001101873", "assigned-sic": "3674", "irs-number": "000000000", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "20-F", "act": "34", "file-number": "000-29103", "film-number": "07686959"}, "business-address": {"street1": "5 YISHUN ST 23", "city": "SINGAPORE", "state": "U0", "zip": "768442", "phone": "657555885"}, "mail-address": {"street1": "5 YISHUN ST 23", "city": "SINGAPORE", "state": "U0", "zip": "768442"}, "former-company": {"former-conformed-name": "ST ASSEMBLY TEST SERVICES LTD", "date-changed": "19991227"}}
STATS ChipPAC LTd.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
(Mark One)
o
Registration statement pursuant to section 12(b) or 12(g) of the Securities Exchange Act of
1934
or
þ
Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2006
or
o
Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from
to
or
o
Shell company report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
Date of event requiring this shell company report
Commission file number
000-29103
STATS ChipPAC Ltd.
(Exact Name of Registrant as specified in its charter)
Republic of Singapore
(Jurisdiction of incorporation or organization)
10 Ang Mo Kio Street 65
#05-17/20 Techpoint
Singapore 569059
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Ordinary Shares, including Ordinary Shares
represented by American Depositary Shares
(each representing ten Ordinary Shares)
(Title of Class)
NASDAQ Stock Market
(Name of Exchange on which registered)
Securities registered or to be registered pursuant to Section 12(g) of the Act.
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None
Indicate the number of outstanding shares of each of the issuer's classes of capital or common
stock as of the close of the period covered by the annual report.
2,002,814,117 Ordinary Shares of Registrant.
Indicate by check mark if the registrant is a
well-known
seasoned issuer, as defined in Rule
405 of the Securities Act.
Yes
þ
No
o
If this report is an annual or transition report, indicate by check mark if the registrant is
not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934.
Yes
o
No
þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes
þ
No
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a
non-accelerated
filer. See definition of "accelerated filer and large accelerated
filer" in Rule
12b-2
of the Securities Exchange Act of 1934. (Check one):
Large accelerated filer
þ
Accelerated filer
o
Non-accelerated
filer
o
Indicate by check mark which financial statement item the registrant has elected to follow.
Item 17
o
Item 18
þ
If this is an annual report, indicate by check mark whether the registrant is a shell company
(as defined in Rule
12b-2
of the Securities Exchange Act of 1934).
Yes
o
No
þ
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to
be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes
o
No
o
TABLE OF CONTENTS
PAGE
ITEM 1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
2
ITEM 2.
OFFER STATISTICS AND EXPECTED TIMETABLE
2
ITEM 3.
KEY INFORMATION
2
ITEM 4.
INFORMATION ON OUR COMPANY
20
ITEM 4A.
UNRESOLVED STAFF COMMENTS
42
ITEM 5.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
42
ITEM 6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
59
ITEM 7.
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
74
ITEM 8.
FINANCIAL INFORMATION
76
ITEM 9.
THE OFFER AND LISTING
78
ITEM 10.
ADDITIONAL INFORMATION
79
ITEM 11.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
91
ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
92
ITEM 13.
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
92
ITEM 14.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
92
ITEM 15.
CONTROLS AND PROCEDURES
92
ITEM 16A.
AUDIT COMMITTEE FINANCIAL EXPERT
93
ITEM 16B.
CODE OF ETHICS
93
ITEM 16C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
94
ITEM 16D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEE
94
ITEM 16E.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
94
ITEM 17.
FINANCIAL STATEMENTS
94
ITEM 18.
FINANCIAL STATEMENTS
95
ITEM 19.
EXHIBITS
95
SIGNATURES
100
INDEX TO FINANCIAL
STATEMENTS
Ex-1.1 Memorandum of Association of STATS ChipPAC Ltd.
Ex-4.28 STATS ChipPAC Ltd. Share Option Plan
Ex-4.30 STATS ChipPAC Ltd. Performance Share Plan
Ex-4.41 Subscription Agreement dated June 22, 2006
Ex-4.42 Deed of Indemnity dated June 22, 2006
Ex-4.43 Joint Venture Agreement dated June 22, 2006
Ex-4.44 Asset Sale and Purchase Agreement dated June 22, 2006
EX-4.45 Amendment Number One dated  July 14, 2006 to the Asset Sales & Purchase Agreement dated June 22, 2006
Ex-4.46 Manufacturer's Representative Agreement dated June 22, 2006
Ex-4.47 US$125,000,000 Syndicated Facility Agreement dated August 10, 2006 between STATS ChiPAC Ltd. and Oversea-Chinese Banking Corporation Limited
Ex-4.48 English language translation of Korean language US$25,000,000 Term Loan Agreement dated May 29, 2006 between STATS ChipPAC Korea Ltd. and Hana Bank
Ex-4.49 English language summary of Chinese language NT$1.8 Billion Syndicated Loan Agreement dated March 2, 2004 between Winstek Semiconductor Corporation and Mega Bank
Ex-4.50 English language summary of Chinese language NT$3.6 Billion Syndicated Loan Agreement dated August 18, 2006 between Winstek Semiconductor Corporation and Taishin Bank
Ex-12.1 Certification by CEO pursuant to Section 302 of Sarbanes-Oxley Act of 2002
Ex-12.2 Certification by CFO pursuant to Section 302 of the Sarbanes-Oxley Act 2002
Ex-13.1 Certification by CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Ex-13.2 Certification by CFO pursuant to Section 906 of the Sarbanes-Oxley Act 2002
Ex-15.1 Consent of Pricewaterhouse Coopers, Singapore,independent registered public accounting firm
i
Table of Contents
GENERAL INFORMATION
References to "Singapore dollars" and "S$" in this annual report mean Singapore dollars, the
legal currency of the Republic of Singapore. References to "U.S. dollars", "$" and "US$" mean
United States dollars, the legal currency of the United States. References to "South Korean Won"
and "KRW" mean Korean Republic Won, the legal currency of the Republic of Korea. References to
"Chinese Renminbi" and "RMB" mean Chinese Renminbi, the legal currency of People's Republic of
China. References to "Malaysian Ringgit" and "MYR" mean Malaysian Ringgit, the legal currency of
Malaysia. References to "New Taiwan dollar" and "NT$" mean New Taiwan dollars, the legal currency
of Taiwan. References to "Japanese yen" or "¥" mean Japanese yen, the legal currency of Japan. The
noon buying rate in the City of New York on January 31, 2007 was S$1.54 per $1.00 for cable
transfers in Singapore dollars, KRW941.00 per $1.00 for cable transfers in South Korean Won,
RMB7.77 per $1.00 for cable transfers in Chinese Renminbi, MYR3.50 per $1.00 for cable transfers in
Malaysian Ringgit, NT$32.95 per $1.00 for cable transfers in New Taiwan dollars and ¥121.02 per
$1.00 for cable transfers in Japanese yen, as certified for customs purposes by the Federal Reserve
Bank of New York. For your convenience, unless otherwise indicated, certain amounts in these
currencies have been translated into U.S. dollars based on these exchange rates. Certain amounts
(including percentage amounts) have been rounded for convenience; as a result, certain figures may
not sum to total amounts or equal quotients.
No representation is made that the Singapore dollar, U.S. dollar, South Korean Won, Chinese
Renminbi, Malaysian Ringgit, New Taiwan dollar or Japanese yen amounts shown in this annual report
could have been or could be converted at such rate or at any other rate.
In this annual report, unless otherwise specified or the context requires, the terms
"Company", "combined company", "STATS ChipPAC", "we", "our", and "us" refer to STATS ChipPAC Ltd.,
a Singapore company, and its consolidated subsidiaries after the consummation of the merger
described herein, the term "STATS" refers to ST Assembly Test Services Ltd, a Singapore company,
and its consolidated subsidiaries prior to the consummation of the merger and the term "ChipPAC"
refers to ChipPAC, Inc., a Delaware corporation, and its consolidated subsidiaries prior to the
consummation of the merger and ChipPAC, Inc. (now known as STATS ChipPAC, Inc. as described below)
as a
wholly-owned
subsidiary of STATS ChipPAC after the consummation of the merger. On January 20,
2005, STATS ChipPAC, Inc. (formerly known as ST Assembly Test Services, Inc.) was merged into
ChipPAC, Inc. The entity surviving the merger was renamed STATS ChipPAC, Inc.
Following the consummation of the merger of STATS and ChipPAC, we have included in our
financial results for the periods presented in this annual report the financial results of ChipPAC
from August 5, 2004.
Since the beginning of fiscal 2005, we have employed quarterly and fiscal year reporting
periods. Our
52-53 week
fiscal year ends on the Sunday nearest to December 31. Our fiscal quarters
end on a Sunday and are generally thirteen weeks in length. Our first three quarters of 2006 ended
on March 26, June 25 and September 24, respectively, and our fourth quarter and fiscal year 2006
ended on December 31, while our first three quarters of 2005 ended on March 27, June 26 and
September 25, respectively, and our fourth quarter and fiscal year 2005 ended on December 25, the
Sunday nearest to the calendar quarter end of each period. Our quarterly periods in the years prior
to 2005 ended on March 31, June 30, September 30 and December 31, respectively. Unless otherwise
stated, all years and dates refer to STATS ChipPAC's fiscal years.
FORWARD-LOOKING
STATEMENTS
Certain of the statements in this annual report on Form
20-F
are
forward-looking
statements
that are based on management's current views and assumptions and involve a number of risks and
uncertainties which could cause actual results to differ materially. These include statements on
our financial condition and results of operations, cash flows, dividends, financing plans, business
strategies, operating efficiencies and synergies, budget, capital and other expenditures,
competitive positions, growth opportunities for existing products, benefits from new technology,
plans or objectives of management, outcome of litigation, industry growth, the impact of regulatory
initiatives, markets for our securities and other statements on underlying assumptions, other than
statements of historical fact, including but not limited to those that are identified by the use of
words such as "anticipates", "believes", "estimates", "expects", "intends", "plans", "predicts",
"projects" and similar expressions.
Factors that could cause actual results to differ include general business and economic
conditions and the state of the semiconductor industry; level of competition; demand for
end-use
applications products such as communications equipment and personal computers (PCs); decisions by
customers to discontinue outsourcing of test and packaging services; reliance on a small group of
principal customers; continued success in technological innovations; availability of financing;
pricing pressures including declines in average selling prices;
proposed tender offer by Singapore Technologies Semiconductors Pte Ltd (STSPL), a subsidiary of Temasek Holdings (Private) Limited (Temasek Holdings);
actions that may be taken by the Company or third parties in
connection with or in response to such proposed tender offer; our substantial
1
Table of Contents
level of indebtedness; potential impairment charges; adverse tax and other financial consequences if the
South Korean taxing authorities do not agree with our interpretation of the applicable tax laws; ability to develop and protect our
intellectual property; rescheduling or canceling of customer orders; changes in product mix;
intellectual property rights disputes and litigation; capacity utilization; delays in acquiring or
installing new equipment; limitations imposed by our financing arrangements which may limit our
ability to maintain and grow our business; changes in customer order patterns; shortages in supply
of key components; disruption of our operations; loss of key management or other personnel; defects
or malfunctions in our testing equipment or packages; changes in environmental laws and
regulations; exchange rate fluctuations; regulatory approvals for further investments in our
subsidiaries; significant ownership by Temasek Holdings (Private) Limited (Temasek Holdings) that
may result in conflicting interests with Temasek Holdings and our affiliates; unsuccessful
acquisitions and investments in other companies and businesses; our ability to successfully
integrate the operations of former STATS and ChipPAC and their employees; labor union problems in
South Korea; uncertainties of conducting business in China; natural calamities and disasters,
including outbreaks of epidemics and communicable diseases; and other risks described in "Item 3.
Key Information — D. Risk Factors".
You should not unduly rely on such statements. We do not intend, and do not assume any
obligation, to update any industry information or
forward-looking
statements set forth in this
annual report to reflect subsequent events or circumstances.
RECENT DEVELOPMENTS
Temasek Holdings' Subsidiary, Singapore Technologies Semiconductors Pte Ltd's, Tender Offer
On
March 1, 2007, STSPL, a
wholly-owned
subsidiary of Temasek Holdings, announced its intention to
launch a voluntary conditional cash offer for the remaining ordinary shares and American Depositary
Shares (ADSs) in our Company that STSPL does not already own (the Offer). As of January 31, 2007,
STSPL owned approximately 35.56% of our outstanding ordinary shares. The information in the
following paragraph is based on STSPL's Offer announcement.
The offer price will be S$1.75 for each ordinary share and S$17.50 for each ADS in cash. The Offer
will be conditioned upon, among other matters, STSPL receiving acceptance of such number of
ordinary shares and ADSs which, together with all other ordinary shares and ADSs owned, acquired or
agreed to be acquired by STSPL, would represent more than 50% of our outstanding ordinary shares
and ADSs following the close of the Offer. If ordinary shares and ADSs tendered into the Offer
result in STSPL owning at least 90% of our outstanding ordinary shares and ADSs (other than those
owned by STSPL and its related corporations at the commencement of the Offer), STSPL intends to
offer a higher purchase price of S$1.88 per ordinary share or S$18.80 per ADS to all shareholders
who accept the Offer, regardless of when their ordinary shares and ADSs are tendered. The Offer
would also include an offer by STSPL for our outstanding $115,000,000 Convertible Notes due 2008
and $150,000,000 2.50% Convertible Notes due 2008. The offer for the convertible notes is
conditioned on the offer for the ordinary shares and ADSs becoming unconditional in all respects.
STSPL stated that it will send to our security holders the Offer to Purchase, which will contain
the terms and conditions of the Offer, not earlier than 14 days and not later than 21 days from the
date of the Offer announcement. STSPL announced that the Offer will remain open for acceptances by
security holders for a period of not less than 20 U.S. business days or 28 calendar days after the
date of posting of the Offer to Purchase, whichever is the longer.
On March 1, 2007, we announced that our board of directors will appoint an independent financial
adviser to advise the directors of our Company who are regarded as independent for the purposes of
the Offer under the Singapore Code on
Take-Overs
and
Mergers (
Take-Over
Code) (Special Committee). On March 3, 2007, our board of directors
formed the Special Committee to review and consider the Offer and
such other strategic alternatives available to the Company as the
Special Committee may deem to be appropriate.  The recommendations to security holders by our Special Committee
and the reasons for those recommendations will be set forth in a circular of our Company (which
will also contain the advice of the independent financial adviser appointed by our Special
Committee) and our Company's Solicitation/Recommendation Statement on
Schedule 14D-9
filed with the
Securities and Exchange Commission (SEC). Following their
publication, these documents can be obtained without charge at www.sec.gov, www.sgx.com and www.statschippac.com. Our security
holders should read these filings as they will contain important information about the Offer, our
board of director's recommendations, the advice of the independent financial adviser and other
related matters.
See "Item 5. Operating and Financial Review and Prospects — Temasek Holdings' Subsidiary,
Singapore Technologies Semiconductors Pte Ltd's, Tender Offer" for a discussion of the impact on
our liquidity and earnings guidance for our first fiscal quarter of 2007.
ITEM 1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable
ITEM 2.
OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable
ITEM 3.
KEY INFORMATION
A. Selected Financial Data
You should read the following selected consolidated financial data in conjunction with our
consolidated financial statements and the related notes and "Item 5. Operating and Financial Review
and Prospects" included elsewhere in this annual report. The selected consolidated financial data
as of December 25, 2005 and December 31, 2006 and for 2004, 2005 and 2006 are derived from our
consolidated financial statements which have been audited by PricewaterhouseCoopers (PwC),
independent registered public accounting firm, and are included in "Item 18. Financial Statements".
The selected consolidated financial data as of December 31, 2002, 2003 and 2004 and for 2002 and
2003 are derived from our audited consolidated financial statements, which are not included in
this annual report.
Our consolidated financial statements are prepared in accordance with accounting principles
generally accepted in the United States of America (U.S. GAAP).
Following the consummation of the merger of STATS and ChipPAC, we have included in our
financial results for the periods presented in this annual report the financial results of ChipPAC
from August 5, 2004. The financial results prior to 2004 reflect the financial results of STATS and
do not include the financial results of ChipPAC.
Year Ended
December 31,
December 31,
December 31,
December 25,
December 31,
2002
2003
2004
2005
2006
(In thousands, except per share data and ratios)
Income Statement Data:
Net revenues
$
225,738
$
380,691
$
769,121
$
1,157,253
$
1,616,933
Cost of revenues
(247,943
)
(328,014
)
(643,540
)
(968,023
)
(1,290,773
)
Gross profit (loss)
(22,205
)
52,677
125,581
189,230
326,160
Operating expenses:
Selling, general and administrative
37,241
36,849
84,501
135,751
139,466
Research and development
18,856
15,295
17,637
26,071
30,446
Goodwill impairment(1)
—
—
453,000
—
—
Equipment impairments(2)
14,666
—
—
—
—
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Year Ended
December 31,
December 31,
December 31,
December 25,
December 31,
2002
2003
2004
2005
2006
(In thousands, except per share data and ratios)
Prepaid leases written off
764
—
—
—
—
Restructuring charges
—
—
—
830
1,938
Total operating expenses
71,527
52,144
555,138
162,652
171,850
Operating income (loss)(3)
(93,732
)
533
(429,557
)
26,578
154,310
Other income (expense), net:
Interest income (expense), net
(5,143
)
(9,209
)
(24,386
)
(36,215
)
(40,415
)
Foreign currency exchange gain (loss)
(512
)
1,634
(1,122
)
531
(1,578
)
Equity income from equity investee
—
—
—
—
152
Other
non-operating
income (expense), net
3,419
7,570
(936
)
(1,076
)
108
Total other income (expense), net
(2,236
)
(5
)
(26,444
)
(36,760
)
(41,733
)
Income (loss) before income taxes
(95,968
)
528
(456,001
)
(10,182
)
112,577
Income tax benefit (expense)
7,163
(705
)
(7,894
)
(9,689
)
(25,759
)
Income (loss) before minority interest
(88,805
)
(177
)
(463,895
)
(19,871
)
86,818
Minority interest
(514
)
(1,539
)
(3,828
)
(6,440
)
(10,010
)
Net income (loss)
$
(89,319
)
$
(1,716
)
$
(467,723
)
$
(26,311
)
$
76,808
Net income (loss) per ordinary share:
Basic
$
(0.09
)
$
(0.00
)
$
(0.33
)
$
(0.01
)
$
0.04
Diluted
$
(0.09
)
$
(0.00
)
$
(0.33
)
$
(0.01
)
$
0.04
Net income (loss) per ADS:
Basic
$
(0.90
)
$
(0.02
)
$
(3.27
)
$
(0.13
)
$
0.39
Diluted
$
(0.90
)
$
(0.02
)
$
(3.27
)
$
(0.13
)
$
0.37
Ordinary shares (in thousands) used in per ordinary
share calculation:
Basic
991,549
1,005,374
1,428,954
1,961,950
1,991,110
Diluted
991,549
1,005,374
1,428,954
1,961,950
2,161,545
ADS (in thousands) used in per ADS calculation:
Basic
99,155
100,537
142,895
196,195
199,111
Diluted
99,155
100,537
142,895
196,195
216,154
Balance Sheet Data:
Cash and cash equivalents
$
167,661
$
313,163
$
227,509
$
224,720
$
171,457
Working capital
165,851
328,583
124,028
250,369
227,967
Total assets
721,968
993,852
2,271,702
2,393,382
2,458,280
Current installments of obligations under capital leases
6,558
5,296
7,587
7,091
3,680
Short-term
borrowings and current installments of
long-term
debt
21,588
6,841
174,281
35,542
61,693
Obligation under capital leases, excluding current
installments
5,520
812
10,771
3,680
—
Long-term
debt, excluding current installments
218,370
358,789
642,175
775,425
697,523
Shareholders' equity
366,512
475,956
1,159,350
1,141,652
1,246,150
Share capital
$
160,295
$
172,434
$
298,233
$
303,052
$
1,847,002
Ordinary shares outstanding (in thousands)
992,115
1,076,620
1,944,330
1,976,292
2,002,814
(1)
We recorded impairment charges of $453,000,000 in 2004 on our goodwill associated with
purchase accounting for the acquisition of ChipPAC.
(2)
We recognized impairment charges of $14,666,000 in 2002 on our equipment.
(3)
Includes
share-based
compensation expenses of $60,000, $97,000, $658,000 and $743,000 in
accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" (APB 25) in 2002, 2003, 2004 and 2005, respectively, and $13,688,000 in accordance
with Statement of Financial Accounting Standards (SFAS) No. 123(R),
"Share-Based
Payment" in
2006.
3
Table of Contents
B. Capitalization and Indebtedness
Not applicable
C. Reasons for the Offer and Use of Proceeds
Not applicable
D. Risk Factors
In addition to the other information and risks described elsewhere in this annual report, our
business is subject to the following risks:
Risks Relating to Our Company
Downturns in the semiconductor industry have adversely affected our operating results and may
continue to adversely affect our operating results.
Our results of operations have been and will be significantly affected by conditions in the
semiconductor industry. The market for semiconductors is characterized by:
•
rapid technological change;
•
evolving industry standards;
•
intense competition; and
•
fluctuations in
end-user
demand.
The semiconductor industry experienced a significant downturn beginning in the fourth quarter of
2000. This downturn had a significant adverse impact on our sales and financial performance as
customers reduced purchase orders to reflect inventory corrections and lower demand experienced in
their
end-user
markets. The semiconductor industry started its recovery in late 2002. However, in
late 2004 to early 2005 and in late 2006, we experienced a softening of our business as our
customers corrected their excess inventory positions. Despite the softening of our business in
late 2006, the semiconductor industry outlook in 2007 published by recognized industry research
analysts and associations are projecting growth rates of approximately 7% as compared to 2006.
However, there is no assurance that inventory correction will not continue or resurface in 2007 or
that there will not be a further decline in the industry that will result in a material adverse
effect on our business, financial condition and results of operations.
We may not be able to compete successfully in our industry.
The independent semiconductor assembly and test service (SATS) industry is very competitive
and diverse and requires us to be capable of testing increasingly complex semiconductors as well as
bringing the most technologically advanced packages to market as quickly as our competitors. The
industry comprises both large
multi-national
companies and small niche market competitors. We face
substantial competition from a number of competitors, including, among others, Advanced
Semiconductor Engineering, Inc. and its subsidiaries, Amkor Technology, Inc. and Siliconware Precision Industries Co., Ltd. Their facilities are
primarily located in Asia.
Each of these companies has significant manufacturing capacity, financial resources, research
and development operations, marketing and other capabilities and has been in operation for some
time. Such companies have also established relationships with many of our current or potential
customers.
We also face competition from the internal capabilities and capacity of many of our current
and potential integrated device manufacturers (IDM) customers. Many IDMs have greater financial,
technical and other resources than we have and may rely on internal sources for packaging and test
services for a number of reasons including due to:
•
their desire to realize higher utilization of their existing test and packaging capacity;
4
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•
their unwillingness to disclose proprietary technology;
•
their possession of more advanced packaging and testing technologies; and
•
the guaranteed availability of their own packaging and test capacity.
We cannot assure you that we will be able to compete successfully in the future against our
existing or potential competitors or that our customers will not rely on internal sources for test
and packaging services, or that our business, financial condition and results of operations will
not be adversely affected by such increased competition.
A decrease in demand for communications equipment, consumer and
multi-applications,
or personal
computers, may significantly decrease the demand of our services.
Substantially all of our net revenues are derived from customers who use our test or packaging
services for semiconductors used in communications equipment, consumer and
multi-applications,
or
personal computers. Any significant decrease in the demand for communications equipment, consumer
and
multi-applications,
or personal computers may decrease the demand for our services and could
seriously harm our Company. In addition, the declining average selling prices of communications
equipment, consumer and
multi-applications,
or personal computers places significant pressure on
the prices of the components that are used in these products. If the average selling prices of
communications equipment, consumer and
multi-applications,
or personal computers continue to
decrease, the pricing pressure on services provided by us may reduce our net revenues and therefore
significantly reduce our gross profit margin.
Decisions by our IDM customers to curtail outsourcing may adversely affect our business.
Historically, we have been dependent on the trend in outsourcing of packaging and test
services by IDMs. Our IDM customers continually evaluate the outsourced services against their own
in-house
packaging and test services. As a result, at any time, IDMs may decide to shift some or
all of their outsourced packaging and test services to internally sourced capacity. Any such shift
or a slowdown in this trend of outsourcing packaging and test services is likely to adversely
affect our business, financial condition and results of operations.
In a downturn in the semiconductor industry, IDMs may respond by shifting some outsourced
packaging and test services to internally serviced capacity on a
short-term
basis. This would have
a material adverse effect on our business, financial condition and results of operations,
especially during a prolonged industry downturn.
We depend on a small number of customers for a significant portion of our revenues and any decrease
in sales to any of them could adversely affect our business and results of operations.
We are dependent on a small group of customers for substantially all of our net revenues. In
2006, our ten largest customers accounted for 65.3% of our net revenues. Our two largest customers,
Freescale Semiconductor, Inc. and Intel Corporation, each contributed in excess of 10% of our net
revenues and in the aggregate contributed 20.8% of our net revenues in 2006.
Although no one customer is expected to account for more than 15% of our Company's revenues,
we anticipate that our ten largest customers will continue to account for a significant portion of
our net revenues for the foreseeable future. Our ability to retain these and other customers, and
to add new customers, is important to our ongoing success. The loss of one or more key customers,
or reduced demand from any key customers, could have a material adverse effect on our business,
financial condition and results of operations.
In line with industry practice, new customers usually require us to pass a lengthy and
rigorous qualification process that can take up to six months at a significant cost to the
customer. As a result, customers are reluctant to qualify new packaging and test service providers
and it may be difficult for us to attract new major customers and/or break into new markets. In
addition, if we fail to qualify packages with potential customers or customers with which we have
recently become qualified do not use our services, then our customer base could become more
concentrated with an even more limited number of customers accounting for a significant portion of
our revenues. Furthermore, we believe that once a semiconductor company has selected a particular
packaging and test company's services, the semiconductor company generally relies on that vendor's
packages for specific applications and, to the extent possible, subsequent generations of that
vendor's packages. Accordingly, it may be difficult to achieve significant sales from a customer
once it selects another vendor's packaging and test services. See "Item 4. Information on Our
Company — B. Business Overview — Customers".
5
Table of Contents
We may not be able to develop or access leading technology which may affect our ability to compete
effectively.
The semiconductor packaging and test markets are characterized by rapid technological change
and increasing complexity. We must be able to offer our customers packaging and test services based
upon the most advanced technology. This requirement could result in significant research and
development expenditures and capital expenditures in the future. We periodically review our
equipment for obsolescence and impairment. If we determine that, due to technological advances,
reduced demand in certain end markets or otherwise, the anticipated future usage of any of our
equipment has been diminished, we will
write-down
such equipment. Although no
write-down
of
equipments was made in 2004, 2005 and 2006, we cannot assure you that we would not have to write
down our equipment in the future.
If we fail to develop advanced test and packaging services or to access those developed by
others in a timely manner, we could lose existing customers or miss potential customers demanding
these advanced services. Developing new technology may result in longer sales cycles and product
implementations, which may cause revenue and operating income to fluctuate or fail to meet
expectations. Also, we would miss the opportunity to benefit from the higher average selling prices
which are derived from newer and emerging packaging and test services. In addition, our choice of
test equipment is important because obtaining the wrong test equipment or failing to understand
market requirements will make us less competitive and will lower our asset utilization. In order to
remain competitive, we must be able to upgrade or migrate our test equipment to respond to changing
technological requirements.
We expect to incur significant capital expenditures in the future and therefore may require
additional financing in the future which may not be available on terms favorable to us, if at all.
Our capital expenditures are largely driven by the demand for our services. Our capital
expenditures were $277.7 million in 2005 and $348.5 million in 2006. In 2007, we expect our
capital expenditures to be approximately $250.0 million, depending on business conditions. To grow
our business, we will need to increase our packaging and test capacity, to replace existing
equipment from time to time and to expand our facilities. This will require substantial capital
expenditures for additional equipment and further expenditure to recruit and train new employees.
These expenditures will likely be made in advance of increased sales. We cannot assure you that our
net revenues will increase after these expenditures. Failure to increase our net revenues after
these expenditures could have a material adverse effect on our business, financial condition and
results of operations.
We may need to obtain additional debt or equity financing to fund our capital expenditures.
Additional debt financing may be required which, if obtained, may:
•
limit our Company or its subsidiaries' ability to pay dividends or require us to seek consents for the payment of dividends;
•
increase our vulnerability to general adverse economic and industry conditions;
•
limit our ability to pursue our growth plan;
•
require us to dedicate a substantial portion of our cash flow from operations to
payments on our debt, thereby reducing the availability of our cash flow to fund capital
expenditures, working capital and other general corporate purposes; and
•
limit our flexibility in planning for, or reacting to, changes in our business and our
industry.
We cannot assure you that we will be able to obtain the additional financing on terms that are
acceptable to us or at all.
Our profitability will be affected by average selling prices of packaging and test services that
have experienced pricing pressures and have a tendency to decline.
Decreases in the average selling prices of our packaging and test services can have a material
adverse effect on our profitability. The average selling prices of packaging and test services have
declined historically, with packaging services in particular experiencing severe pricing pressure.
This pricing pressure for packaging and test services is likely to continue. Our ability to
maintain or increase our profitability will continue to be dependent, in large part, upon our
ability to offset decreases in average selling prices by improving production efficiency,
increasing unit volumes packaged and tested, or by shifting to higher margin packaging and test
services. If we are unable to do so, our business, financial condition and results of operations
could be materially adversely affected.
6
Table of Contents
We have experienced substantial losses in the past and may continue to do so in the future.
In 2004, we suffered an operating loss of $429.6 million and a net loss of $467.7 million. In
2005, we achieved an operating income of $26.6 million, but suffered a net loss of $26.3 million.
Although we achieved an operating income of $154.3 million and a net income of $76.8 million in
2006, we cannot assure you that we will not continue to incur operating losses and net losses in
the future due to a variety of factors, including if there is a further decline in the
semiconductor industry.
The
announcement by Temasek Holdings' subsidiary, STSPL, of a proposed tender offer to purchase
all of our outstanding ordinary shares and ADSs may cause disruptions in our business, which could
have a material adverse effect on our business and operations.
Our customers, suppliers or other strategic partners, in response to the announcement by STSPL, a
wholly-owned
subsidiary of
Temasek Holdings, of its intention to launch a tender offer to purchase
all of our outstanding ordinary shares and ADSs and certain of our outstanding convertible notes,
as described above under "Recent Developments — Temasek
Holdings' Subsidiary, Singapore
Technologies Semiconductors Pte Ltd's, Tender Offer", may terminate or cancel their existing
relationships with us, or delay or defer decisions to enter into or to renew those arrangements,
which could have a material adverse effect on our business and operations. Similarly, our current
and prospective employees may experience uncertainty about their future roles with our Company,
which may adversely affect our ability to attract and retain key management, sales, marketing and
technical personnel.
Litigation may arise in connection with the proposed tender offer by STSPL, which could negatively
impact our business and our results of operations.
Litigation may arise against, among others, our Company and our directors and officers alleging,
among others, breaches of fiduciary duties relating to the proposed tender offer by STSPL. There
can be no assurance as to the outcome of any such litigation (if it arises) and the impact on our
business and results of operations. Any such litigation, with or without merit, could
substantially divert the attention of management and resources in general. In addition, the cost of
defending any such litigation, even if resolved favorably, could be substantial.
Our substantial indebtedness could adversely affect our financial health.
We have a substantial amount of indebtedness. As of December 31, 2006, we had total
indebtedness of $762.9 million, consisting of $365.0 million of unsecured senior notes, $318.1
million of unsecured convertible notes (of which $161.5 million were senior convertible notes and
$150.0 million were subordinated convertible notes), $79.2 million of senior secured debt
(including capital lease obligations) and $0.6 million of unsecured
short-term
debt. In addition,
we are permitted to incur additional debt under the terms of our existing debt.
Our substantial indebtedness could have a material adverse effect on our business, financial
condition and results of operations by:
•
increasing our vulnerability to general adverse economic and industry conditions by
limiting our flexibility in planning for, or reacting to, changes in the business and the
industry in which we operate;
•
requiring us to dedicate a substantial portion of our cash flow from operations to
payments on our indebtedness, thus reducing the availability of cash flow to fund working
capital, capital expenditures, research and development efforts and other general corporate
purposes;
•
placing us at a competitive disadvantage relative to our competitors that have less leverage; and
•
limiting, along with the financial and other restrictive covenants in the indebtedness, our ability to borrow additional funds.
In addition, the holders of our various notes may, in certain circumstances, including a
change in control of our Company, in each case as defined in the respective indenture relating to
such notes, require us to redeem all or a portion of the holders' notes. STSPL's proposed tender
offer for the remaining shares in our Company that STSPL does not already own, as described above
under "Recent Developments — Temasek Holdings' Subsidiary, Singapore Technologies Semiconductors
Pte Ltd's, Tender Offer", if consummated, would result in a change in control of our Company as
defined in the indenture relating to our $150.0 million of 2.5% convertible subordinated notes due
2008. In such an event, holders of our 2.5% convertible subordinated notes due 2008 will have the
right to require us to repurchase all or a portion of their notes. Further, holders of our $115.0 million of zero coupon convertible notes due 2008 may require us to repurchase all or a portion of
the holders' convertible notes on November 7, 2007. In any such events, or at maturity of each
series of notes, we may not have sufficient funds or we may not be able to arrange financing on
terms that are acceptable to us or at all or to obtain waivers of prohibitions from lenders under
our other financing arrangements to make the required purchase or redemption. If we do not have
sufficient funds or are unable to obtain adequate financing or waivers to repurchase or redeem such
notes, we will be in default under the terms of those notes.
To service our indebtedness and other potential liquidity requirements we will require a
significant amount of cash. Our ability to generate cash depends on many factors beyond our
control.
Our ability to make payments on and to refinance our indebtedness and to fund planned capital
expenditures and research and development efforts will depend on our ability to generate cash in
the future. This, to a certain extent, is subject to general economic, financial, competitive,
legislative, regulatory and other factors that are beyond our control. We believe that our cash
flow from operations together with our existing liquid assets and credit facilities will be
sufficient to meet our cash flow needs for at least the next 12 months. However, our business may
not generate sufficient cash flow from operations and future borrowings may not be available to us
in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs.
We recorded an impairment charge of $453.0 million to our earnings in 2004 and may be required to
record another significant charge to earnings in the future when we review our goodwill or other
intangible assets for potential impairment.
As of December 31, 2006, we had goodwill and other intangible assets of approximately $513.5
million and $41.8 million, respectively, which primarily resulted from the accounting of the merger
in 2004 using the purchase accounting method. Under U.S. GAAP, we are required to review our
goodwill and intangible assets for impairment when events or changes in circumstances indicate the
carrying value may not be recoverable. In addition, goodwill and other intangible assets with
indefinite lives are required to be tested for impairment at least annually. We
7
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performed an impairment review and recorded an impairment charge of $453.0 million to our earnings in 2004. Our
impairment review of goodwill in 2005 and 2006 did not indicate any impairment. We may be required in the future to
record a significant charge to earnings in our financial statements during the period in which any
impairment of our goodwill or other intangible assets is determined. Such charges will likely have
a significant adverse impact on our results of operations.
We could suffer adverse tax and other financial consequences if taxing authorities do not agree
with our interpretation of applicable tax laws.
ChipPAC is our
wholly-owned
subsidiary. ChipPAC's corporate structure and operations are
based, in part, on interpretations of various tax laws, including withholding tax, and other
relevant laws of applicable taxing jurisdictions. We cannot assure you that the taxing authorities
will agree with our interpretations or that they will reach the same conclusions. For example, the
South Korean National Tax Service (NTS) has informed ChipPAC that it has made an assessment of
approximately KRW 18.7 billion (approximately $19.9 million based on the exchange rate as at
January 31, 2007) against ChipPAC relating to withholding tax and interest that it asserts should
have been collected on interest paid on a loan from ChipPAC's Hungarian subsidiary to its South
Korean subsidiary. We believe that no withholding tax on the transaction in question is required under
the prevailing tax treaty. We have appealed this assessment through the NTS's Mutual Agreement
Procedure (MAP) and believe that such assessment should be overturned. The MAP will terminate on
July 3, 2007 if not extended by the NTS. In the event that we are not successful with our appeal,
we estimate that the maximum amount payable including potential interest and local surtax as at
December 31, 2006 to be KRW 36.5 billion (approximately $38.8 million based on the
exchange rate as at January 31, 2007). However, our interpretations are not binding on any taxing
authority and, if these foreign jurisdictions were to change or to modify the relevant laws, we
could suffer adverse tax and other financial consequences or the anticipated benefits of ChipPAC's
corporate structure could be materially impaired. See "Item 5. Operating and Financial Review and
Prospects — Liquidity and Capital Resources — Contingencies".
Our intellectual property is important to our ability to succeed in our business but may be
difficult to obtain and protect.
Our ability to compete successfully and achieve future growth in net revenues will depend, in
part, on our ability to develop and to protect our intellectual property and the intellectual
property of our customers. We seek to protect proprietary information and
know-how
through patents,
the use of confidentiality and
non-disclosure
agreements and limited access to and distribution of
proprietary information. As of January 31, 2007, our Company and our various subsidiaries held a
total of approximately 644 issued patents and pending patent applications. Of these, we have
approximately 116 patents granted or allowed by the U.S. Patent and Trademark Office and
approximately 57 patents registered or allowed in Singapore, South Korea and other countries.
We cannot assure you that any of our pending applications for patents will be granted, or, if
granted, will not be challenged, invalidated or circumvented or will offer us any meaningful
protection. Further, we cannot assure you that the Asian countries in which we market our products
will protect our intellectual property rights in the same manner or to the same extent as the
United States. Additionally, we cannot assure you that our competitors will not challenge our
rights in such intellectual property, or develop, patent or gain access to similar
know-how
and
technology, or reverse engineer our packaging services, or that any confidentiality and
non-disclosure
agreements upon which we rely to protect our trade secrets and other proprietary
information will be adequate protection. The occurrence of any such events could have a material
adverse effect on our business, financial condition and results of operations.
We have licenses to use third party patents, patent applications and other technology rights,
as well as trademark rights, in the operation of our business. To the extent these licenses are not
perpetual and irrevocable, we believe that these licenses will be renewable under normal or
reasonable commercial terms upon their expiration. However, we may be unable to utilize the
technologies under these licenses if they are not extended or otherwise renewed or if any of these
licenses are terminated by the licensor. Alternatively, if we are able to renew these licenses, we
cannot assure you that they will be renewed on the same terms as currently exist. Any termination
of, or failure to extend or renew, these licenses could cause us to incur substantial liabilities
and to suspend the services and processes that utilize these technologies.
We may be subject to intellectual property rights disputes which could materially adversely affect
our business.
Our ability to compete successfully will depend, in part, on our ability to operate without
infringing the proprietary rights of others. However, we may not be aware of the intellectual
property rights of others or whether such rights conflict with our rights, or be familiar with the
laws governing such rights in certain countries in which our products and services are or may be
sold. As the number of patents, copyrights and other intellectual property rights in our industry
increases, and as the coverage of these rights increases, we may face more frequent patent and
other intellectual property infringement claims brought by third parties.
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In the event that any valid claim is made against us, we could be required to:
•
stop using certain processes or other intellectual property;
•
cease manufacturing, using, importing or selling infringing packages;
•
pay substantial damages;
•
develop
non-infringing
technologies; or
•
attempt to acquire licenses to use the infringed technology.
It is the nature of the semiconductor industry that, from time to time, we may receive
communications alleging that we have infringed intellectual property rights of others. For example,
in February 2006, our Company, ChipPAC and STATS ChipPAC (BVI) Limited were named as defendants in
a patent infringement lawsuit filed in United States Federal Court for the Northern District of
California. The plaintiff, Tessera Technologies, Inc. (Tessera), has asserted that semiconductor
chip packaging, specifically devices having Ball Grid Array (BGA) and
multi-chip
BGA configurations used by the
defendants infringe certain patents of Tessera. Tessera has further asserted that our Company is in
breach of an existing license agreement entered into by Tessera with ChipPAC, which agreement has
been assigned by ChipPAC to our Company. A court determination that our products or processes
infringe the intellectual property rights of others could result in significant liability and/or
require us to make material changes to our products and/or processes. Due to the inherent
uncertainties of the lawsuit, we cannot accurately predict the ultimate outcome and it could result in significant liability and/or injunction and could have a material adverse
effect on the business, financial condition and the results of operations of our Company.
We also, from time to time, receive from customers, requests for indemnification against
pending or threatened infringement claims brought against such customers. The resolution of any future allegation or request for indemnification could have a
material adverse effect on our business, financial condition and results of operations.
Although we may seek licenses from or enter into agreements with third parties covering the
intellectual property that we are allegedly infringing, we cannot assure you that any such licenses
could be obtained on acceptable terms, if at all. We may also have to commence lawsuits against
companies who infringe our intellectual property rights. Such claims could result in substantial
costs and diversion of our resources.
Any of the foregoing could have a material adverse effect on our business, financial condition
and results of operations.
Our operating results have fluctuated, and may continue to fluctuate, from quarter to quarter,
which may make it difficult to predict our future performance.
Our operating results have fluctuated and may continue to fluctuate substantially from quarter
to quarter due to a wide variety of factors, including:
•
general economic conditions in the semiconductor industry and the markets addressed by
end-users
of semiconductors;
•
a shift by IDMs between internal and outsourced test and packaging services;
•
the seasonality of the semiconductor industry;
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•
the
short-term
nature of our customers' commitments;
•
the rescheduling or cancellation of large orders;
•
the timing and volume of orders relative to our capacity;
•
changes in capacity utilization;
•
the erosion of the selling prices of packages;
•
changes in our product mix;
•
the rescheduling, cancellation and timing of expenditures in anticipation of future orders;
•
disruptions caused by the installation of new equipment;
•
the ability to obtain adequate equipment and materials on a timely and
cost-effective
basis;
•
any exposure to currency and interest rate fluctuations that may not be adequately covered under our hedging policy;
•
weakness in the supply of wafers and substrates;
•
loss of key personnel or the shortage of available skilled workers; and
•
changes in effective tax rates.
As a result of all of these factors, we believe that period to period comparisons of our
operating results are not meaningful, and that using such comparisons to predict our future
performance may not be meaningful. In addition, unfavorable changes in any of the above factors may
adversely affect our business, financial condition and results of operations.
If we are unable to maintain or increase our capacity utilization, our gross margin will be
adversely affected.
As a result of the capital intensive nature of our business, our operations are characterized
by high fixed costs. Consequently, high capacity utilization allows us to maintain higher gross
margins because it enables us to allocate fixed costs over a greater number of units tested and
packaged. Insufficient utilization of installed capacity can have a material adverse effect on our
gross margin. Due to the high level of fixed costs, we suffered substantial gross loss in 2002.
While our capacity utilization has increased since 2003, there can be no assurance that our
capacity utilization will continue to increase or be maintained or that it will not decline and
adversely affect our gross margin.
Our ability to maintain or enhance our gross margins will continue to be dependent, in large
part, upon our ability to increase capacity utilization. Capacity utilization may be affected by a
number of factors and circumstances, including:
•
overall industry conditions;
•
installation of new equipment in anticipation of future business;
•
the level of customer orders;
•
operating efficiencies;
•
mechanical failure;
•
disruption of operations due to expansion of operations, introduction of new packages or relocation of equipment;
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•
disruption in supply of raw materials;
•
changes in product mix; and
•
fire or other natural disasters.
We cannot assure you that our capacity utilization will not be materially adversely affected
by future declines in the semiconductor industry, declines in industries that purchase
semiconductors or other factors. Any inability on our part to maintain or increase our capacity
utilization could have a material adverse effect on our business, financial condition and results
of operations.
If we are unable to obtain packaging and testing equipment in a timely manner or on reasonably
favorable terms and prices, we may be unable to meet customer demand and our revenue may decline.
The semiconductor packaging and test business is capital intensive and requires investment in
expensive capital equipment manufactured by a limited number of suppliers, which are located
principally in the United States, Singapore, Europe, South Korea and Japan. The market for capital
equipment used in semiconductor testing is characterized, from time to time, by intense demand,
limited supply and long delivery cycles. Our operations and expansion plans are highly dependent
upon our ability to obtain a significant amount of such capital equipment from a limited number of
suppliers. If we are unable to obtain certain equipment, such as testers and wire bonders, in a
timely manner, we may be unable to fulfill our customers' orders which would negatively impact our
business, financial condition and results of operations.
Generally, we have no binding supply agreements with any of our suppliers and we acquire our
equipment on a purchase order basis, which exposes us to substantial risks. For example, increased
levels of demand for the type of capital equipment required in our business may cause an increase
in the price of such equipment and may lengthen delivery cycles, which could have a material
adverse effect on our business, financial condition and results of operations. In addition, adverse
fluctuations in foreign currency exchange rates, particularly the Japanese yen, could result in
increased prices for certain equipment purchased by us, which could have a material adverse effect
on our business, financial condition and results of operations.
We have entered into a number of financing arrangements that impose limitations on our actions
which may limit our ability to maintain and grow our business.
The terms of our 7.5% senior notes due 2010 and 6.75% senior notes due 2011 contain
restrictions applicable to us that limit our ability to, among other things:
•
incur additional debt and issue certain preferred stock;
•
consolidate or merge with another entity;
•
create liens;
•
pay dividends, repurchase stock and make other distributions;
•
prepay subordinated debt;
•
make investments and other restricted payments;
•
enter into sale and leaseback transactions;
•
sell assets; and
•
enter into transactions with affiliates.
The terms of our zero coupon convertible notes due 2008, 1.75% convertible notes due 2007 and
2.5% convertible subordinated notes due 2008 also include one or more of the above restrictions.
As a result of these limitations, we may encounter difficulties obtaining the required
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consents from our existing lenders to conduct our business, in particular, to obtain the
necessary financing to maintain or grow our business, on a timely basis or at all. This could have
a material adverse effect on our business, financial condition and results of operations.
A breach of any of the covenants or restrictions contained in any of the indentures could
result in an event of default. Such default could allow our debt holders to accelerate the related
debt as well as any other debt to which a
cross-acceleration
or
cross-default
provision applies,
and/or to declare all borrowings outstanding hereunder to be due and payable. If our debt is
accelerated, our assets may not be sufficient to repay such debt in full.
Research and development investments may not yield profitable and commercially viable packages or
test services and thus will not necessarily result in increases in revenues for us.
We invest significant resources in our research and development. However, research and
development efforts may not yield commercially viable packages or test services. The qualification
process for new packages and test services is conducted in various stages which may take one or
more years to complete, and during each stage there is a substantial risk that we will have to
abandon a potential package or test service which is no longer marketable and in which we have
invested significant resources. In the event we are able to qualify new packages or test services,
a significant amount of time will have elapsed between our investment in new packages or test
services and the receipt of any related revenues. In addition, from time to time, our customers may
request, and have requested, research and development services relating to the development of
packages and/or services. These customers may not, and generally do not, reimburse us for our
research and development expenses if the developed package or service does not achieve expected
levels of demand or utilization.
We do not have any significant backlog because our customers do not place purchase orders far in
advance, which makes us vulnerable to sudden changes in customer demand.
Our customers generally do not place purchase orders far in advance, and our contracts with
major customers do not generally require minimum purchase of our products or services. In addition,
our customers' purchase orders have varied significantly from period to period because demand for
their products is often volatile. As a result, we do not typically operate with any significant
backlog. The lack of a significant backlog makes it difficult for us to forecast our net operating
revenues in future periods and causes our operating results to fluctuate from period to period.
Moreover, our expense levels are based in part on our expectations of future revenue and we may be
unable to adjust costs in a timely manner to compensate for revenue shortfalls. We expect that in
the future our net operating revenues in any quarter will continue to be substantially dependent
upon purchase orders received in that quarter. We cannot assure you that any of our customers will
continue to place orders with us in the future at the same levels as in prior periods. We also
cannot assure you that our customers' orders will be consistent with our expectations when we made
or will make the necessary investments in raw materials, labor and equipment.
We generally do not have any
long-term
supply contracts with our raw materials suppliers and may
not be able to obtain the raw materials required for our business, which could have a material
adverse effect on our business.
We obtain the materials we need for our packaging services from outside suppliers. We purchase
all of our materials on a purchase order basis and have not generally entered into
long-term
contracts with our suppliers. If we cannot obtain sufficient quantities of materials at reasonable
prices or if we are not able to pass on higher materials costs to our customers, this could have a
material adverse effect on our business, financial condition and results of operations.
We need a controlled environment for our operations and any prolonged inability to maintain a clean
room environment may disrupt our operations and materially adversely affect our business.
Our packaging and testing operations take place in areas where air purity, temperature and
humidity are controlled. If we are unable to control our packaging or testing environment, our
packaging or test equipment may become nonfunctional or the tested and packaged semiconductors may
be defective. If we experience prolonged interruption in our operations due to problems in the
clean room environment, this could have a material adverse effect on our business, financial
condition and results of operations.
Loss of our key management and other personnel, or an inability to attract such management and
other personnel, could impact our business.
We depend on our key senior management to run our business. We do not maintain "key man" life
insurance on any of our personnel. The loss of these persons could have a material adverse effect
on our business, financial condition and results of operations, particularly if we are
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unable to find, relocate and integrate adequate replacements for any of these persons.
Further, in order to develop or grow our business, we will require experienced technical, customer
support, sales and management personnel and other skilled employees. We may be unable to attract or
retain these persons. This could disrupt our operations or materially adversely affect the success
of our business.
The packaging and testing process is complex and our production yields and customer relationships
may suffer from defects or malfunctions in our testing equipment or defective packages and the
introduction of new packages.
Semiconductor packaging and testing are complex processes that require significant
technological and process expertise. Semiconductor testing involves sophisticated testing equipment
and computer software. We develop computer software which is used to test our customers'
semiconductors. We also develop conversion software programs which enable us to test semiconductors
on different types of testers. Similar to most software programs, these software programs are
complex and may contain programming errors or "bugs". In addition, the testing process is subject
to operator error by our employees who operate our testing equipment and related software. Any
significant defect in our testing or conversion software, malfunction in our testing equipment or
operator error could reduce our production yields, damage our customer relationships and materially
harm our business.
The packaging process is complex and involves a number of precise steps. Defective packages
primarily result from:
•
contaminants in the manufacturing environment;
•
human error;
•
equipment malfunction;
•
defective raw materials; or
•
defective plating services.
These and other factors have, from time to time, contributed to lower production yields. They
may do so in the future, particularly as we expand our capacity or change our processing steps. In
addition, to be competitive, we must continue to expand our offering of packages. Our production
yields on new packages typically are significantly lower than our production yields on our more
established packages.
Our failure to maintain high standards or acceptable production yields, if significant and
prolonged, could result in loss of customers, increased costs of production, delays, substantial
amounts of returned goods and claims by customers relating thereto. Any of these problems could
have a material adverse effect on our business, financial condition and results of operations.
Liabilities and obligations under certain environmental laws and regulations could require us to
spend additional funds and could adversely affect our business, financial condition and results of
operations.
We are subject to a variety of environmental laws and regulations in the countries in which we
have operations, including laws and regulations relating to the use, storage, discharge and
disposal of hazardous materials and the chemical
by-products
of, and waste water discharges from,
our packaging and testing processes. Furthermore, our activities are also subject to new regulatory
requirements on the environmental impacts of products such as the European Union's Directive
2002/95/EC on the restriction of the use of certain hazardous substances in electrical and
electronic equipment and other similar legislations in China and certain states in the United
States. As a result of these laws and regulations, we expect that our customers will increasingly
demand products that do not contain these restricted substances, such as lead as an alloy in
soldering material. Such requirements may adversely affect our manufacturing costs by requiring us
to acquire costly equipment or materials or to redesign some of our processes, thereby resulting in
further costs increase from research and development and quality controls. In addition, failures to
meet these demands could materially adversely affect our product sales. We may also be subject to
liability under such laws and regulations for the investigation or cleanup of contamination caused
by, or other damages associated with, the release of hazardous materials in connection with current
or historical operations at our facilities or
off-site
locations. While we believe that we are
currently in material compliance with such laws and regulations, failure to comply with such laws
and regulations in the future could subject us to liabilities that may have an adverse effect on
our business, financial condition and results of operations. While we believe that we do not face
material liabilities associated with contamination conditions and that in some cases we have
contractual indemnification agreements with predecessors relating to such conditions, should these
predecessors become unable or unwilling to address these conditions, or should other yet
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unknown conditions be identified in the future that are not subject to such indemnification
agreements, we could face environmental liabilities that may have an adverse effect on our
business, financial condition and results of operations.
Significant fluctuations in exchange rates may affect our business, financial condition and results
of operations.
Our financial statements are prepared in U.S. dollars. Our net revenues are generally
denominated in U.S. dollars and operating expenses are generally incurred in U.S. dollars,
Singapore dollars, Japanese yen, South Korean Won, Malaysian Ringgit, Chinese Renminbi and the New
Taiwan dollar. Our capital expenditures are generally denominated in U.S. dollars, Singapore
dollars, South Korean Won, Japanese yen and other currencies. As a result, we are affected by
significant fluctuations in foreign currency exchange rates among the U.S. dollar, the Singapore
dollar, the Japanese yen and other currencies, including the South Korean Won, the Malaysian
Ringgit, the Chinese Renminbi and the New Taiwan dollar.
Our ability to make further investments in our subsidiaries may be dependent on regulatory
approvals.
Our subsidiaries may require future
equity-related
financing, and any capital contributions to
certain of our subsidiaries, including, but not limited to, Winstek Semiconductor Corporation
(Winstek) and our China subsidiaries, may require the approval of the relevant authorities in the
jurisdiction in which the subsidiary is incorporated. The approvals are required from the
investment commissions or similar agency of the particular jurisdiction and relate to any initial
or additional equity investment by foreign entities in local corporations. We may not be able to
obtain any such approval in the future in a timely manner or at all.
We are exposed to certain risks as a result of the significant ownership by Temasek Holdings,
through its
wholly-owned
subsidiary. Temasek Holdings' interests may conflict with your interests.
As of January 31, 2007, Temasek Holdings, through its
wholly-owned
subsidiary, STSPL, beneficially owned approximately 35.56% of our
outstanding ordinary shares. Temasek Holdings, a private limited company incorporated in Singapore,
is
wholly-owned
by the Minister for Finance (Incorporated) of Singapore, a body corporate
constituted by the Minister for Finance (Incorporation) Act (Cap. 183). As a result, Temasek
Holdings has significant influence over matters requiring the approval of our shareholders.
Matters that typically require the approval of our shareholders include, among other things:
•
the election of directors;
•
the merger or consolidation of our Company with any other entity;
•
any sale of all or substantially all of our assets; and
•
the timing and payment of dividends.
The actions of Temasek Holdings and STSPL, particularly through the election of directors and
subsequent selection of management by those directors, can affect our strategic decisions, our
legal and capital structure and our
day-to-day
operations. This concentration of ownership may also
delay, deter or prevent acts that would result in a change of control, which may be against the
interests of holders of our ADSs and ordinary shares.
On March 1, 2007, STSPL announced its intention to launch a voluntary conditional cash offer for the remaining
ordinary shares and ADSs in our Company that STSPL does
not already own. See "Recent Developments — Temasek Holdings' Subsidiary, Singapore Technologies Semiconductors
Pte Ltd's, Tender Offer" above. If the tender offer is consummated, STSPL's ownership of our outstanding
ordinary shares and ADSs will increase to the extent of the ordinary shares and ADSs tendered and accepted
in the offer.
We may have conflicts of interest with our affiliates which may not be resolved in our favor.
We have certain contractual and other business relationships and may engage in material
transactions with the Government of Singapore and companies within the Temasek Holdings group,
including Chartered Semiconductor Manufacturing Ltd. (Chartered), which is one of our customers, and with our joint venture with China Resources Logic Limited (CR Logic).
Although all new material related party transactions generally will require the approval of the
audit committee of our Board of Directors and in certain circumstances may also require separate
approval of a majority of our Board of Directors, circumstances may arise in which the interests of
our affiliates may conflict with the interests of our other shareholders. In addition, Temasek
Holdings and their affiliates make investments in various companies. They have invested in the
past, and may invest in the future, in entities that compete with us. For example, affiliates of
Temasek Holdings have investments in United Test & Assembly Center Ltd, a
Singapore-based
provider
of
14
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semiconductor packaging and testing services for semiconductor logic, radio frequency (RF),
application-specific
integrated circuits (ASICs) and memory products. In the context of negotiating
commercial arrangements with affiliates, conflicts of interest have arisen in the past and may
arise, in this or other contexts, in the future. We cannot assure you that any such conflicts of
interest will be resolved in our favor.
We may not be successful in our acquisitions and investments in other companies and businesses.
From time to time, we may make acquisitions of, or investments in, other companies or
businesses. In June 2006, we entered into a strategic joint venture with CR Logic for the assembly and test of select products in Wuxi, China, in connection with
which we acquired a 25% shareholding in Micro Assembly Technologies Limited (MAT) with CR Logic
owning a 75% interest. MAT wholly owns Wuxi CR
Micro-Assembly
Technology Ltd. (ANST), an assembly
and test company based in Wuxi, China. In November 2005, we invested in a new facility in Song
Jiang, China to provide 200 millimeter (mm) gold bumping services as part of our strategy to service the high
growth liquid crystal display (LCD) driver semiconductor market. In October 2005, we also invested
in a new facility in Taiwan to provide 300mm wafer electroplated solder bumping services as part of
our strategy to provide turnkey services for advanced
flip-chip
packaging applications. In August
2004, we completed our merger with ChipPAC.
The success of any acquisitions and investments depends on a number of factors, including:
•
our ability to identify suitable opportunities for investment or acquisition;
•
our ability to finance any future acquisition or investment on terms acceptable to us or at all;
•
whether we are able to reach an acquisition or investment agreement on terms that are satisfactory to us or at all;
•
the extent to which we are able to exercise control over the acquired company;
•
the economic, business or other strategic objectives and goals of the acquired company compared to those of our Company; and
•
our ability to successfully integrate the acquired company or business with our business.
If we are unsuccessful in our acquisitions and investments, our financial condition may be
materially adversely affected and we may be unable to realize the anticipated results or synergies
from these acquisitions or investments.
We may be unable to integrate our operations successfully and may not realize the full anticipated
benefits of the combination of STATS and ChipPAC.
We may not be successful in integrating the businesses of STATS and ChipPAC. Integrating the
two companies' operations and personnel is a complex process. The integration may not be completed
rapidly and may not achieve the anticipated benefits of the combination of STATS and ChipPAC. The
successful integration of the two companies' businesses will require, among other things, the
following:
•
integration of the two companies' products and services, sales and marketing,
information and software systems and other operations;
•
retention and integration of management and other employees;
•
achievement of the expected cost savings;
•
coordination of ongoing and future research and development efforts and marketing activities;
•
retention of existing customers of both companies and attraction of additional customers;
•
retention of strategic partners of each company and attraction of new strategic partners;
•
developing and maintaining uniform standards, controls, procedures and policies;
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•
minimization of disruption of the combined company's ongoing business and distraction of its management; and
•
limiting expenses related to integration.
The successful integration of STATS and ChipPAC will involve considerable risks and may not be successful. These risks include:
•
the impairment of relationships with employees, customers and business partners;
•
our ability to attract and retain key management, sales, marketing and technical personnel;
•
a delay in, or cancellation of, purchasing decisions by current and prospective customers and business partners;
•
the potential disruption of the combined company's ongoing business and distraction of its management; and
•
the difficulty of incorporating acquired technology and rights into the products and service offerings of the combined company.
We may not succeed in addressing these risks or any other problems encountered in connection
with the combination of STATS and ChipPAC. The diversion of the attention of management and any
difficulties encountered in the process of combining STATS and ChipPAC could cause the disruption
of, or a loss of momentum in, the activities of the combined company's business. Further, the
process of combining ChipPAC's business with STATS' business could negatively affect employee
morale and STATS' ability to retain some key STATS and ChipPAC employees after the merger. If the
anticipated benefits of the merger are not realized or the combined company is unsuccessful in
addressing the risks related to the integration, the combined company's business, financial
condition and results of operations may be negatively impacted.
If we encounter future labor problems, we may fail to deliver our products in a timely manner,
which could adversely affect our revenues and profitability.
The employees at our Icheon, South Korea facility are represented by the STATS ChipPAC Korea
Labor Union and are covered by collective bargaining and wage agreements. The wage agreement is
renewed every year, and the collective bargaining agreement, which covers basic union activities,
working conditions and welfare programs, among other things, is renewed every other year. The wage
agreement was renewed in 2006 and is effective through April 30, 2007. The collective bargaining
agreement was renewed in 2005 and is effective through April 30, 2007. As of January 31, 2007,
approximately 67% of our South Korean employees were represented by the STATS ChipPAC Korea Labor
Union. We cannot assure you that issues with the labor union or other employees will be resolved
favorably for us in the future, that we will not experience significant work stoppages in future
years or that we will not record significant charges related to those work stoppages.
With our operations conducted in a limited number of facilities, a fire, flood or other calamity at
one of our facilities could adversely affect us.
We conduct our packaging and testing operations at a limited number of facilities. Significant
damage or other impediments to any of these facilities, whether as a result of fire, weather,
disease, civil strife, industrial strikes, breakdowns of equipment, difficulties or delays in
obtaining materials and equipment, natural disasters, terrorist incidents, industrial accidents or
other causes could temporarily disrupt or even shut down our operations, which would have a
material adverse effect on our business, financial condition and results of operations. For
example, our operations in South Korea, Taiwan and China are vulnerable to regional typhoons that
can bring with them destructive winds and torrential rains, which can in turn cause plant closures,
power supply, telecommunications and transportation interruptions. In addition, some of the
processes that we utilize in our operations place us at risk of fire and other damage. For example,
highly flammable gases are used in the preparation of wafers holding semiconductor devices for
flip-chip
packaging. While we maintain insurance policies for various types of property, casualty
and other risks, which we consider to be adequate, we do not carry insurance for all the above
referred risks and with regard to the insurance we do maintain, we cannot assure you that it would
be sufficient to cover all of our potential losses.
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New laws and regulations, currency devaluation and political instability in countries in which we
operate, particularly in South Korea, China, Malaysia and Taiwan could make it more difficult for
us to operate successfully.
A significant portion of our unit shipments are sent out to and substantially all of our
packaging and test facilities are located in Singapore, South Korea, China, Malaysia and Taiwan. In
addition, we believe that the end markets for certain of our key customers are located in Asia. The
following are some of the risks inherent in doing business internationally:
•
regulatory limitations imposed by foreign governments;
•
fluctuations in currency exchange rates;
•
political, military and terrorist risks;
•
disruptions or delays in shipments caused by customs brokers or government agencies;
•
unexpected changes in regulatory requirements, tariffs, customs, duties and other trade barriers;
•
difficulties in staffing and managing foreign operations; and
•
potentially adverse tax consequences resulting from changes in tax laws.
There can be no assurance that economic, political or legal developments in any of these countries
would not have a material adverse effect on our business, financial condition and results of
operations.
Conducting business in China involves uncertainties and there can be no assurances that the
intended benefits from our new China facility will be realized.
We are expanding our facilities in China to include additional buildings next to our existing
facility in Qing Pu, Shanghai. The expansion will increase floor space by approximately 500,000
square feet and is near completion. Many legal, operational and financial risks may prevent us
from realizing our intended benefits in China in connection with our investment in the facility in
China. These risks include:
•
economic and political uncertainties in China;
•
local infrastructure problems, such as electrical power interruptions;
•
transportation difficulties that may be encountered in receiving supplies and/or in shipping finished products by land or by air;
•
an unwillingness or hesitancy on the part of customers to qualify their products in the new facilities;
•
an inability to attract and retain sufficient and qualified engineering and management talent and resources;
•
measures which may be introduced to control inflation or deflation;
•
continuing fluctuations in the value of the Chinese Renminbi currency; and
•
modifications to fiscal, banking or monetary policies to reduce the rate of future growth in China.
Because a significant portion of Winstek's business and operations, our 300mm wafer
bumping facility, the production facilities of many of our suppliers and customers and providers of
complementary semiconductor manufacturing services are located in Taiwan, a severe earthquake could
severely disrupt their normal operations and adversely affect our earnings.
Taiwan is susceptible to earthquakes. For example, on March 31, 2002, Taiwan experienced a
severe earthquake that caused significant property damage and loss of life, particularly in central
Taiwan. This earthquake damaged production facilities and adversely affected the operations of many
companies involved in the semiconductor and other industries. Our 52% owned subsidiary, Winstek,
experienced no structural damage to its facilities and no damage to its machinery and equipment as
a result of this earthquake. There were, however, interruptions to our production schedule
primarily as a result of power outage caused by the earthquake. Recently, on December 26, 2006,
17
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tremors from an earthquake near the southern tip of Taiwan caused casualties, property damage
and also damaged several undersea cables, disrupting internet and telecommunications across various
parts of Asia. There were no major disruptions to operations at Winstek and our 300mm wafer
bumping facility. The production facilities of many of our suppliers and customers and providers
of complementary semiconductor manufacturing services, including foundries, are located in Taiwan.
If our customers are affected, it could result in a decline in the demand for our testing and
packaging services. If suppliers and providers of complementary semiconductor manufacturing
services are affected, our production schedule could be interrupted or delayed. As a result, a
major earthquake in Taiwan could severely disrupt the normal operation of business, in particular
Winstek's and our 300mm wafer bumping business, and may have a material adverse effect on our
business, financial condition and results of operations.
Outbreaks of epidemics and communicable diseases in China and other parts of Asia may disrupt our
business operations, causing us to lose customers and revenue.
In early 2003, China and certain other countries, largely in Asia, experienced the spread of
the Severe Acute Respiratory Syndrome (SARS) virus. The World Health Organization and several
countries issued travel warnings against international travel to China and several other Asian
nations during the period of the alert. China reported a number of cases of SARS in April 2004.
More recently, the avian influenza viruses have been a health threat in many countries across Asia.
There can be no assurance that the SARS virus, avian influenza viruses and/or different or even
more virulent viruses will not make a
re-appearance
in the future. If such an outbreak were to
occur in Singapore, South Korea, China, Malaysia or Taiwan, and if the outbreak were to be
prolonged, uncontrolled and/or associated with high mortality, our operations could be severely
impacted, such as through facility closures and the imposition of other emergency measures, any of
which would have a material adverse effect on our business, financial condition and results of
operations. Furthermore, any outbreak in any of our premises or manufacturing facilities could
result in our management and employees being quarantined and our operations being required to be
suspended.
Risks Relating to Our Ordinary Shares and ADSs
The trading price of our ordinary shares and our ADSs has been and may continue to be volatile.
The trading price of our ordinary shares and our ADSs has been and may continue to be subject
to large fluctuations. Our ordinary share price and our ADS share price may increase or decrease in
response to a number of events and factors, including:
•
quarterly variations in operating results;
•
changes in financial estimates and recommendations by securities analysts;
•
the operating and stock price performance of other companies in our industry;
•
developments affecting us, our customers or our competitors;
•
changes in government regulation;
•
changes in general economic conditions;
•
changes in accounting principles; and
•
other events or factors described in this annual report.
This volatility may adversely affect the price of our ordinary shares and our ADSs, regardless
of our operating performance.
Singapore law contains provisions that could discourage a
take-over
of our Company.
The Securities and Futures Act, Chapter 289 of Singapore and the
Take-Over
Code contain certain provisions that may delay, deter or prevent a future
take-over
or change in control of our Company. Any person acquiring an interest (either on his or
her own or together with parties acting in concert with him or her) in 30% or more of our voting
shares must extend a
take-over
offer for the remaining voting shares in accordance with the
provisions of the
Take-Over
Code. A
take-over
offer is also required to be made if
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a person holding (either on his or her own or together with parties acting in concert with him
or her) between 30% and 50% (both inclusive) of our voting shares acquires (either on his or her
own or together with parties acting in concert with him or her) additional voting shares
representing more than 1% of our voting shares in any
six-month
period. These provisions may
discourage or prevent certain types of transactions involving an actual or threatened change of
control of our Company.
Our public shareholders may have more difficulty protecting their interests than they would as
shareholders of a corporation incorporated in the United States.
Our corporate affairs are governed by our Memorandum and Articles of Association and by the
laws governing corporations incorporated in Singapore. The rights of our shareholders and the
responsibilities of our management and the members of our Board of Directors under Singapore law
may be different from those applicable to a corporation incorporated in the United States. For
example, controlling shareholders of U.S. corporations have fiduciary duties to minority
shareholders while controlling shareholders in Singapore corporations are not subject to such
duties. Therefore, our public shareholders may have more difficulty in protecting their interests
in connection with actions taken by our management, members of our Board of Directors or our
controlling shareholder than they would as shareholders of a corporation incorporated in the United
States.
It may be difficult for you to enforce any judgment obtained in the United States against us or our
affiliates.
Our Company is a limited liability company incorporated under the laws of Singapore. Some of
our directors and a majority of our senior management reside outside the United States. In
addition, a majority of our assets and the assets of those persons are located outside the United
States. As a result, it may be difficult to enforce in the United States any judgment obtained in
the United States against us or any of these persons, including judgments based upon the civil
liability provisions of the United States securities laws. In addition, in original actions brought
in courts in jurisdictions located outside the United States, it may be difficult for shareholders
to enforce liabilities based upon United States securities laws. We have been advised that
judgments of U.S. courts based on the civil liability provisions of the federal securities laws of
the United States may not be enforceable in Singapore courts. We have also been advised that there
is doubt as to whether Singapore courts will enter judgments in original actions brought in
Singapore courts based solely upon the civil liability provisions of the federal securities laws of
the United States.
The Singapore securities market is relatively small and more volatile than markets in the United
States and may cause the market price of our ordinary shares and our ADSs to fluctuate.
The Singapore Exchange Securities Trading Limited
(SGX-ST)
is relatively small and more
volatile than stock exchanges in the United States and certain other European countries. As of
December 31, 2006, there were 539 companies listed on the Main Board of the
SGX-ST
and the
aggregate market capitalization of listed equity securities of these companies was approximately
S$579.8 billion. For the year ended December 31, 2006, the annualized aggregate trading value on
the
SGX-ST
(including shares traded on the Central Limit Order Book (CLOB) International trading
system) was approximately S$291.2 billion. The relatively small market capitalization of, and
trading volume on, the
SGX-ST
may cause the market price of securities of Singapore companies,
including our ordinary shares and, in turn, our ADSs, to fluctuate.
Future sales, or perceived sales, of our ordinary shares or our ADSs by our Company or existing
shareholders could cause the price of our ordinary shares and our ADSs to decline.
Sales of our ordinary shares or our ADSs in the public market, or the perception that these
sales could occur, could cause the market price of ordinary shares and our ADSs to decline. These
sales, or the perception that these sales could occur, also might make it more difficult for us to
sell securities in the future at a time or at a price that we deem appropriate. All of our
outstanding shares are freely transferable without restriction in Singapore and in the United
States (in the form of ADSs), except that the shares owned by our affiliates, including Temasek
Holdings and STSPL, may only be sold in the United States if they registered or if they qualified
for an exemption from registration, including pursuant Rule 144 under the Securities Act of 1933,
as amended (Securities Act).
Your voting rights with respect to the ADSs are limited by the terms of the deposit agreement for
the ADSs.
Holders may exercise voting rights with respect to the ordinary shares represented by
ADSs only in accordance with the provisions of the deposit agreement relating to the ADSs. There
are no provisions under Singapore law or under our Articles of Association that limit ADS holders'
ability to exercise their voting rights through the depositary with respect to the underlying ordinary shares. However, there are practical limitations upon the ability of ADS
holders to exercise their voting rights due to the additional procedural steps involved in
communicating with
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such holders. For example, our Articles of Association require us to notify our
shareholders at least 14 days in advance of any annual general meeting unless a special resolution
is to be passed at that meeting, in which case at least 21 days' notice must be given. Our ordinary
shareholders will receive notice directly from us and will be able to exercise their voting rights
by either attending the meeting in person or voting by proxy.
ADS holders, by comparison, will not receive notice directly from us. Rather, in accordance
with the deposit agreement, we will provide the notice to the depositary, which will in turn, as
soon as practicable thereafter, mail to holders of ADSs:
•
the notice of such meeting;
•
voting instruction forms; and
•
a statement as to the manner in which instructions may be given by holders.
To exercise their voting rights, ADS holders must then instruct the depositary how to vote
their shares. Because of this extra procedural step involving the depositary, the process for
exercising voting rights will take longer for ADS holders than for holders of ordinary shares. ADSs
for which the depositary does not receive timely voting instructions will not be voted at any
meeting.
Except as described in this annual report, holders of ADSs will not be able to exercise voting rights
attaching to the ADSs.
The ability of holders of ADSs to participate in any rights offering of our Company is limited,
which may cause dilution to their holdings.
We may, from time to time, distribute rights to our shareholders, including rights to acquire
securities under the deposit agreement relating to the ADSs. The depositary will not offer rights
to holders in any jurisdictions unless both the rights and the securities to which such rights
relate are either exempt from registration under the applicable securities laws of such
jurisdictions or are registered in accordance with the provisions of such laws. However, we are
under no obligation to file a registration statement with respect to any such rights or underlying
securities or to endeavor to cause such a registration statement to be declared effective.
Accordingly, holders of our securities may be unable to participate in rights offerings by us and
may experience dilution of their holdings as a result.
ITEM 4.
INFORMATION ON OUR COMPANY
A. History and Development of Our Company
STATS ChipPAC Ltd. was incorporated in Singapore as a limited liability company on October 31,
1994 and began operations in January 1995.
In February 2000, we completed our initial public offering. Our ordinary shares are listed on
SGX-ST
(SGX-ST:
STATSChP) and, our ADSs are quoted on the NASDAQ Stock Market (Nasdaq)
(NASDAQ: STTS). Our registered office is at No. 5, Yishun Street 23, Singapore 768442, Republic
of Singapore, and our telephone and facsimile numbers at that address is (65) 6824 7888 and (65)
6720 7829, respectively. Our principal executive offices are located at 10 Ang Mo Kio Street 65,
#05-17/20
Techpoint, Singapore 569059, Republic of Singapore. Our website address is:
www.statschippac.com.
Information contained on our website does not constitute a part of this
annual report. Our agent for service in the United States is the current Company Secretary of STATS
ChipPAC, Inc., located at 47400 Kato Road, Fremont, CA 94538, United States of America; Telephone:
1
(510) 979-8000;
Facsimile: 1
(510) 979-8001.
We are headquartered in Singapore and our global
operations are mainly carried out in Singapore, South Korea, China, Malaysia, Taiwan, United
States, United Kingdom, the Netherlands and Japan.
On August 5, 2004, we completed our merger with ChipPAC, which resulted in ChipPAC becoming
our
wholly-owned
subsidiary. In connection with the merger, we changed our name from ST Assembly
Test Services Ltd to STATS ChipPAC Ltd. For information concerning the merger of our Company with
ChipPAC, see "Item 10. Additional Information — C. Material Contracts", and elsewhere in this
annual report.
Our capital expenditures in 2004, 2005 and 2006 amounted to $270.8 million, $277.7 million and
$348.5 million, respectively. Our capital expenditures are largely driven by the demand for our
services, primarily to increase our packaging and testing capacity, to replace packaging
20
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\
and testing equipment from time to time, and to expand our facilities. Depending on business
conditions, we expect our capital expenditures to be approximately $250.0 million in 2007 as our
capital expenditure spending continues to be targeted at demand we see from our customers.
For a more detailed discussion of our capital expenditures and financing for such capital
expenditures, see "Item 5. Operating and Financial Review and Prospects — Liquidity and Capital
Resources".
On March 1, 2007, STSPL announced its intention to launch a voluntary conditional cash offer for
the remaining ordinary shares and ADSs in our Company that STSPL does not already own. See "Recent
Developments — Temasek Holdings' Subsidiary, Singapore Technologies Semiconductors Pte Ltd's,
Tender Offer" above.
B. Business Overview
We are a leading service provider of semiconductor packaging design, bump, probe, assembly,
test and distribution solutions. We have the scale to provide a comprehensive range of
semiconductor packaging and test solutions to a diversified global customer base servicing the
computing, communications, consumer, automotive and industrial markets. Our services include:
•
Packaging services:
providing leaded, power, array, memory card and wafer level
chip-scale
packages to customers with a broad range of packaging solutions and full backend
turnkey services for a wide variety of electronics applications. We also provide
redistribution layers (RDL), integrated passive device (IPD), and wafer bumping services
for
flip-chip
and wafer level
chip-scale
packages. As part of customer support on packaging
services, we also offer package design, electrical, mechanical and thermal simulation,
measurement and design of
lead-frames
and laminate substrates;
•
Test services:
including wafer probe and final testing, on a diverse selection of test
platforms, covering the major test platforms in the industry. We have expertise in testing
a broad variety of semiconductors, especially
mixed-signal
and
high-performance
digital
devices. We also offer
test-related
services such as
burn-in
process support, reliability
testing, thermal and electrical characterization, dry pack and tape and reel; and
•
Pre-production
and
post-production
services:
such as package development, test software
and related hardware development, warehousing and drop shipment services.
We have a leadership position in providing advanced packages, such as stacked die,
System-in-Package
(SiP) and
flip-chip,
as well as BGA packages and wafer level
chip-scale
packages.
We are a leader in
high-volume
assembly, test and distribution of discrete and analog power
packages.
We are also a leader in testing
mixed-signal
semiconductors or semiconductors combining the
use of analog and digital circuits in a chip.
Mixed-signal
semiconductors are used extensively in
fast-growing
communications applications. We have strong expertise in testing a wide range of
high-performance
digital devices.
We have been successful in attracting new customers with our packaging and test capabilities
and then expanding our relationship with such customers to provide full turnkey solutions tailored
to their needs.
We are headquartered in Singapore and our manufacturing facilities are strategically located
in Singapore, South Korea, China, Malaysia and Taiwan (which includes our 52% owned subsidiary,
Winstek). We also have test
pre-production
facilities in the United States. We market our services
through our direct sales force located across the globe in Singapore, South Korea, China, Malaysia,
Taiwan, the United States, the United Kingdom, the Netherlands and Japan. With an established
presence in the countries where strategic semiconductor markets are located, we are in close
proximity to the major hubs of wafer fabrication which allows us to provide customers with
fully-integrated,
multi-site,
end-to-end
packaging and test services.
Our Industry
Semiconductors are critical components used in an increasingly wide variety of applications
such as computer systems, communications equipment and systems, automobiles, consumer products and
industrial automation and control systems. As the performance of electronic systems has improved
and their size and cost have decreased, the use of semiconductors in these applications has grown
significantly.
The semiconductor industry is highly cyclical mainly due to the cyclicality of demand in the
markets of the products that use semiconductors. This is significantly exacerbated by the capital
intensive nature of the semiconductor industry and the time required to set up new capacity that
results in periods of high capacity utilization when demand is robust, followed by periods of
underutilization and accelerated price erosion when new capacities are commissioned and demand
growth slows.
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Historically, IDMs conducted most of the semiconductor manufacturing process in their own
facilities, outsourcing only the
lower-technology
aspects of the process and keeping advanced or
proprietary technology
in-house.
Fabless semiconductor companies, which concentrated their efforts and resources on the design,
marketing and sale of semiconductors, emerged in the
mid-1980s.
Fabless companies outsource
virtually every step of the production process — fabrication, packaging and testing — to
independent companies, allowing them to utilize the latest production, packaging and test
technologies without committing significant amounts of capital and other resources to
manufacturing.
The demand for quick delivery to market of increasingly smaller semiconductors with greater
functionality, which may be used in a wide array of electronic applications, has led to increased
requirements for technical expertise and capital spending in the semiconductor production process.
In addition to fabless companies, IDMs outsource packaging and test requirements as a means of
obtaining
cost-effective
access to backend
state-of-the-art
technology and a faster time to
market.
Historically, outsourced semiconductor manufacturing services have grown faster than the
semiconductor market as a whole. We believe that the reduced investments in packaging and test
capacity by semiconductor manufacturers will better position outsource providers to capture a
greater percentage of future volume levels.
The semiconductor industry experienced a significant downturn beginning in the fourth quarter of
2000. This downturn had a significant adverse impact on our sales and financial performance as
customers reduced purchase orders to reflect inventory corrections and lower demand experienced in
their
end-user
markets. The semiconductor industry started its recovery in late 2002. However, in
late 2004 to early 2005 and in late 2006, we experienced a softening of our business as our
customers corrected their excess inventory positions. Despite the softening of our business in
late 2006, the semiconductor industry outlook in 2007 published by recognized industry research
analysts and associations are projecting growth rates of approximately 7% as compared to 2006. We expect the SATS market to grow at a faster pace than the semiconductor industry as a
whole and we believe that we are well positioned to benefit from the growing outsourcing trend and
from our strategic positioning in the higher growth communication, computing and consumer markets.
In 2002, our net revenues increased 54.8% over 2001 to $225.7 million. In 2003, our net
revenues grew by 68.6% over 2002 to $380.7 million. In 2004, our net revenues grew further by
102.0% to $769.1 million. In 2005, our net revenues grew by 50.5% over 2004 to $1,157.3 million
primarily due to our acquisition of ChipPAC and a return to growth in the semiconductor industry
coupled with a trend towards increased outsourcing of test and packaging. In 2006, our net
revenues grew by 39.7% over 2005 to $1,616.9 million. We continue to expect that the cyclicality
of the semiconductor industry will impact our results of operations.
Semiconductor Manufacturing Process
The production of a semiconductor is a complex process that requires increasingly
sophisticated engineering and manufacturing expertise. The production process can be broadly
divided into three primary stages:
•
wafer fabrication, including wafer probe;
•
assembly of bare semiconductors, or die, into finished semiconductors (referred to as "assembly" or "packaging"); and
•
final testing of assembled semiconductors.
Wafer Fabrication.
The wafer fabrication process begins with the generation of a mask defining
the circuit patterns for the transistors and interconnects layers that will be formed on the raw
silicon wafer. The transistors and other circuit elements are formed by repeating a series of
process steps where photosensitive material is deposited onto the wafer. The material is then
exposed to light through the mask in a photolithography process and the unwanted material is
removed through an etching process, leaving only the desired circuit pattern on the wafer.
Wafer Probe.
Wafer probe is a process whereby each individual die on the wafer is electrically
tested in order to identify the operable semiconductors for assembly.
Assembly.
The assembly process packages the semiconductor to protect it, facilitate its
integration into electronic systems and enable the dissipation of heat. In the assembly process,
the wafer is diced into individual dies that are then attached to a substrate with an epoxy
adhesive.
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Typically leads on the substrate are then connected by extremely fine gold wires to the
input/output (I/O) terminals on the die through the use of automated equipment known as "wire
bonders". Finally, each die is encapsulated in a molding compound, thus forming the package.
Final Testing.
Final testing is conducted to ensure that the packaged semiconductor meets
performance specifications. Final testing involves using complex processes that require the use of
sophisticated testing equipment and customized software programs to electrically test a number of
attributes of assembled semiconductors, including functionality, speed, predicted endurance, power
consumption and electrical characteristics.
Our Strengths and Strategy
Our goal is to strengthen our position as a leading global provider of a full range of
semiconductor packaging and test services. The key elements of our strengths and strategy include
the following:
Leverage our broad portfolio of packaging and test services to provide full turnkey solutions.
We offer one of the broadest portfolios of comprehensive
end-to-end
packaging and test services in
the semiconductor industry. Increasingly, our customers are looking for supply chain semiconductor
manufacturing solutions from
value-added
design to packaging, test and delivery to their designated
locations. We intend to leverage our strong packaging and test capabilities to provide a full
turnkey solution consisting of integrated packaging, testing and direct shipment to end customers.
We believe that the scale and scope of our technical capabilities and global reach will enable us
to provide our customers with seamless
cost-effective
solutions that will simplify their supply
chain management.
Leverage our established presence in the major hubs of wafer fabrication.
We have
manufacturing facilities located in Singapore, South Korea, China, Malaysia and Taiwan and test
pre-production
facilities in the United States. We intend to leverage our strategic proximity to
the major hubs of wafer fabrication to provide customers with
fully-integrated,
multi-site,
end-to-end
packaging and test services.
Capitalize on our research and development capabilities to drive accelerated growth.
We have
over 250 employees in our research and development department which focuses on developing advanced
technologies to meet our customers' needs. We believe this will enable us to capture potential
opportunities and accelerate our growth.
Continue to cultivate our strong customer relationships.
We have a broad and diversified
customer base that includes most of the world's leading semiconductor companies across the
fast-growing
communications, computing and power markets. No single customer accounted for more
than 15% of our Company's net revenues for 2006. We seek to strengthen these relationships and
build new relationships by providing our customers with an integrated supply chain solution.
Continue to focus on
high-quality
customer service.
Our customers demand increasingly high
levels of service. Our close interactions with our customers enable us to better anticipate and
meet their requirements on a timely basis. We focus on developing and delivering to our customers,
semiconductor designs that are developed, packaged, tested and delivered on time and as specified
to any of their global locations. Our flexible manufacturing model allows us to better address
periodic,
product-specific
capacity constraints that negatively affect smaller players. We have
implemented information technology platforms to enable the seamless integration of our customers'
systems into ours, to enable them to obtain
real-time
information on their works in progress and
thereby facilitate their production planning processes. We believe that offering
high-quality
customer service is critical to attracting and retaining leading semiconductor companies as our
customers. We intend to continue to foster a
service-oriented
and
customer-focused
environment.
Capitalize on our financial position.
Our financial strength provides us with financial
resources and flexibility to invest in customers' anticipated needs and withstand the downturns of
industry cycles. We intend to capitalize on our financial position to continue to make prudent
investments in research and development efforts even through downturns in the semiconductor
industry and be better positioned to take advantage of potential opportunities right at the start
of an upturn cycle.
Our Services
We offer semiconductor packaging and test services to the semiconductor industry for
applications in communications, computing, consumer, automotive and industrial end markets. We
offer full backend turnkey services from wafer probe to final test and drop ship. The services we
offer are customized to the needs of our individual customers. In 2006, 73.8% of our net revenues
were derived from packaging services and 26.2% of our net revenues were derived from test and other
services.
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The following table sets forth the percentage of net revenues by packaging product group and
testing and other services for the periods indicated. Our data for 2004 includes the data for
ChipPAC from August 5, 2004 and our data for 2005 and 2006 includes the data for ChipPAC for the
full period.
Year Ended
December 31,
December 25,
December 31,
2004
2005
2006
Packaging — array
40.6
%
50.2
%
55.5
%
Packaging — leaded
20.9
22.0
18.3
Test and other services
38.5
27.8
26.2
Total
100.0
%
100.0
%
100.0
%
Packaging Services
We offer a broad range of leaded, power and advanced array packages designed to provide
customers with a full range of packaging solutions and full backend turnkey services for a wide
variety of electronics applications. Packaging serves to protect the die and facilitate electrical
connection and heat dissipation. As part of customer support on packaging services, we also offer
complete package design, electrical and thermal simulation, measurement and design of
lead-frames
and substrates. Our two key types of packaging services, leaded and array, contributed
approximately 18.3% and 55.5%, respectively, of our net revenues in 2006.
Leaded Packaging.
"Leaded" or
"lead-frame"
package is the most widely used package type and is
used in almost every electronic application, including automobiles, household appliances, desktop
and notebook computers and telecommunications. Leaded packages have been in existence since
semiconductors were first produced and are characterized by a semiconductor die encapsulated in a
plastic mold compound with metal leads surrounding the perimeter of the package. With leaded
packages, the die is attached to a lead-frame (a flat lattice of leads) and very fine gold wires
are bonded (welded) to the chip and then welded to the leads to provide the interconnect. The chip
is then encapsulated in plastic to form a package, with the ends of the
lead-frame
leads protruding
from the edges of the package to enable connection to a printed circuit board. Specific packaging
customization and improvements are continually being engineered to improve electrical and thermal
performance, shrink package sizes and enable
multi-chip
capability.
Standard
Lead-frame
Packages.
Our standard
lead-frame
packages are used in a variety of
applications, including mobile phones, notebook computers and networking systems. We focus on
high-performance,
thin profile and near
chip-scale
lead-frame
packages.
The following table summarizes our standard lead-frame packages:
Number
Package Format
of I/Os
Description
Typical Applications
Plastic Dual
In-line
Package
(PDIP)
8-40
Lead-frame
package of low pin
countwith
two-side
leads and
plated-through-hole
(PTH)
technology
Automotive electronics, power
management, audio and remote
control
Small Outline Integrated Circuit
(SOIC)
8-32
Lead-frame
package of low pin
count with
two-side
leads, and
a surface mount technology
(SMT) designed for logic,
linear, digital and
read-only-memory
devices
Automotive electronics, power
management, audio and remote
control
Plastic Leaded Chip Carrier
(PLCC)
20-84
Traditional
lead-frame
package
designed for applications that
do not have space constraints
and do not require a high
number of interconnects
Personal computers (PCs),
access equipment and multimedia
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Number
Package Format
of I/Os
Description
Typical Applications
Micro
Small outline Package
(MSOP)
8-10
Lead-frame
package of very low pin count with thickness below
1.0mm designed for logic,
analog and
mixed-signal
devices
such as analog and operation
amplifiers, controllers and drivers,
logic, memory and RF/wireless devices
Mobile phone, mass storage, multimedia and Personal Digital
Assistant (PDA)
Shrink Small Outline Package
(SSOP)
36-56
Traditional
lead-frame
package
designed for logic, analog and
mixed-signal
devices such as
Flash, SRAM, EPROM, EEPROM and
DRAM
PCs, mass storage and multimedia
Thin Shrink Small Outline
Package (TSSOP)
8-56
Traditional
lead-frame
package
with thickness below 1.0mm
designed for logic, analog and
mixed-signal
devices such as
Flash, SRAM, EPROM, EEPROM and
DRAM
Mobile phone, mass storage,
multimedia and PDA
Thin Small Outline Package
(TSOP)
28-56
Traditional
lead-frame
package
with
two-side
leads, and a SMT
designed for memory,
RF/wireless, logic, linear and
automotive devices
PCs, portable electronics,
networking equipment and
automotive electronics
Thin Quad Flat Package (TQFP)
32-128
Advanced QFP with thickness of
1.0mm for use in low profile,
space constrained applications
Mobile phone, mass storage and
multimedia
Low Quad Flat Package (LQFP)
32-208
Advanced QFP with thickness of
1.4mm for use in low profile,
space constrained applications
Mobile phone, mass storage and
multimedia
Metric Quad Flat Package (MQFP)
44-240
Traditional QFP designed for
ASICs, field programmable gate
arrays (FPGAs) and digital
signal processors (DSPs)
Access/Local Area Network (LAN)
equipment, multimedia and mass
storage
Enhanced
Lead-frame
Packages.
Our enhanced
lead-frame
packages are similar in design to our
standard
lead-frame
packages but are generally thinner and smaller and have advanced thermal and
electrical characteristics which are necessary for many of the
leading-edge
semiconductors designed
for communications applications.
We believe we are a leader in offering chip stack technology that provides the flexibility of
stacking up to seven dies in a single package to improve package performance and functionality
while reducing overall package size and cost. These solutions provide us with a significant
competitive advantage when servicing clients who need to reduce the form factor of their devices
while increasing product functionality, for instance in mobile handheld and phone applications.
The following table summarizes our enhanced
lead-frame
packages:
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Table of Contents
Number
Package Format
of I/Os
Description
Typical Applications
Quad Flat
No-Lead
(QFN)
4-88
Lead-frame
based plastic encapsulated
chip-scale
package in single mold cavity format (punch singulated) or molded array format (saw singulated)
Mobile phone, PDA, Global Positioning System (GPS)
Dual Row Quad Flat
No-Lead
(QFN-dr)
4-156
QFN version with staggered dual
row leads offers higher I/O
counts.
Mobile phone, PDA, GPS
Bumped Chip Carrier (BCC)
16-84
Lead-frame
based near
chip-scale
Mobile phone, PDA, GPS
Dual Row Bumped Chip Carrier
(BCCs)
16-116
BCC version with staggered dual
row leads offers higher I/O
counts.
Mobile phone, PDA, GPS
Lead-frame
Chip-scale
Packages
(LFCSPs)
8-64
Lead-frame
based near
chip-scale
Mobile phone, PDA, GPS
Exposed Pad Low Quad Flat
Package
(LQFP-ep)
48-216
Thermally enhanced QFP with 30% greater thermal dissipation than MQFP
Access/Wide Area Network
(WAN)/LAN equipment and
PC/graphics, high disk drive
(HDD)
Exposed Pad Thin Quad Flat
Package
(TQFP-ep)
32-100
Thermally enhanced TQFP with 30% greater thermal dissipation than TQFP
Access/WAN/LAN equipment,
PC/graphics, HDD, PDA, GPS and
mobile phone
Exposed
Drop-in
Heat Sink Quad
Flat Package
(MQFP-ed)
128-240
Thermally enhanced QFP with 60% greater thermal dissipation than MQFP
Access/WAN/LAN equipment and
PC/graphics
Drop-in
Heat Sink Quad Flat
Package
(MQFP-d)
64-208
Thermally enhanced QFP with 30% greater thermal dissipation than MQFP
Access/WAN/LAN equipment and
PC/graphics
Exposed Pad Thin Shrink Small
Outline Package
(TSSOP-ep)
16-38
Thermally enhanced TSSOP with 30% greater thermal dissipation than TSSOP
Mobile phone, mass storage
multimedia and PDA
Stacked Die Quad Flat Package
(LQFP-SD)
32-208
Compact multiple die designed for space constrained applications
Mobile phone, PDA, GPS, disk
drive and multimedia
Stacked Die Exposed Pad Low
Quad Flat Package
(LQFP-ep-SD)
32-216
Thermally enhanced
LQFP-SD
designed for space constrained
applications with thickness of
1.4mm and greater thermal
dissipation than
LQFP-SD
PC, mobile phone, PDA, GPS,
disk drive, MP3, pagers and
consumer electronics
Stacked Die Exposed Pad Thin
Quad Flat Package
(TQFP-ep-SD)
32-100
Thermally enhanced with
multiple die TQFP designed for
space constrained applications
with thickness of 1.0mm and
greater thermal dissipation
than
LQFP-SD
PC, mobile phone, PDA, GPS,
disk drive, MP3 and consumer
electronics
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Table of Contents
Power Packaging.
Power semiconductors are used in a variety of
end-markets,
including
telecommunications and networking systems, computers and computer peripherals, consumer
electronics, electronic office equipment, automotive systems and industrial products. These end
markets increasingly depend upon power regulation and control in the trend toward smaller devices
and longer operating times. Packaging manufacturers are left to contend with shrinking chip
geometries owing to continued emphasis upon greater mobility and portability. Power semiconductors
typically involve higher current and voltage levels than memory, logic and microprocessor devices.
The high current involved in switching high voltages on and off and the phase control of
alternating current (AC) signals result in considerable power dissipated internally that produces
heat. Thus our power packages are designed in such a way as to conduct the resultant heat away from
the chip as power is dissipated, preventing the power device from being destroyed.
Power package assembly is somewhat different from assembly of
non-power
integrated circuit as
it employs special solder die attach and heavy aluminum wire bonding machines. Higher current
levels of power semiconductors likewise require larger diameter aluminum and gold wire than
non-power
integrated circuits to carry the load. Our facility in Malaysia maintains a vast array of
these special machines needed for power semiconductor assembly and test.
Array Packaging.
Array substrate based packaging represents one of the fastest growing areas
in the semiconductor packaging industry and is used primarily in computing platforms, networking,
hand-held
consumer products, wireless communications devices, personal digital assistants, video
cameras, home electronic devices such as DVDs and home video game machines.
Benefits of array packaging over leaded packaging include:
•
smaller size;
•
greater pin count, or number of connections to the printed circuit board;
•
greater reliability;
•
higher power dissipation;
•
better electrical signal integrity; and
•
easier attachment to a printed circuit board.
BGA technology was first introduced as a solution to problems associated with the increasingly
high lead counts required for advanced semiconductors used in applications such as portable
computers and wireless telecommunications. As the number of leads surrounding the integrated
circuit increased, high lead count packages experienced significant electrical shorting problems.
The BGA technology solved this problem by effectively creating leads on the bottom surface of the
package in the form of small bumps or solder balls. In a typical BGA, the semiconductor die is
placed on top of a plastic or tape laminate substrate rather than a
lead-frame.
The die is
connected to the circuitry in the substrate by a series of fine gold wires that are bonded to the
top of the substrate near its edges. On the bottom of the substrate is a grid of solder balls that
connect the packaged device to a printed circuit board. These balls can be evenly distributed
across the entire bottom surface of the package, allowing greater distance between the individual
balls. For the highest lead count devices, the BGA format can be manufactured less expensively and
requires less delicate handling.
Our BGA are typically used in semiconductors that require enhanced performance, including
DSPs, microprocessors and microcontrollers, ASICs, FPGAs, memory and PC chipsets. Our BGA typically
have between 16 and 900 balls.
Several of these packages have been developed as
chip-scale
packages (CSPs). The emphasis of
these packages is on low profile, small footprint and lightweight characteristics. These are ideal
for medium
pin-count
applications which require dense arrays in very small package sizes such as
hand-held
wireless equipment, mobile base stations and digital photography.
We supply our customers with substantially the entire family of BGA packaging services offered
in the marketplace today, including:
•
Standard BGA.
Standard BGA packaging has a grid array of balls on the underside of the
integrated circuit, and is used in
high-performance
applications, like PC chipsets, graphic
controllers and DSPs. A BGA generally has greater than 100 pins.
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Table of Contents
•
Chip-scale.
Chip-scale
packaging includes all packages where the package is less than
1.2 times the size of the silicon die.
Chip-scale
BGA is a substrate (laminate or
tape)-based
package that is designed for memory devices and other medium pin count
semiconductors and requires dense ball arrays in very small package sizes, like wireless
telephones and personal digital assistants, video cameras, digital cameras and pagers.
•
System-in-Package.
SiP is a family of
chip-scale-packages
that contain several
semiconductor dies along with passive components such as resistors, capacitors and
inductors in one package. Dies can be either stacked on top of each other or side by side.
This technology allows greater functionality in the same package footprint and thickness
without significant cost increase. These packages are used in wireless handsets, consumer
products and mobile computing applications.
•
Chip-scale
Module Packaging (CSMP).
CSMP is an advanced SiP solution which features a
modular architecture that integrates mixed IC technologies and a wide variety of IPD such
as resistors, capacitors, inductors, filters, Balanced Unbalanced (BALUNs) and
interconnects directly onto a silicon substrate. The result is a high performance system
level solution, which provides a significant reduction in die size, weight, number of
interconnections and system board space requirements, and can be used for many
applications.
•
Flip-chip
BGA.
Flip-chip
BGA packaging, in which the silicon die is directly attached
to the substrate using gold or solder bumps instead of wire bonds, provides the most dense
interconnect with the highest electrical and thermal performance.
Flip-chip
BGA technology
is used in a wide array of applications ranging from consumer products to highly
sophisticated ASICs, PC chipsets, graphics and memory packages.
While we believe that
flip-chip
BGA represents the next generation of BGA packaging
technology, we believe that standard BGA and
chip-scale
BGA packaging will experience long life
cycles as have many of our leaded packaging solutions.
Our array packages, including CSPs, are described below:
Number
Package Format
of I/Os
Description
Typical Applications
Land Grid Array (LGA)
8-200
Laminate substrate based
package with plastic
overmolded encapsulation.
Unlike a standard
flip-chip
BGA, second level interconnect
is achieved on the LGA by
connecting "lands" on the
package directly onto the
printed circuit board through
solder
re-flow
Mobile phone, wireless RF,
analog, ASIC, memory chip
Flip-chip
Low Profile Fine
Pitch BGA (fcLFBGA)
49-144
CSP BGA with
Flip-chip/bump
interconnect, instead of wire
bonding
Mobile phone, WAN/LAN equipment
Flip-chip
BGA (fcBGA)
225-1152
BGA with
Flip-Clip/bump
interconnect instead of wire
bonding
DSP, ASIC, FPGA
Tape based Very Thin Fine
Pitch BGA
(VFBGA-T)
81-169
Thin CSP BGA (<1.0mm)
characterized by
flex-tape
substrate for high density
circuits
Mobile phone, PDA and
multimedia
Stacked Die Low Profile Fine
Pitch BGA
(LFBGA-SD)
72-409
Compact multiple die designed
for space sensitive
applications. Capability to
stack up to seven dies in one
package
Mobile phone, PDA and
multimedia
Tape Enhanced Plastic base
BGA (TBGA)
208-792
BGA characterized by a
flex-tape
substrate mounted on
a copper heatspreader. This
package has a high thermal dissipation
WAN/LAN equipment and base
station
28
Table of Contents
Number
Package Format
of I/Os
Description
Typical Applications
Enhanced BGA (EBGA)
159-1140
High pin count,
thermally-enhanced
BGA suitable for high power
applications which utilize
heat sinks for thermal
dissipation
WAN/LAN equipment and base
station
Low Profile Fine Pitch BGA
(LFBGA)
16-450
Smaller and thinner BGA
designed for applications
which are space constrained
and require electrical
performance
Mobile phone, PDA, GPS and
multimedia
Plastic Ball Grid Array
(PBGA)
169-1152
Electrically enhanced BGA
package designed for high I/O
replacement
Access/LAN equipment,
PC/graphics and base station
Thin Fine Pitch BGA
(TFBGA)
41-280
CSP BGA characterized by a
thin core laminate substrate
Mobile phone, PDA and
multimedia
Exposed
Drop-in
Heat
Spreader Plastic BGA
(PBGA-H)
208-841
Thermally Enhanced PBGA with
20% greater thermal
dissipation than PBGA
Access/LAN/PC/graphics and
base station equipment
Multi Chip Module Plastic
BGA
(PBGA-MC)
80-600
BGA integrated with two or
more multiple die within a
PBGA
Access/LAN/PC/graphics and
base station equipment
Package-in-Package
(PiP)
40-450
Three-dimensional
package
stacking fully tested packaged
chips and bare chips in a CSP
PC, mobile phone, PDA, MP3,
base station modems, memory
cards and consumer electronics
Package-on-Package
(PoP)
128-700
Three-dimensional
package
stacking multiple fully tested
separate packages
PC, mobile phone, PDA, MP3,
base station modems, memory
cards and consumer electronics
In response to ongoing government regulation and the industry trend towards environmentally
friendly products, our packaging operations introduced a "green" molding compound and set up a
dedicated
lead-free
pure tin plating machine for leadframe based products since 2001.
In 2004, we announced the offering of
lead-free
and "green" material options for our entire
package portfolio. These
lead-free
and "green" packages are qualified with enhanced moisture
sensitivity level to withstand the higher reflow temperature at board packaging that is required
for
lead-free
solders, complying with current Joint Electron Device Engineering Council and Japan
Electronics & Information Technology Industries Association standards for
lead-free
reflow profile
with a peak temperature of 260 degrees Celsius. Our green initiative is developed in accordance
with a number of international standards including the European Commission's Directive on Waste
from Electrical and Electronic Equipment and Restriction on Hazardous Substances.
In response to industry trends toward fine line and space wafer fabrication technology, we
have improved our fine pitch wire bonding capability to handle up to 40 micron
in-line
bond pad
pitch and 50/25 micron staggered bond pitch. We have also established complete handling and
packaging processes for gallium arsenide (GaAs) semiconductors.
Wafer Process Services.
As part of our efforts to be a total turnkey packaging and test
solutions provider for
high-end
products, including products requiring wafer bumping, probe and
flip-chip
packaging and test solutions, we introduced
Flex-On-Cap
(FOC) wafer bumping services,
with and without redistribution layers (RDL) for 150mm and 200mm wafers in 2003 and we started to
offer 300mm wafer electroplated solder bumping services in 2005. In 2006, we set up a new facility
to provide 200mm gold bumping services as part of our strategy to service the high growth LCD
driver semiconductor market.
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Table of Contents
Test Services
We provide our customers with semiconductor test services for a number of device types,
including
mixed-signal,
digital logic, memory, power and radio frequency devices. Semiconductor
testing measures and ensures the performance, functionality and reliability of a packaged device,
and requires knowledge of the specific applications and functions of the devices being tested. In
order to enable semiconductor companies to improve their
time-to-market,
streamline their
operations and reduce costs, there has been an increasing trend toward outsourcing both packaging
and test services. We have capitalized on this trend by enhancing our test service capabilities.
Our test revenue was $422.7 million in 2006, compared to $322.0 million in 2005. The increase of
31.3% reflected effects of the growth in the semiconductor industry coupled with a trend towards
increased outsourcing of test services.
We offer wafer probe and final testing on many different platforms, covering the major test
platforms in the industry. Wafer probe is the step immediately prior to the packaging of
semiconductors and involves electrical testing of the processed wafer for defects. Wafer probe
services require similar expertise and testing equipment to that used in final testing. We probe
wafers at either ambient or elevated temperature in accordance with our customer's test
requirement. Wafers are probed either as bumped or
un-bumped
wafers. For bumped wafers, we can
probe both peripheral or array bumped wafers. We believe this wafer probe capability is very
important to customers who require
known-good-die
for
flip-chip
packaging.
Final testing involves using sophisticated test equipment and
device-specific
software
programs to electrically test a number of attributes of packaged semiconductors for functionality
and performance in accordance with a test plan or test list. The test plan or test list varies from
device to device and customer to customer. For final testing, we have either gravity feed handlers
or
pick-and-place
handlers. We also offer strip testing for
mixed-signal
and RF applications. We
believe strip testing offers some advantages over the conventional method, including allowing large
numbers of devices to be tested at the same time, improved first pass yield, a more effective and
efficient handling of smaller form factor devices and increased overall throughput.
In order to test the capability of a semiconductor device, our customers generally will
provide us with their proprietary test programs and specify the test equipment to run those
programs. Our customers at times may consign their test equipment to us. Alternatively, our
customers may engage us to develop the test program and test hardware required to test their
device. The devices to be tested are placed into a
socket-custom
load board by an automated
handling system, which is connected to the test equipment, which then tests the devices using
software programs developed and supplied by our customers or by us. The cost of any specific test
and the time required to conduct it, ranging from a few milliseconds to several seconds, varies
depending on the complexity of the semiconductor device and the customer's test program.
We have invested in
state-of-the-art
testing equipment that allows us to test a broad variety
of semiconductors, especially the more complex testing of
mixed-signal
and
high-performance
digital
devices.
Mixed-signal Testing.
We test a variety of
mixed-signal
semiconductors, including those used
in communications applications such as network routers, switches and interface cards; broadband
products such as cable modem
set-top
boxes; and for wireless telecommunications products such as
cellular phones, base stations, wireless local area network (WLAN) and
Bluetooth
tm
devices, personal computers and consumer applications.
Bluetooth
tm
is a technology that enables short range wireless communication
between different electronic appliances. We are a member of the
Bluetooth
tm
Special Interest Group. We also test
mixed-signal
semiconductors for computers and consumer
components including audio devices,
CD-ROM,
hard disk drive controllers, DVD players and game
consoles.
Digital Testing.
We test a variety of digital semiconductors, including
high-performance
semiconductors used in PCs, disk drives, modems and networking systems. Specific digital
semiconductors tested include DSPs, FPGAs, microcontrollers, central processing units (CPUs), bus
interfaces, digital ASICs and application specific standard products.
Memory Testing.
We provide wafer probe services covering a limited type of memory devices
including static and
non-volatile
memories.
Test-Related Services.
We offer a variety of other
value-added
test-related
services,
including:
•
Burn-in process support.
Burn-in
is the process of electrically stressing
semiconductors, usually at high temperature and voltage, for a period of time long enough
to cause the failure of marginal semiconductors. During
burn-in
process support, we perform
an analysis of
burn-in
rejects in order to determine the cause of failure.
30
Table of Contents
•
Reliability testing.
Reliability testing is the process of testing a semiconductor to
evaluate its life span. It is performed on a sample of devices that have passed final
testing.
•
Thermal and electrical characterization.
Thermal and electrical characterization is the
process of testing a semiconductor for performance consistency under thermal and electrical
stress.
•
Dry pack.
Dry pack is the process of baking the semiconductors in order to prevent the
failure of any semiconductors due to exposure to moisture during shipping. We "dry pack"
many of our packaged integrated circuits in specially sealed, environmentally secure
containers.
•
Tape and reel.
Many electronic assembly lines utilize "tape and reel" methods in which
semiconductors are placed into a pocket tape to enable faster attachment to the printed
circuit board. We offer a service in which we ship packaged and tested devices on a tape
and reel mechanism, in a tray or in a tube in accordance with our customer's
post-test
requirements.
Pre-production
and
Post-production
Services
We have developed and enhanced our
pre-production
and
post-production
services to provide a total
solution for our customers. Our
pre-production
services for packaging include package development,
and for testing include software and hardware development. Our
wholly-owned
subsidiary, STATS
ChipPAC Test Services, Inc. in Milpitas, California, which is in Silicon Valley, delivers an
extended range of
high-end
pre-production
test services to new and existing customers. STATS
ChipPAC Test Services, Inc. commenced operations in January 2002 and provides test hardware and
software development services,
pre-production
volume testing services, tester rentals and a unique
customer-to-lab-to-factory
relay for fast production offloads and capacity coordination. At our
customers' request, certain finished and piloted test programs are transferred to our
high-volume
manufacturing facilities in Asia for full production release. STATS ChipPAC Test Services, Inc.
operates as a microcosm of our
high-volume
Asian operations; it operates similarly configured
testing systems and handling equipment to ensure transfers to our manufacturing facilities in Asia
for subsequent volume production ramps are seamless. In December 2002, STATS ChipPAC Test
Services, Inc. acquired the San Diego test facility from Conexant Systems Inc. for cash and in
connection with the acquisition, assumed certain liabilities associated with the San Diego
facility. STATS ChipPAC Test Services, Inc. began operations immediately in the San Diego facility
and offers the same range of
high-end
preproduction test services that are offered in its
facilities in Silicon Valley. We also provide
post-production
drop shipment services for our
customers.
Package Development
Our package development group interacts with customers early in the design process to optimize
package design and manufacturability including through selection, design and development of the
appropriate package,
lead-frame
or substrate for that device by simulating the semiconductor's
performance and
end-use
environment. For each project, our engineers create a design strategy in
consultation with each customer to address the customer's requirements, package attributes, design
guidelines and previous experience with similar products. After a design is finished, we provide
quick-turn
prototype services. By offering package design and prototype services, we can reduce our
customer's development costs, accelerate
time-to-volume
production and ensure that new designs can
be properly packaged at a reasonable cost. We offer these services at our facilities in Singapore,
South Korea, China, Taiwan and the United States.
Test Software and Hardware Development
We work closely with our customers to provide sophisticated software engineering services,
including test program development, platform conversion,
multi-site
conversion, test optimization
and strip testing implementation. Generally, testing requires customized software to be developed
for each particular semiconductor device. Software is typically provided by the customer. We also
provide test development services where we will develop a total test solution for the customer. The
test development process is divided into five phases. We will first create a test plan based on the
customer's specifications. Once the test plan is approved by the customer, we create the
engineering designs and develop the layout for the test fixtures, generate the
check-plot
for the
customer and, upon the customer's approval, proceed to hardware fabrication. In conjunction with
hardware fabrication, we develop the test program and convert all simulation vectors to the desired
tester format. Once the test program is developed, we debug the program, the hardware and the
device. We then correlate the software and hardware with the bench data provided by the customer.
Thereafter, we perform device characterization to enable our customer to understand the device
performance over different voltage and temperature ranges. This enables the customer to determine
the optimum conditions for their device performance and also to achieve optimum test yield.
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In some cases, test program and hardware provided by the customer may be converted by us for
use on one or more of our tester platforms. Once a test program has been converted, we correlate
the test software and hardware using the correlation units or devices provided by the customer.
Upon the customer's approval of the results of the correlation of the test software and hardware,
actual production testing begins. On an
on-going
basis, a dedicated group of our product engineers
will then assist our customers in collecting and analyzing the test results and develop engineering
solutions to improve their test robustness and production efficiency. We offer these services at
our facilities in Singapore and the United States.
Warehousing and Drop Shipment Services
In order to enable semiconductor companies to improve their
time-to-market
and reduce supply
chain and handling costs, we offer warehousing and drop shipment services in which we ship packaged
semiconductor devices directly to our customers'
end-customers.
We either directly bill our
customers for the cost of drop shipment or incorporate this into the price of our services.
Research and Development
Our research and development efforts are focused on developing new packages, design, assembly
and test services and technologies required by our existing customers and that are necessary to
attract new customers. We have invested considerable resources and we are among the leaders in new
product and technology development. Our expenditures for research and development in 2004, 2005 and
2006 were $17.6 million, $26.1 million and $30.4 million, respectively. As of January 31, 2007, we
employed over 250 dedicated professionals for packaging and test development. We consider this a
core element of our total service offering and expect to continue to invest significant resources
in research and development.
Packaging Services
We have established a dedicated group of engineers whose primary focus is the development and
improvement of materials and process technology as well as development of new and advanced
packages. We work closely with our existing customers to better understand their immediate and
future packaging needs. As a result, we focus our packaging research and development efforts in
part on developing packages tailored to their individual requirements. Our
web-based
proprietary
design and performance characterization provides the shortest
time-to-market
with predictable
performance. These efforts take place at our package design development centers located in
Singapore, South Korea, Malaysia and the United States.
We have a number of advanced packages under development to support our customers' needs for
high-performance
packages. Our development roadmap includes
flip-chip
technology and comprises
build-up
substrate, wafer bumping and passive integration technology components.
Flip-chip
technology can be used in both low pin count as well as high pin count packages and is particularly
suitable for devices that require more than 1,000 interconnects in a relatively small die.
Build-up
substrates deliver even higher interconnect density without compromising thermal and electrical
performance. We believe
flip-chip
packages will find increasing application in
high-end
communications equipment such as switches, routers, PC chipsets, advanced memory buffer chips and
high-end
graphic processors. Furthermore, we have built capabilities to provide SiP solutions for
the radio frequency, wireless and cellular markets.
We also have next generation CSPs both under development and in qualification which
incorporate
lead-frame,
laminate and tape technologies, along with multiple die stacking
capabilities. The emphasis in the development of such packages is the integration of more silicon
chips in the same
low-profile,
small footprint and light weight package. This requires development
of many enabling technologies in order to thin and stack dies in very low profile packages. We
continually seek to develop and improve stacked die, stacked packages or
three-dimensional
packages
such as
Package-in-Package
(PiP) and
Package-on-Package
(PoP) to meet customer needs. These
packages are used particularly in
hand-held
wireless communications equipment and are extremely
useful for all
hand-held
devices including PC, mobile phones, PDA, base station modems,
base-band
circuits and memories. We continue to develop total SiP solutions to meet market demand for next
generation devices with higher levels of integration, increased functionality and compact sizes.
In addition, we continue to increase our support functions for thermal, electrical, stress and
package to board level reliability characterization. We offer a full range of thermal simulation
and actual testing for all of our existing packages and packages under development. We have a full
service reliability laboratory that can stress test assembled semiconductors. In conjunction with
local institutes and laboratories, we can also perform board level reliability testing of surface
mount assembled packages.
During the past three years, we developed and introduced a number of new packages, including:
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•
Lead free
Flip-Chip
Land Grid Array (fcLGA);
•
Chip-scale
Module Package
(LFBGA-CSMP,
fcLGA-CSMP,
QLP-CSMP);
•
Low profile, Fine pitch BGA with Heatspreader
(LFBGA-H);
•
Dual Row Leadframe CSP
(LFCSP-dr);
•
0.4mm Leadframe CSP;
•
Power Leadframe CSP;
•
Stacked Die Leadframe CSP;
•
Dual Row Quad Leadless Package
(QLPp-dr);
•
Molded
multi-die
chip-scale
package family with the following
chip-stack
combinations in
package profile thickness ranging from 0.8 to 1.4mm (LF/TF/VFBGA):
—
Two-chip
stack, same chip size;
—
Three-chip
stack, "pyramid stack";
—
Three-chip
stack with the two chip same size;
—
Four-chip
stack, "pyramid stack";
—
Four-chip
stack with two chips same size;
—
Five-chip
stack, "pyramid stack";
—
Five-chip
stack with three chips same size;
—
Six-chip
stack, "pyramid stack";
—
Six-chip
stack with three chips same size; and
—
Seven-chip
stack with four chips same size;
•
Lead-frame
chip-scale
package (LFCSPtm);
•
Stacked Die Bumped Chip Carrier package (BCC++
-SD2);
•
"Gigabit-Green-Gold-to-Gold"
flip-chip
interconnection package family of CSPs and BGAs (G4TM);
•
Higher thermal performance PBGA with embedded heatslug
(PBG-H);
•
Thermally enhanced ball grid array family with integrated passive components
(PBGA-H-SiP);
•
Stacked Die
System-in-Package
PBGA
(PBGA-SiP-SD);
•
Flip-Chip
Multi Package Module family module
(fcBGA-MP);
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Table of Contents
•
Flip-Chip
BGA with High Lead bumping
(fcBGA-Hi
Lead);
•
Enhanced BGA with Multi Cavity
(EBGA-MC);
•
Flip-Chip
on
lead-frame
substrate (fcLFCSPs);
•
Package-in-Package
(PiP) stacking —
LFBGA-PiPs;
PiPm;
•
Package-on-Package
(PoP) —
LFBGA-PoP;
VFBGA-PoP;
•
Stacked Die
System-in-Package
Multi Package Module —
TFLGA-SiP-SD2-MP;
•
Stacked Die
System-in-Package
LGA —
VFLGA-SiP-SD4;
•
Bond on Chip Fine Ball Grid Array —
TFBGA-BOC;
•
Stacked Die Bond on Chip Fine Ball Grid Array —
TFBGA-BOC-SD2;
•
Extremely Thin Fine Ball Grid Array (XFBGA);
•
Extremely Thin Fine Land Grid Array (XFLGA);
•
Flip-Chip
Quad Leadless Package (fcQLPp);
•
Stacked Die Thin Small Outline Package
(TSOP-SD7);
•
Thin Internal Stack Module (Thin ISM);
•
Stack Die
Package-on-Package
—
LFBGA-PoPt-SD5;
•
Flip-Chip
Stacked Die Fine Ball Grid Array —
fcTFBGA-SD2;
fcLFBGA-SD2;
•
Flip-Chip System-in-Package BGA with 160 um Bump Pitch — fcBGA-SiP-SS2 with 160 um Bump Pitch;
•
Extremely thin Quad Flat
No-Lead
— XQFN;
•
Multi Pad Quad Flat
No-Lead
— Multi Pad QFNs;
•
0.4mm pitch Quad Flat
No-Lead
(punch-singulated);
and
•
Memory Card Format —
SD-SiP-SD5;
MS Micro; rsMMC/MMC.
We will continue to develop and introduce advanced packaging that meets the requirements of
our customers.
Test Services
We focus on developing new technologies, software and processes to enhance efficiency and
reliability and to shorten test times. These include
multi-site
testing, strip testing, test
program optimization and hardware improvements designed to permit improved utilization of existing
test equipment. When necessary we also design and build specialized equipment that is not available
from outside vendors. Our test development center is an important part of our research and
development efforts and is utilized to develop and debug test software prior to production,
complete test software conversions and offer our customers continuous access to our development
capabilities. Our test development center is located in Singapore.
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Table of Contents
Customers
Our customers include some of the largest semiconductor companies in the world. We seek to
diversify and broaden our customer base. In 2004, 2005 and 2006, our ten largest customers
accounted for 67.0%, 69.7% and 65.3%, respectively, of our net revenues. In 2006, our two largest
customers, Freescale Semiconductor, Inc. and Intel Corporation, each contributed in excess of 10%
of our net revenues and in the aggregate contributed 20.8% of our net revenues. We anticipate that
customer concentration will decrease as our business grows with an increase in engagements from a
large number of customers comprising our existing customer base and the addition of new customers
with whom we have already become qualified or with whom we are currently undergoing qualification.
The following table sets forth, for the periods indicated, the percentage of net revenues
derived from packaging and test of semiconductors used in communications, personal computers and
other applications. Our data for 2004 includes the data for ChipPAC from August 5, 2004 and our
data for 2005 and 2006 includes the data for ChipPAC for the full period.
Year Ended
December 31,
December 25,
December 31,
2004
2005
2006
Communications
60.1
%
55.2
%
56.7
%
Personal computers
22.8
21.5
18.7
Customer,
multi-applications
and others
17.1
23.3
24.6
Total
100.0
%
100.0
%
100.0
%
Our customers are located around the world. We report geographic distribution of revenue based
on the location of our customers' headquarters which is not indicative of shipment destination or
end market for our services. The following table details, for the periods indicated, the percentage
of net revenues received from the United States, Europe and Asia. Our data for 2004 includes the
data for ChipPAC from August 5, 2004 and our data for 2005 and 2006 includes the data for ChipPAC
for the full period.
Year Ended
December 31,
December 25,
December 31,
2004
2005
2006
United States of America
77.2
%
76.5
%
73.2
%
Europe
4.6
2.3
2.9
Asia
18.2
21.2
23.9
Total
100.0
%
100.0
%
100.0
%
In general, we believe the factors that our customers take into account in choosing their
packaging and test service providers include the ability of the provider to provide packaging and
test services for a wide range of semiconductor devices and the close proximity of the packaging
and test house to their wafer fabrication plant. Close proximity between the wafer foundry and the
packaging and test house enhances overall communication, simplifies supply chain logistics and
results in increased yield.
Semiconductor companies require packaging and test service providers to undergo a
qualification process before selecting them as their packager or tester. The qualification process
for a packaging service company is a lengthy and rigorous process that typically takes three to six
months, and typically costs the customer approximately $250,000 to $300,000. In the case of a test
service company, the test company must, in addition to ensuring that the requisite tester platform
is used, have the requisite production engineering expertise to pass a highly specialized and
rigorous test qualification process. The test qualification process typically takes one to two
months where the test house already has the tester technology and three to six months where the
tester technology is a new test platform, and typically costs the customer approximately $20,000 to
$100,000. Once a primary packager or tester has been selected, that packager or tester gains
insight into its customer's business operations and an understanding of its products as part of the
overall working relationship. The packaging and test service providers' familiarity with the
customer's requirements and accordingly, their ability to better meet those requirements, combined
with the pressures of a semiconductor company to meet the
time-to-market
demands of its customers,
help to assure continuity of relationship with their providers. We have been successful in
attracting new customers because we are one of only a few independent packaging and test companies
that offers full turnkey packaging, test and distribution services for a broad portfolio of
packages in strategic manufacturing locations.
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Table of Contents
Sales and Marketing
We market our services through direct sales forces strategically located at centers in close
proximity to our customers, in Singapore, South Korea, China, Malaysia, Taiwan, the United States,
the United Kingdom, the Netherlands and Japan. Our account managers, applications engineers,
customer service representatives and sales support personnel form teams that focus on specific
customers or geographic regions.
Customers generally deliver rolling six month forecasts and release production die to us in
daily or weekly increments for packaging, test and distribution. These
near-term
forecasts guide us
as to anticipated volumes, but provide no meaningful backlog statistics. Substantially all of our
materials inventory is purchased based on customer forecasts. We carry relatively low levels of
work-in-progress
and finished goods inventory.
Our marketing efforts focus on creating a brand awareness and familiarity with our advanced
device packaging technologies and an understanding of our
end-user
market applications in wireless
handset and PDA graphics, PC chipsets, wireless LAN,
Bluetooth
TM
, flash memory,
storage and networking. We market our leadership in
three-dimensional
advanced packaging and test
technology, distribution and our ability to supply a broad line of packaging and test services to
the semiconductor industry. We target engineers and executive level decision makers through a
direct sales force, the delivery of "white papers" at industry conferences, mailings of technical
brochures and newsletters, advertisements in trade journals and our website.
Pricing Policy
Test services are priced competitively against the market and vary principally on the type of
tester used and length of tester CPU time used, typically referred to as test time on
per-second
basis. The price of test time is a function of tester platform and hardware configuration, which
are usually determined by our customers based on the function and complexity of a particular
semiconductor device. In general, the test time for a complex semiconductor device will be longer
than a less complex semiconductor device. Wafer probe pricing is determined by similar factors. Any
reduction in test time resulting from optimization of test program or optimum hardware
configuration will mean savings for our customers.
Packaging services are priced competitively against the market and vary depending on such
factors as package complexity and material cost. Design costs are not material but when incurred
may be charged to a customer separately under
non-recurring
engineering cost or built into the unit
price.
Customer Service
We place strong emphasis on quality customer service. Our broad service offerings, dedicated
customer account teams and commitment to finding solutions to our customers' needs and problems
have enabled us to develop important relationships with many of our customers. We have implemented
an information technology architecture that seeks to achieve our objective of creating a virtual
manufacturing environment for our customers and making it easier for them to work with us. Our
system includes Business to Business links to some of our customers' systems and an internet
portal, the mySTATSChipPAC portal, which may be directly accessed by our customers. These features
enable our customers to obtain
real-time
information on our
works-in-progress,
inventory and
shipment status, as well as other information relating to our operations. Our system also includes
a design collaboration system that enables us to engage the customer at the design stage for ease
of working collaboratively on design changes.
Suppliers
Raw Materials
Our packaging operations depend upon obtaining adequate supplies of raw materials on a timely
basis. The principal materials used in our packaging process are
lead-frames
or laminate
substrates, gold wire, molding compound, epoxy, tubes and trays. The prices of
lead-frames,
laminate substrates, gold wire, molding compound, epoxy, tubes and trays tend to be volatile. We purchase materials based on the
regular monthly forecasts of our customers. Our customers are generally responsible for most or all
of the costs of unique materials that we purchase but do not use, particularly those
lead-frames
and substrates that are ordered on the basis of
customer-supplied
forecasts. We manage inventory
with automated materials management processes using enterprise resource planning systems. We work
closely with our primary materials suppliers to ensure the timely availability of materials
supplies, and we are not dependent on any one supplier for a substantial portion of our materials
requirements. The materials we procure are normally available and we are able to meet our
production requirements from multiple sources through new materials qualifications, periodic
negotiation and placement of written purchase orders. We typically combine our global requirements
into centrally negotiated agreements to gain economies of scale in procurement and more significant
volume
36
Table of Contents
discounts. We generally do not have
long-term
supply contracts with our supplier. However,
should materials become scarce, we would look to enter into
long-term
supply agreements with key
suppliers. The major suppliers of our substrate material are located in South Korea, Japan and
Taiwan.
Equipment
Our operations and expansion plans depend on us being able to obtain an adequate supply of
packaging and test equipment on a timely basis. We work closely with our major equipment suppliers
to ensure that equipment meets our performance specifications and is delivered on time.
With the exception of a few key suppliers that provide reserved equipment delivery slots and
price discount structures, we have no binding supply agreements with any of our suppliers. A
reserved equipment delivery slot is one which allows us to obtain an accelerated delivery of the
equipment over and above the delivery schedule previously committed to by the supplier. We acquire our
packaging and test equipment on a purchase order basis. Increased
levels of demand for the type of capital equipment required in our business may cause an
increase in the price and lengthen delivery cycles.
Typically, price discounts are offered for volume purchases. We leverage our large volume of orders for
testers, probers, handlers and other equipment with our equipment suppliers to secure favorable
terms for our equipment purchases, including pricing and accelerated delivery times. A
portion of our equipment is held under capital lease. The unavailability of new test or packaging
equipment, the failure of such equipment or other equipment acquired by us to operate in accordance
with our specifications or requirements or delays in the delivery of such equipment, could delay
implementation of our expansion plans and could materially and adversely affect our business,
financial condition and results of operations. See "Item 3. Key Information — D. Risk Factors —
Risks Relating to Our Company — If we are unable to obtain packaging and testing equipment in a
timely manner or on reasonably favorable terms and prices, we may be unable to meet customer demand
and our revenue may decline".
Packaging Equipment.
The primary equipment used in packaging includes die saw, die attach,
wire bonders and mold systems. Certain of our wire bonders allow for interchangeability between
lead-frame
and array packages. We purchase die attach and wire bonders from major international
manufacturers, including Kulicke & Soffa Industries, Inc., Shinkawa Ltd, ASM Technology and Unaxis
(formerly known as ESEC S.A.). As of January 31, 2007, we operated an aggregate of 3,845 wire
bonders. We purchase mold systems from major international manufacturers, including , Asahi
Engineering Co Ltd,
Dai-Ichi
Seiko Co Ltd. and Towa Corporation.
Testing Equipment.
Testing equipment is one of the most critical components of the wafer
probing and device testing process. We generally seek to maintain testers from different vendors
with similar functionality and the ability to test a variety of different semiconductors. In
general, certain semiconductors can only be tested on a limited number of specially configured
testers. Our major suppliers of testing equipment are Teradyne, Inc., Verigy Ltd. and LTX
Corporation.
As of January 31, 2007, we operated 959 testers, comprising 693
mixed-signal
testers, 138
digital testers, 108 memory testers and 20 discrete power testers. In certain cases where a
customer has specified testing equipment that is not widely applicable to other products that we
test, we have required that the customer provide the equipment on a consignment basis. Of the 959
testers, 183 are on consignment from customers. In addition to testing equipment, we maintain a
variety of other types of equipment, such as automated handlers and probers (with special handlers
for wafer probing), scanners, reformers and PC workstations for use in software development.
Quality Control
We maintain a team of quality control staff comprising engineers, technicians, inspection
specialists and other employees whose responsibilities are to monitor our packaging and test
processes to ensure high quality. Our quality assurance systems impose strict process controls,
statistical
in-line
monitors, supplier control, data review and management, quality controls and
corrective action systems. Our
in-house
laboratory is equipped with advanced analytical tools and
provides the necessary equipment and resources for our research and development and engineering
staff to continuously enhance product quality and process improvement.
Our packaging and test operations are undertaken in clean rooms where air purity, temperature
and humidity are controlled. To ensure the stability and integrity of our operations, we maintain
clean rooms at our facilities that meet U.S. Federal 209E class 1,000, 10,000 and 100,000
standards.
Our packaging and test operations in Singapore are ISO 9000, ISO 14001, TS16949 and OHSAS
18001 certified. Our facilities located in Icheon, South Korea, Shanghai, China and Kuala Lumpur,
Malaysia are ISO 14001, ISO 9001 and TS16949 certified. In addition, both of our facilities in
Kuala Lumpur, Malaysia, and Icheon, South Korea are OHSAS 18001 certified; and our Shanghai, China,
facility is expected to achieve OHSAS 18001 accreditation in the third quarter of 2007. ISO 9000 is
an international standard on the requirements for production of
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Table of Contents
quality products and services. It also sets forth quality management systems for product
design, product development, installation and servicing. TS16949 is a quality management system
that addresses the specific production needs of automotive customers. ISO 14001 is an international
standard on environmental management systems to ensure environmental protection and prevention of
pollution in balance with
socio-economic
needs while OHSAS 18001 is the standard for implementation
of an occupational health and safety management system (OHSMS).
Competition
The independent SATS industry is very competitive and highly fragmented. In order to compete,
we must offer
state-of-the-art
testing services and bring the most technologically advanced
packages to market as quickly as our competitors and at comparable prices. Packaging and test
services are provided by both large
multi-national
companies and small niche market competitors. We
face substantial competition from a number of competitors, whose facilities are primarily located
in Asia.
Our primary competitors and their primary locations are as follows:
•
Advanced Semiconductor Engineering, Inc. — South Korea, Taiwan, Malaysia, Hong Kong and the United States;
•
Amkor Technology, Inc. — South Korea, Japan, Taiwan, China, the Philippines and the United States;
•
ASE Test Limited — South Korea, Taiwan, Malaysia, Hong Kong and the United States; and
•
Siliconware Precision Industries Co., Ltd. — Taiwan.
Each of these companies has significant packaging capacity, financial resources, research and
development operations, marketing and other capabilities, as well as some degree of operating
experience. These companies also have established relationships with many large semiconductor
companies, which are current or potential customers of ours.
We also compete with the internal capabilities and capacity of many of our current and
potential IDM customers. Many IDMs have greater financial and other resources than we do and may
rely on internal sources for packaging and test services for reasons including:
•
their desire to realize higher utilization of their existing packaging or test capacity;
•
their unwillingness to disclose proprietary technology;
•
their possession of more advanced packaging or testing technologies; and
•
the guaranteed availability of their own packaging or test capacity.
The principal elements of competition in the independent semiconductor packaging industry
include variety of packages offered, price, location, available capacity, cycle time, engineering
capability, technical competence, customer service and flexibility. In the area of test services,
we compete on the basis of quality, cycle time, pricing, location, available capacity, software
development, engineering capability, technical competence, customer service and flexibility. We
believe that we compete favorably in these areas.
In addition, we also compete in the independent testing market with smaller niche companies,
which offer limited services and compete principally on the basis of engineering capability,
location and available capacity.
Intellectual Property
Our ability to develop and provide advanced packaging technologies and designs for our
customers depends in part on our proprietary
know-how,
trade secrets and other patented and
non-patented
technologies, which we either own or license from third parties. We have licenses to
use numerous third party patents, patent applications and other technology rights, as well as
trademark and other intellectual property rights, in the operation of our business. We believe that
the material licenses should be renewable under normal or reasonable commercial terms once they
expire.
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Table of Contents
Our ability to compete successfully and achieve future growth in net revenues will depend, in
part, on our ability to develop and to protect our intellectual property and the intellectual
property of our customers. We seek to protect proprietary information and
know-how
through patents,
the use of confidentiality and
non-disclosure
agreements and limited access to and distribution of
proprietary information. As of January 31, 2007, our Company and our various subsidiaries held a
total of approximately 644 issued patents and pending patent applications. Of these, we have
approximately 116 patents granted or allowed by the U.S. Patent and Trademark Office and
approximately 57 patents registered or allowed in Singapore, South Korea and other countries.
When we are aware of intellectual property of others that may pertain to or affect our
business, we attempt to either avoid processes protected by existing patents, or
cross-license
or
otherwise obtain certain process or package technologies. In addition, we execute confidentiality
and
non-disclosure
agreements with our customers and consultants and limit access to and
distribution of our proprietary information.
Our ability to compete successfully and achieve future growth will rely in part on the
technological skills and innovation of our personnel and our ability to develop, maintain and
protect proprietary technologies. The departure of any of our key management or technical personnel
or the breach of their confidentiality and
non-disclosure
obligations or our failure to achieve our
intellectual property objectives or avoid infringement could have a material adverse effect on our
business, financial condition and results of operations.
In February 2006, our Company, ChipPAC and STATS ChipPAC (BVI) Limited were named as
defendants in a patent infringement lawsuit filed in United States Federal Court for the Northern
District of California. The plaintiff, Tessera, has asserted that semiconductor chip packaging,
specifically devices having BGA and
multi-chip
BGA configurations used by the defendants infringe
certain patents of Tessera. Tessera has further asserted that our Company is in breach of an
existing license agreement entered into by Tessera with ChipPAC, which agreement has been assigned
by ChipPAC to our Company. We believe that we have a meritorious defense to the claims and intend
to defend the lawsuit vigorously. A court determination that our
products or processes infringe the intellectual property rights of
others could result in significant liability and/or require us to
make material changes to our products and/or processes. Due to the inherent uncertainties of the lawsuit, we cannot
accurately predict the ultimate outcome and it could result in
significant liability and/or injunction and could have a material adverse effect on the business, financial condition
and the results of operations of our Company.
We
also, from time to time, receive from customers request for
indemnification against pending or threatened infringement claims
brought against such customers. The resolution of any future
allegation or request for indemnification could have a material
adverse effect on our business, financial condition and results of
operations.
Our primary
registered trademark and trade name are "STATSChipPAC". We also own or are
licensed to use other trademarks.
Insurance
We
maintain insurance policies covering losses, including losses due to business interruption
and losses due to fire, which we consider to be adequate. Our insurance policies cover our
buildings, machinery and equipment. The policies are subject to deductibles and exclusions that
result in our retention of a level of risk. Significant damage to our production facilities,
whether as a result of fire or other causes, would have a material adverse effect on our business,
financial condition and results of operations. We are not insured against the loss of any of our
key personnel.
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Table of Contents
Environmental Matters and Compliance
Our manufacturing operations use many chemicals, gases and other hazardous substances and also
generate gaseous, liquid and solid wastes. We are subject to regulatory requirements on, and
potential liabilities of the environmental aspects of manufacturing processes arising under laws
and regulations governing, among other things, the use, storage, discharge and disposal of
chemicals, air and water discharges as well as monitoring and remediation of soil and groundwater
contamination. These environmental aspects are identified and managed in a proactive and systematic
way via the ISO 14001 standard to which four of our manufacturing facilities are certified. We
regularly send samples of emissions and wastes to third party accredited laboratories for analysis
to ensure our compliance with the environmental laws and regulations that apply to us. We believe
that we are in substantial compliance with all current environmental laws and regulations
applicable to our operations and facilities.
Furthermore, our activities are subject to new regulatory requirements on the environmental
impacts of products such as the European Union's Directive 2002/95/EC on the restriction of the use
of certain hazardous substances in electrical and electronic equipment and other similar
legislations in China and certain states in the United States. As a result of these laws and
regulations, we expect that our customers will increasingly demand products that do not contain
these restricted substances, such as lead as an alloy in soldering material. Such requirements may
adversely affect our manufacturing costs by requiring us to acquire costly equipment or materials
or to redesign some of our processes, thereby resulting in further costs increase from research and
development and quality controls. In addition, failures to meet these demands could materially
adversely affect our product sales.
C. Corporate Structure
The diagram below summarizes our corporate structure. We may from time to time make
acquisitions of, or investments in, other companies or businesses.
Note:
(1)
In June 2006, we entered into a strategic joint venture with CR Logic for the assembly and
test of select products in Wuxi, China, in connection with which we acquired a 25%
shareholding in MAT with CR Logic owning a 75% interest. MAT wholly owns ANST, an assembly
and test company based in Wuxi, China.
40
Table of Contents
D. Property, Plants and Equipment
Our packaging and test network comprises 12 facilities throughout Asia and the United States.
The following chart provides information regarding our facilities. For information on the aggregate
capacity of our facilities in terms of the number of wire bonders and testers we operate, see "—
B. Business Overview — Suppliers — Equipment". Our utilization rates for equipment for 2004, 2005
and 2006 were 69%, 72% and 75%, respectively.
Area
Property/Location(1)
(Sq. Feet)
Functions/Services
Principal Packaging or Services Provided
Yishun, Singapore(2)
594,036
Turnkey packaging and test
services, research and
development, warehousing
services, and drop shipment
services
Test services, including mixed-signal and
high performance testing, wafer sort and
probe, traditional and advanced leaded and
array packaging including BGA,
flip-chip
packaging, wafer level packaging and CSP
and drop shipment services
Icheon, South Korea
587,273
Turnkey packaging and test
services, research and
development, warehousing
services, and drop shipment
services
Advanced array packaging such as stacked
die, SiP and
flip-chip
, standard array
packaging such as BGA and CSP and test
services
Kuala Lumpur, Malaysia(3)
488,448
Turnkey packaging and test
services, research and
development, warehousing
services, and drop shipment
services
Advanced lead frame packages such as LFCSP
and BCC, discrete power packages, and test
services
Qing Pu, Shanghai, China(4)
421,748
Turnkey packaging and test
services, research and
development, warehousing
services, and drop shipment
services
Packaging of leaded packages, CSP, BGA,
memory card, wafer probe, test and
distribution services
Hsin-Chu
Hsien, Taiwan(5)
217,258
Test services, research and
development, warehousing
services, and drop shipment
services
Test development, final test, wafer probe
and distribution services
Fremont, California, United
States
56,320
Sales, marketing, administration and research
and development
Sales, marketing, administration and
design review services
Milpitas, California, United
States
34,000
Test facility and sales office
Sales, marketing, administration, design
and test engineering services
Ang Mo Kio, Singapore
31,261
Corporate executive,
administrative, sales and
marketing and finance office
Corporate administration and finance,
sales and marketing
San Diego, California,
United States(6)
20,000
Test facility
Test engineering services
Song Jiang, Shanghai, China
15,000
LCD driver, IC bumping and
assembly turnkey services
Gold bumping, Circuit probe (CP) testing,
Chip-on-glass
(COG) assembly and
Chip-on-flex
(COF) assembly for LCD driver
IC
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Table of Contents
Area
Property/Location(1)
(Sq. Feet)
Functions/Services
Principal Packaging or Services Provided
Tempe, Arizona, United States
9,300
Package design, research and
development and sales office
Sales, marketing, administration, design
and characterization services
Hsin-Chu
Hsien, Taiwan
7,000
Solder bump services for
flip-chip
assembly
Eutectic/
High-lead
/Lead-free
solder bump
for 300mm wafers
(1)
We lease all of our facilities except where otherwise noted.
(2)
We own the production assets but lease the land from the statutory housing development board
of the Government of Singapore under a long-term lease with an initial term expiring in March
2026 with an option to renew.
(3)
We own the building and improvements and lease the land from the State Government of
Malaysia, but the land and all buildings on the land will revert to the lessor upon the
expiration of the
long-term
lease in 2086.
(4)
We own the building and improvements and lease the land, but the land and all buildings on
the land will revert to the lessor upon the expiration of the
long-term
lease in 2044. Our
investment of approximately $53.6 million to expand our existing facility in Qing Pu,
Shanghai, by adding new buildings next to it, is near completion. The addition of the new
buildings will increase the total floor space indicated above by approximately 500,000 square
feet.
(5)
Winstek owns the land and building, which is subject to mortgages and certain other security
interests.
(6)
Situated within the campus of Conexant Systems Inc.
In addition, we purchased a building together with the land in 2006 in Icheon City, South Korea for
approximately $14.3 million. The refurbishment works on the building are expected to be completed
in various stages throughout 2007 and 2008. The amount of the
expenditures and the timing of the refurbishment work will depend on
market conditions. The building has a total floor space of approximately
199,000 square feet and is expected to accommodate turnkey packaging and test services upon
completion.
ITEM 4A.
UNRESOLVED STAFF COMMENTS
None.
ITEM 5.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion
of our business, financial condition and results of operations should
be read in conjunction with our consolidated financial statements and the related notes included
elsewhere in this annual report. This discussion contains
forward-looking
statements that reflect
our current views with respect to future events and financial performance. Our actual results may
differ materially from those anticipated in these
forward-looking
statements as a result of certain
factors, such as those set forth under "Item 3. Key Information — D. Risk Factors" and elsewhere
in this annual report. Our consolidated financial statements are reported in U.S. dollars and have
been prepared in accordance with U.S. GAAP. Since the beginning of fiscal 2005, we have employed
quarterly and fiscal year reporting periods. Our
52-53 week
fiscal year ends on the Sunday nearest
to December 31. Our fiscal quarters end on a Sunday and are generally thirteen weeks in length. Our
first three quarters of 2006 ended on March 26, June 25 and September 24, respectively, and our
fourth quarter and fiscal year 2006 ended on December 31, while our first three quarters of 2005
ended on March 27, June 26 and September 25,
respectively, and our fourth quarter and fiscal year 2005
ended on December 25, the Sunday nearest to the calendar quarter end of each period. Unless
otherwise stated, all years and dates refer to STATS ChipPAC's fiscal years.
Overview
We are a leading service provider of semiconductor packaging design, assembly, test and
distribution solutions. We have the skill to provide a comprehensive range of semiconductor
packaging and test solutions to a diversified global customer base servicing the computing,
communications, consumer, automotive and industrial markets.
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In August 2004, we completed the merger with ChipPAC, Inc. which resulted in ChipPAC, Inc.
becoming a
wholly-owned
subsidiary of STATS. The merger was accounted for using the purchase
method. Under the purchase method of accounting, the cost of approximately $1.1 billion to acquire
ChipPAC, including transaction costs, was allocated to ChipPAC's net assets based on their
respective estimated fair values. The excess of the purchase price over the estimated fair values
of the net assets acquired was recorded as goodwill. The financial results for the periods
presented in this annual report reflect the financial results of STATS for the full periods and the
financial results of ChipPAC from August 5, 2004. As a result, changes in our operating results in
2005 compared with 2004 are due generally to the acquisition of ChipPAC and the inclusion of
ChipPAC's operating results from August 5, 2004. Further, because ChipPAC's operating results have
not been included for the full year 2004, and in any case for the reasons mentioned in "Item 3. Key
Information — D. Risk Factors — Risks Relating to Our Company — Our operating results have
fluctuated, and may continue to fluctuate, from quarter to quarter, which may make it difficult to
predict our future performance" and elsewhere in this annual report, the period to period
comparisons of our operating results are not meaningful and you should not use such comparisons to
predict our future performance.
Temasek Holdings' Subsidiary, Singapore Technologies Semiconductors Pte Ltd's, Tender Offer
On
March 1, 2007, STSPL, a wholly-owned subsidiary of Temasek Holdings, announced its intention to
launch a voluntary conditional cash offer for the remaining ordinary shares and ADSs in our Company
that STSPL does not already own (the Offer). As of January 31, 2007, STSPL owned approximately
35.56% of our outstanding ordinary shares. The information in the following paragraph is based on
STSPL's Offer announcement.
The offer price will be S$1.75 for each ordinary share and S$17.50 for each ADS in cash. The Offer
will be conditioned upon, among other matters, STSPL receiving acceptance of such number of
ordinary shares and ADSs which, together with all other ordinary shares and ADSs owned, acquired or
agreed to be acquired by STSPL, would represent more than 50% of our outstanding ordinary shares
and ADSs following the close of the Offer. If ordinary shares and ADSs tendered into the Offer
result in STSPL owning at least 90% of our outstanding ordinary shares and ADSs (other than those
owned by STSPL and its related corporations at the commencement of the Offer), STSPL intends to
offer a higher purchase price of S$1.88 per ordinary share or S$18.80 per ADS to all shareholders
who accept the Offer, regardless of when their ordinary shares and ADSs are tendered. The Offer
would also include an offer by STSPL for our outstanding $115,000,000 Convertible Notes due 2008
and $150,000,000 2.50% Convertible Notes due 2008. The offer for the convertible notes is
conditioned on the offer for the ordinary shares and ADSs becoming unconditional in all respects.
STSPL stated that it will send to our security holders the Offer to Purchase, which will contain
the terms and conditions of the Offer, not earlier than 14 days and not later than 21 days from the
date of the Offer announcement. STSPL announced that the Offer will remain open for acceptances by
security holders for a period of not less than 20 U.S. business days or 28 calendar days after the
date of posting of the Offer to Purchase, whichever is the longer.
On March 1, 2007, we announced that our board of directors will appoint an independent financial
adviser to advise the directors of our Company who are regarded as independent for the purposes of
the Offer under the
Take-Over
Code (Special Committee). On March 3, 2007, our board of directors
formed the Special Committee to review and consider the Offer and
such other strategic alternatives available to the Company as the
Special Committee may deem to be appropriate. The recommendations to security holders by our Special Committee
and the reasons for those recommendations will be set forth in a circular of our Company (which
will also contain the advice of the independent financial adviser appointed by our Special
Committee) and our Company's Solicitation/Recommendation Statement on
Schedule 14D-9
filed with the
SEC. Following their publication, these documents can be obtained without charge at
www.sec.gov
,
www.sgx.com
and
www.statschippac.com
. Our security holders should read these filings as they will contain
important information about the Offer, our board of director's recommendations, the advice of the independent financial adviser and other related
matters.
We expect to incur significant expenses in investment banking, legal and other fees and use
significant amounts of internal resources in connection with the
matters described above. It is not possible to accurately
predict the amount of money or internal resources that will be required in connection with the
these matters. Due to the additional costs expected to be incurred in
connection with these matters, we may not be
able to achieve the net income and net income per ADS guidance for the first fiscal quarter of 2007
that we had provided in our earnings release on January 25,
2007. Further, while we are dealing with these matters, we may not be able to provide any guidance on our future quarterly results of
operations.
Factors Affecting Our Results of Operations
Cyclicality of the Semiconductor Industry
Our results of operations are influenced by the state of the global semiconductor industry
which is highly cyclical. The semiconductor industry experienced a significant downturn beginning in the
fourth quarter of 2000. This downturn had a significant adverse impact on our sales and financial
performance as customers reduced purchase orders to reflect inventory corrections and lower demand
experienced in their
end-user
markets. The semiconductor industry started its recovery in late
2002. However, in late 2004 to early 2005 and in late 2006, we experienced a softening of our
business as our customers corrected their excess inventory positions. Despite the softening of our
business in late 2006, the semiconductor industry outlook in 2007 published by recognized industry
research analysts and associations are projecting growth rates of approximately 7% as compared to
2006. We expect the SATS market to grow at a faster pace than the semiconductor industry as a
whole and we believe that we are well positioned to benefit from the growing outsourcing trend and
from our strategic positioning in the higher growth communication, computing and consumer markets.
In 2002, our net revenues increased 54.8% over 2001 to $225.7 million. In 2003, our net
revenues grew by 68.6% over 2002 to $380.7 million. In 2004, our net revenues grew further by
102.0% to $769.1 million. In 2005, our net revenues grew by 50.5% over 2004 to $1,157.3 million
primarily due to our acquisition of ChipPAC and a return to growth in the semiconductor industry
coupled with a trend towards increased outsourcing of test and packaging and in 2006, our net
revenues grew by 39.7% over 2005 to $1,616.9 million. We continue to expect that the cyclicality
of the semiconductor industry will impact our results of operations.
Declining Prices.
The semiconductor industry is characterized by price erosion which can have
a material adverse effect on our revenues and gross margins, particularly when coupled with
declining capacity utilization. Prices of our products at a given level of technology decline over
the product life cycle, commanding a premium in the earlier stages and declining towards the end of
the cycle. To maintain our profitability, we offset decreases in average selling prices by
improving our capacity utilization rates and production efficiency, or by shifting to higher margin
test and packaging services. In addition, we continue to develop and offer test and packaging
services which command higher margins. We expect average selling prices to fluctuate depending on
our product mix in any given period.
Cost of Revenues.
Our results of operations are generally affected by the
capital-intensive
nature of our business. Our cost of revenues include depreciation expense, attributed overhead such
as facility rental, operating costs and property taxes and insurance, cost of labor and materials
and cost of leasing equipment. Our fixed costs comprised largely the expenses related to our test
and packaging equipment. Depreciation of our equipment and machinery is generally provided on a
straight-line
basis over their estimated useful lives of eight years. We routinely review the
remaining estimated useful lives of our equipment and machinery to determine if such lives should
be adjusted due to changes in technology, production techniques and our customer base. However, due
to the nature of our operations, which may include sudden changes in demand in the end markets, and
due to the fact that certain equipment are dedicated to specific customers, we may not be able to
accurately anticipate declines in the utility of our equipment and machinery. Consequently,
impairment charges on our equipment and machinery may be necessary in the future. Our variable
costs comprised cost of materials, payroll and operating supplies. The cost of our packaging
services will typically include a higher proportion of variable costs compared to test services.
Our variable costs may be subject to various global economic factors such as gold prices, oil
prices and fluctuations in foreign exchange rates.
Capacity Utilization.
Increases or decreases in capacity utilization can have a significant
effect on gross profit margins since the unit cost of test and packaging services generally
decreases as fixed charges, such as depreciation expense and equipment leasing costs, are allocated
over a larger number of units. We have experienced a significant decrease in the capacity
utilization of our facilities in 2001 as a result of the downturn
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in the semiconductor industry. Our capacity utilization has improved year over year from 2002
to 2006 as the semiconductor industry has been returning to growth. Our ability to manage our gross
profit margins will continue to depend in part on our ability to effectively manage our capacity
utilization.
Goodwill and Intangible Assets.
As of December 31, 2006, we had goodwill and other intangible
assets of approximately $513.5 million and $41.8 million, respectively, which primarily resulted
from the accounting of the merger in 2004 using the purchase accounting method.
Goodwill is recorded when the cost of an acquisition exceeds the fair market value of the net
tangible and identifiable intangible assets acquired. Goodwill and
indefinite-lived
intangible
assets are tested for impairment at least annually. These tests are performed more frequently
whenever events or changes in circumstances indicate that the carrying value may not be
recoverable. Impairment losses are recorded when the carrying amount of goodwill and intangible
assets exceeds their respective implied fair values. We performed an impairment review at the end
of 2004 and recorded an impairment charge of $453.0 million to our results of operations in 2004 on
our goodwill associated with the acquisition of ChipPAC, with determination of fair value
supplemented by independent appraisal using a combination of discounted cash flows and market
multiples methodologies. We believed that the decline in the fair values of the ChipPAC reporting
units in 2004 were primarily due to:
•
longer than expected slow-down in the industry beginning late 2004 as customers
corrected excess inventory position. This reduction in demand, coupled with the competitive
pressures in the testing and packaging business, affected our
short-term
earnings
expectation; and
•
a revision of the industry outlook beyond 2005 compared to the time the merger was
announced.
In 2005 and 2006, we completed our annual test for impairment and determined that the fair
value of the reporting units exceeds their carrying value, and therefore goodwill was not impaired.
We may be required in the future to record a significant charge to earnings in our financial
statements during the period in which any impairment of our goodwill or other intangible assets is
determined. Should an impairment be determined to have occurred, such impairment losses are
recorded as a part of income from continuing operations and this will likely have a significant
adverse effect on our results of operations.
See "Item 3. Key Information — D. Risk Factors — Risks Relating to Our Company — We
recorded an impairment charge of $453.0 million to our earnings in 2004 and may be required to
record another significant charge to earnings in the future when we review our goodwill or other
intangible assets for potential impairment".
Critical Accounting Policies
We believe the following accounting policies are critical to our business operations and the
understanding of our results of operations. Our preparation of our financial statements requires us
to make estimates and assumptions that affect the reported amount of assets and liabilities,
disclosure of contingent assets and liabilities at the date of its financial statements and the
reported amounts of revenues and expenses during the reporting period. If actual results differ
significantly from the estimates and assumptions, there could be a material adverse effect on our
financial statements.
Revenue Recognition, Allowance For Doubtful Debts, Trade Discounts and Allowances and Sales
Returns
We derive revenue primarily from wafer probe and bumping, packaging and testing of
semiconductor integrated circuits. Net revenues represent the invoiced value of services rendered,
net of returns, trade discounts and allowances, and excluding goods and services tax.
Revenue is recognized when there is evidence of an arrangement, fees are fixed or
determinable, collectibility is reasonably assured, the service has been rendered, the revenue to
be recognized is billable under the terms of the arrangement and not contingent upon completion of
undelivered services, and, where applicable, delivery has occurred and risk of loss has passed to
the customer. Such policies are consistent with the provisions in the SEC Staff Accounting Bulletin No. 104, "Revenue Recognition in Financial Statements".
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Our sales arrangement include probe, bumping, packaging or test services sold on a standalone
basis, as well as
multiple-element
arrangements where probe, bumping, packaging, test, and in some
cases,
pre-production
and
post-production
services are provided together. The allocation of revenue
to each unit of accounting based on fair value, determined by reference to prices of services sold
on a standalone basis, is critical judgment and estimate. Changes in the determination of the
allocation could impact the timing of such revenue.
We generally do not take ownership of customer supplied semiconductors as these materials are
sent to us on a consignment basis. Accordingly, the value of the customer supplied materials is
neither reflected in revenue nor in cost of revenue.
We make estimates of the collectibility of our accounts receivable. We review the accounts
receivable on a periodic basis and make specific allowance when there is doubt as to the
collectibility of individual accounts. In evaluating the collectibility of individual receivable
balances, we consider the age of the balance, the customer's historical payment history, its
current creditworthiness and current economic trends. We believe that we adequately manage our
credit risk through our credit evaluation process, credit policies, and credit control and
collection procedures. Additional allowances may be required in the future if the financial
condition of our customers or general economic conditions deteriorate. Our actual uncollectible
accounts have not historically been significantly different from our estimates.
Similarly, we make estimates of potential sales returns and discounts which we allow for
volume purchases and early payments as a deduction from gross revenue based on our historical
experience and expectations of our customers' ultimate purchase levels and payment timing. Actual
revenues may differ from our estimates if future customer purchases or payment timing differ from
our estimates, which may happen as a result of changes in general economic conditions, market
demand for our customers' products, or desire by our customers' interest in achieving payment
timing discounts. Our actual returns and discounts have not historically been significantly
different from our estimates.
Valuation of Inventory
The valuation of inventory requires us to estimate obsolete or excess inventory as well as
inventory that are not of saleable quality. The determination of obsolete or excess inventory
requires us to estimate the future demand from our customers within specific time horizons,
generally six months or less. The estimates of future demand that we use in the valuation of
inventories are the forecasts provided by our customers. If our inventory for specific customer
forecast is greater than actual demand, we may be required to record additional inventory reserves,
which would have a negative impact on our gross margin.
Our inventories are stated at the lower of cost, determined on the weighted average basis, and
market value, as estimated by us. Cost is generally computed on a standard cost basis, based on
normal capacity utilization, with unrecoverable costs arising from underutilization of capacity
expensed when incurred.
Depreciation and Amortization
Our operations are capital intensive and we have significant investment in testing and
packaging equipment. We depreciate our property, plant and equipment based on our estimate of the
period that we expect to derive economic benefits from their use. Our estimates of economic useful
lives are set based on historical experience, future expectations and the likelihood of
technological obsolescence arising from changes in production techniques or in market demand for
the use of our equipment and machinery. However, business conditions, underlying technology and
customers' requirements may change in the future which could cause a change in the useful lives.
Any change in useful lives could have a significant effect on our future operating results.
In the third quarter of 2004, following the consummation of the merger, we adopted ChipPAC's
policy to depreciate equipment and machinery on a straight line basis over eight years. The impact
of this change was depreciation savings of $23.7 million in 2004.
Our decision to change the estimated useful lives of the packaging and test equipment was
based on the following:
•
expected economic life of assets;
•
equipment's potential
re-use
among product lines;
•
historical experience for equipment in our factories;
•
prevailing industry practice; and
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•
consultation with equipment manufacturers.
We believe that our principal competitors depreciate their packaging assets over periods of
six to eight years.
Valuation of Property, Plant and Equipment
We review property, plant and equipment for impairment whenever events or changes in market
conditions indicate that the carrying amounts may not be recoverable. Management judgment is
critical in assessing whether events have occurred that may impact the carrying value of property,
plant and equipment.
Recoverability of assets to be held and used is measured by a comparison of the carrying
amount of the asset to the future undiscounted net cash flows expected to be generated from the
asset. If the carrying amount of the asset exceeds the future undiscounted net cash flows, such
assets are considered to be impaired and an impairment charge is recognized for the amount that the
carrying value of the asset exceeds its fair value. In determining the fair value of equipment and
machinery, we consider offers to purchase such equipment and expected future discounted cash flows.
Due to the nature of our business, which may include sudden changes in demand in the end markets,
and due to the fact that certain equipment is dedicated to specific customers, we may not be able
to anticipate declines in the utility of our equipment and machinery. Generally, we consider
consecutive quarterly utilization rate declines or projected utilization deterioration as principal
factors for our impairment review. Consequently, additional impairment charges may be necessary in
the future and this could have a significant negative impact on our future operating results.
We did not record any impairment charges in 2004, 2005 and 2006.
Deferred Tax Asset
We record a deferred tax asset when we believe that it is more likely than not that the
deferred tax asset will be realized. The deferred tax effects of the tax losses, unutilized capital
allowances carried forward and temporary differences arising primarily from property, plant and
equipment are recognized because they are expected to be offset against future taxable income.
In assessing the realizability of deferred tax assets, we consider whether it is more likely
than not that some portion or all of the deferred tax assets will not be realized. The ultimate
realization of deferred tax assets is dependent upon the generation of future taxable income during
the periods in which those temporary differences become deductible. We consider the scheduled
reversal of deferred tax liabilities, projected future taxable income and tax planning strategies
in making this assessment. Based upon the level of historical taxable income and projections for
future taxable income over the periods in which the deferred tax assets are deductible, the
assessment will be made if it is more likely than not that the deferred tax assets will realized.
The amount of the deferred tax asset considered realizable could be reduced in the near term if
estimates of future taxable income during the carry forward period differ materially from current
estimates. In the event that we are not able to realize the deferred tax assets, an adjustment to
the deferred tax asset would be charged to income in the period such determination was made which
would result in a reduction of our net income.
For a discussion of significant items in deferred tax asset, see "Note 14. Income Taxes" of
our consolidated financial statements included in "Item 18. Financial Statements".
Valuation of Goodwill
We review goodwill for impairment annually and whenever events or changes in circumstances
indicate the carrying value of an asset may not be recoverable. We determine the fair value based
on a weighting of income and market approaches. Under the income approach, we calculate the fair
value of a reporting unit based on the present value of estimated future cash flows. Under the
market approach, we estimate the fair value based on market multiples of revenue or earnings for
comparable companies. If the fair value of the reporting unit exceeds the carrying value of the net
assets assigned to that unit, goodwill is not impaired and we are not required to perform further
testing. If the carrying value of the net assets assigned to the reporting unit exceeds the fair
value of the reporting unit, then we must perform the second step of the impairment test in order
to determine the implied fair value of the reporting unit's goodwill. If the carrying value of a
reporting unit's goodwill exceeds its implied fair value, then we record an impairment loss equal
to the difference.
Determining the fair value of a reporting unit is judgmental in nature and involves the use of
significant estimates and assumptions. These estimates and assumptions include revenue growth rates
and operating margins used to calculate projected future cash flows,
risk-adjusted
46
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discount rates, future economic and market conditions, and determination of appropriate market
comparables. We base our fair value estimates on assumptions we believe to be reasonable but that
are unpredictable and inherently uncertain. Actual future results may differ from those estimates.
We performed an impairment review of the goodwill associated with the acquisition of ChipPAC
at the end of 2004, with the determination of fair value supplemented by independent appraisal and
recorded an impairment charge of $453.0 million to our results of operations in 2004. In 2005 and
2006, we completed our annual test for impairment and determined that the fair value of the
reporting units exceeds their carrying value, and therefore goodwill was not impaired.
Results of Operations
The following table sets forth the composition of revenue by product group and test services
as a percentage of net revenues:
Year Ended
December 31,
December 25,
December 31,
2004
2005
2006
Net revenues
Packaging — array
40.6
%
50.2
%
55.5
%
Packaging — leaded
20.9
22.0
18.3
Test and other services
38.5
27.8
26.2
Total net revenues
100.0
%
100.0
%
100.0
%
The following table sets forth certain data as a percentage of net revenues for the periods
indicated:
Year Ended
December 31,
December 25,
December 31,
2004
2005
2006
Total net revenues
100.0
%
100.0
%
100.0
%
Gross profit
16.3
16.4
20.2
Selling, general and administrative
11.0
11.7
8.6
Research and development
2.3
2.3
1.9
Goodwill impairment
58.9
0.0
0.0
Restructuring charges
0.0
0.1
0.1
Operating income (loss)
(55.9
)
2.3
9.6
Other income (expense), net
(3.4
)
(3.2
)
(2.6
)
Income tax expense
(1.0
)
(0.8
)
(1.6
)
Minority interest
(0.5
)
(0.6
)
(0.6
)
Net income (loss)
(60.8
)%
(2.3
)%
4.8
%
Year Ended December 31, 2006 Compared to Year Ended December 25, 2005
Net Revenues
We derive revenues primarily from test and packaging of array and leaded packages. Net
revenues were $1,616.9 million in 2006, an increase of 39.7% compared to $1,157.3 million in 2005.
The increase was primarily due to a continued growth in the semiconductor industry, coupled with a
continuing trend towards increased outsourcing of test and packaging in 2006.
Our packaging revenue in 2006 increased 43.0% to $1,194.3 million compared to 2005. Unit
volumes of our total packaging in 2006 were 39.4% higher compared to 2005 and contributed to an
increase of $332.8 million in revenue. The average selling prices for our services have generally
decreased over product life cycles. Our ability to maintain or increase our average selling price
will continue to be dependent upon our ability to selectively increase pricing and shift to higher
margin packaging and test services. Average selling prices per pin for packaging services in 2006
increased 2.2% compared to 2005, primarily due to changes in product mix, and contributed to an
increase of $18.2 million in revenue. Revenue from test and other services in 2006 increased 31.3%
to $422.7 million compared to 2005.
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In 2006, revenue contribution from the communications market increased 1.5% over 2005, and
represented 56.7% of our revenues in 2006, compared to 55.2% of our revenues in 2005. The revenue
from the communications market remained relatively strong with continued demand for more complex,
higher functionality mobile phone and infrastructure products. Revenue contribution from consumer,
multi-applications
and other markets in 2006 increased 1.3% over 2005, and represented 24.6% of our
revenues in the 2006. Revenue contribution from personal computers market in 2006 decreased 2.8%
over 2005 and represented 18.7% of our revenues in 2006. We expect to continue to depend on the
communications, consumer and
multi-applications
, and personal computers market for substantially
all of our net revenues.
Gross Profit
Gross profit in 2006 was $326.2 million, an increase of $136.9 million compared to $189.2
million in 2005. Gross profit as a percentage of net revenues was 20.2% in 2006, compared to 16.4%
in 2005. Gross profit in 2006 include $6.0 million of share-based compensation expense related to
share options and employee share purchase rights under SFAS 123(R) which reduced gross margin by
0.3% during the year. In 2006, gross profit improved primarily as a result of better operating
leverage, improved product mix, continued cost control measures and higher overall average selling
price, partially offset by higher depreciation from our larger capital asset base and an increase
in cost of materials. Overall equipment utilization was approximately 75% in 2006 compared to 72%
in 2005. Our cost of revenues consist principally of fixed costs such as depreciation and leasing
expenses and variable costs such as direct and indirect labor, materials and overhead expenses. We
continue to experience higher cost as a result of external global economic factors such as higher
substrate, gold and oil prices which affected our cost of materials and the adverse effect of the
strengthening of the Singapore dollar, South Korean Won, Chinese Renminbi and Malaysian Ringgit
against the U.S. dollar when compared to 2005.
Selling, General and Administrative
Selling, general and administrative expenses were $139.5 million in 2006, an increase of 2.7%
compared to $135.8 million in 2005. As a percentage of net revenues, selling, general and
administrative expenses were 8.6% in 2006 compared to 11.7% in 2005. The increase in selling,
general and administrative expenses in 2006 was primarily a result of higher
share-based
compensation expense, higher payroll expenses resulting from additional headcount, increased cost
of general business support for our overall business growth and higher
Sarbanes-Oxley
Act
compliance related expenses, partially offset by certain intangible assets related to the merger of
former STATS and ChipPAC becoming fully amortized. In 2006,
share-based
compensation expense was
$6.1 million under SFAS 123(R) compared to $0.7 million under APB 25 in 2005.
Research and Development
Research and development expenses were $30.4 million in 2006 compared to $26.1 million in
2005, an increase of $4.4 million. Research and development expenses increased primarily due to an
increase in headcount and the inclusion of
share-based
compensation expense of $1.6 million under
SFAS 123(R) in 2006. As a percentage of net revenues, research and development expenses were 1.9%
in 2006 compared to 2.3% in 2005.
Restructuring Charges
In the third quarter of 2006 and the first quarter of 2005, certain restructuring plans were
executed to realign our organization and reduce operating costs to better align our expenses with
revenues, which resulted in a total reduction in workforce of 556 and 88 employees, respectively,
related to the restructuring. Severance and related charges of $1.9 million and $0.8 million were
incurred and expensed in the third quarter of 2006 and the first quarter of 2005, respectively.
Goodwill Impairment
As required by U.S. GAAP, we performed our annual test for impairment in 2006 and 2005, and
determined that the fair value of the reporting units exceeded their carrying value, and therefore
goodwill was not impaired.
Net Interest Income (Expense)
Net interest expense was $40.4 million in 2006 compared to $36.2 million in 2005. Interest
income was $5.4 million in 2006 compared to $6.4 million in 2005. The decrease in interest income
in 2006 was primarily due to a decrease in cash equivalents and marketable securities held by us
compared to 2005.
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Interest expense was $45.8 million in 2006 compared to $42.6 million in 2005. The increase in
interest expense was primarily due to a full year of interest on the $150.0 million 7.5% senior
notes due 2010 in 2006 compared to approximately half year of interest in 2005 as the notes were
issued in July 2005 and an increase in foreign loans of $12.0 million in South Korea and $50.3
million in Taiwan. The increase was partially offset by the reduction in interest expense as a
result of our redemption and repurchase of $168.5 million (out of $200.0 million) aggregate
principal amount of our 1.75% convertible notes due 2007, a repurchase of $50.0 million aggregate
principal amount of our 8.0% convertible subordinated notes due 2011 and repayment of
short-term
and
long-term
debts in South Korea and
long-term
debts in Taiwan. Total outstanding
interest-bearing
debt was $762.9 million and $821.7 million as of December 31, 2006 and December
25, 2005, respectively.
Foreign Currency Exchange Gain (Loss)
Net foreign currency exchange gain or (loss) was $(1.6) million in 2006 compared to $0.5
million in 2005. The
non-cash
losses in 2006 were due primarily to the fluctuations of the exchange
rate between the U.S. dollar and the Singapore dollar, the South Korean Won and the Chinese
Renminbi.
Other
Non-Operating
Income (Expense)
Net other non-operating income was $0.1 million in 2006 compared to net other
non-operating
(expense) of $(1.1) million in 2005. The fluctuation resulted from the
write-off
of capitalized
debt issuance cost of $1.7 million from the repurchase and redemption of our 1.75% convertible
notes due 2007 in 2005.
Income Tax Expense
We have recorded a valuation allowance to reduce deferred tax assets to the amount we believe
is more likely than not to be realized. In the event that deferred tax assets would be realizable
in the future in excess of the net recorded amount, an adjustment to the deferred tax asset would
increase income in the period such determination was made. Our consolidated income tax expense was
$25.8 million in 2006 compared to $9.7 million in 2005 based on the mix of tax rates and taxable
income across the various jurisdictions in which we do business. Our primary tax jurisdictions are
Singapore, South Korea, China, Malaysia, Taiwan and the United States of America.
Year Ended December 25, 2005 Compared to Year Ended December 31, 2004
Net Revenues
Net revenues were $1,157.3 million in 2005, an increase of 50.5% compared to $769.1 million in
2004. The increase was primarily due to our acquisition of ChipPAC (ChipPAC's results of operations
were consolidated from August 5, 2004) and a return to growth in the semiconductor industry coupled
with a trend towards increased outsourcing of test and packaging. Following our merger, revenue
attributable to ChipPAC's operations has had a relatively larger impact on our packaging revenue
than on our test revenue.
Our packaging revenue in 2005 increased 76.7% to $835.3 million compared to 2004. Unit volumes
of our total packaging increased 76.4% in 2005 compared to 2004, and contributed to an increase of
$426.4 million in revenue. Average selling prices for our services have generally declined over
product life cycles. Average selling prices per pin for packaging services in 2005 decreased 7.2%,
compared to 2004, primarily due to changes in product mix, and contributed to a decrease of $63.9
million in revenue. We experienced increased demand for our
three-dimensional
packaging, FBGA and
PBGA packaging in 2005. Test revenue in 2005 increased 8.9% to $322.0 million compared to 2004. Our
increase in test revenue from our acquisition of ChipPAC was partially offset by declining average
selling prices.
In 2005, revenue from the communications market decreased by 4.9% over 2004, and contributed
55.2% of our net revenues in 2005 compared to 60.1% of our net revenues in 2004. The revenue from
the communications market remained relatively strong with continued demand for more complex, higher
functionality mobile phone and infrastructure products. Revenue from consumer,
multi-applications
and other markets increased 6.2% over 2004 and contributed 23.3% of our net revenues in 2005.
Revenue from the personal computers market decreased 1.3% over 2004 and contributed 21.5% of our
net revenues in 2005. We expect to continue to be dependent on the communications, consumer and
multi-applications
, and personal computers markets for substantially all of our net revenues.
49
Table of Contents
Gross Profit
Gross profit in 2005 was $189.2 million, an increase of $63.6 million compared to $125.6
million in 2004. Gross margin as a percentage of net revenues was 16.4% in 2005 compared to 16.3%
in 2004. In 2005, gross profit improved primarily as a result of higher equipment utilization,
depreciation savings from the change in equipment useful lives and continued cost control measures,
including a reduction in workforce, partially offset by lower overall average selling prices,
changes in product mix and an increase in cost of materials. Overall equipment utilization was
approximately 72% in 2005 compared to 69% in 2004. We continued to experience pressure to reduce
average selling prices in 2005. Our cost of revenues consist principally of fixed costs such as
depreciation and leasing expenses and variable costs such as direct and indirect labor, materials
and overhead expenses. We also experienced continued higher cost as a result of external global
economic factors such as higher gold prices, higher oil prices, and the adverse effect of the
strengthening of the Singapore dollar, South Korean Won and Japanese yen against the U.S. dollar in
2005 when compared to 2004.
Selling, General and Administrative
Selling, general and administrative expenses were $135.8 million in 2005, an increase of 59.8%
compared to $85.0 million in 2004. As a percentage of net revenues, selling, general and
administrative expenses were 11.7% in 2005, compared to 11.0% in 2004. The increase in selling,
general and administrative expenses in 2005 was primarily due to the higher headcount resulting
from our merger with ChipPAC, the inclusion of merger and integration expenses, and ChipPAC
expenses which amounted to $84.3 million. The merger and integration expenses and ChipPAC expenses
in 2005 included the amortization of the intangible assets which amounted to $38.1 million and
stock-based
compensation expenses of $0.7 million mainly resulting from the expensing of the
unearned compensation on unvested options recorded in the ChipPAC acquisition. The increase was
partially offset by continued measures to control costs and manage discretionary expenses in 2005.
Research and Development
Research and development expenses in 2005 were $26.1 million compared to $17.6 million in
2004, an increase of $8.5 million. Research and development expenses had increased primarily due to
the inclusion of ChipPAC expenses which amounted to $13.9 million, inclusive of the amortization of
the acquired intangible assets which amounted to $2.4 million in 2005. However, these expenses were
partially offset by depreciation savings from the change in equipment useful lives and continued
measures to control costs and manage discretionary expense.
Restructuring Charges
During the quarter ended March 31, 2005, certain restructuring plans were executed to realign
our organization and reduce operating costs to better align our expenses with revenues. We had a
total reduction in workforce of 88 employees related to the restructuring. Severance and related
charges of $0.8 million were expensed in 2005. There were no restructuring charges incurred in
2004.
Goodwill Impairment
As required by U.S. GAAP, we performed our annual test for impairment in 2005, and determined
that the fair value of the reporting units exceeded their carrying value, and therefore goodwill
was not impaired. In 2004, we impaired $453.0 million of goodwill related to our acquisition of
ChipPAC. We will continue to perform a test for goodwill impairment at least annually as required
by U.S. GAAP.
Net Interest Income (Expense)
Net interest expense was $36.2 million in 2005 compared to $24.4 million in 2004. Net interest
expense consisted of interest income of $6.4 million and interest expense of $42.6 million in 2005
and interest income of $4.4 million and interest expense of $28.8 million in 2004. The increase in
interest income in 2005 was primarily due to an increase of the marketable securities held by us.
The increase in interest expense was primarily due to interest on debts assumed as a result of our
merger with ChipPAC, and our
accrued interest on the $215.0 million 6.75% senior notes due 2011 issued in November 2004,
the $150.0 million 7.5% senior notes due 2010 issued in July 2005, an increase in foreign loans of
$19.7 million in South Korea and $4.6 million in Taiwan, and the $99.0 million
short-term
debts
which was borrowed and repaid in 2005. The increase was partially offset by the reduction in
interest expense as a result of our redemption and repurchase of $168.5 million (out of $200.0
million) aggregate principal amount of our 1.75% convertible notes due 2007 and repayment of
certain
long-term
debts in South Korea and Taiwan, respectively. Total outstanding
interest-bearing
debt was $821.7 million and $834.8 million as of December 25, 2005 and December 31, 2004,
respectively.
50
Table of Contents
Foreign Currency Exchange Gain (Loss)
Net foreign currency exchange gain was $0.5 million in 2005, compared to net foreign currency
exchange loss of $1.1 million in 2004. These
non-cash
losses and gains were primarily due to the
fluctuations between the exchange rate of the United States dollar and the Singapore dollar, the
South Korean Won and the Japanese yen.
Other Non-Operating Income (Expense)
Other non-operating expense, net was $1.1 million in 2005 compared to $0.9 million in 2004.
The increase was primarily due to
write-off
of capitalized debt issuance cost of $1.7 million from
the repurchase and redemption of our 1.75% convertible notes due 2007 in 2005.
Income Tax Expense
We have recorded a valuation allowance to reduce deferred tax assets to the amount we believe
is more likely than not to be realized. In the event that deferred tax assets would be realizable
in the future in excess of the net recorded amount, an adjustment to the deferred tax asset would
increase income in the period such determination was made. We have a mix of tax rates across the
various jurisdictions in which we do business. Our primary tax jurisdictions are Singapore, South
Korea, China, Malaysia, Taiwan and the United States of America. Our consolidated income taxes were
$9.7 million in 2005 compared to $7.9 million in 2004.
Quarterly Results
The following table sets forth our unaudited results of operations, including as a percentage
of net revenues, for the eight fiscal quarters ended December 31, 2006. We believe that all
necessary adjustments, consisting only of normal recurring adjustments, have been included in the
amounts stated below to present fairly the selected quarterly information when read in conjunction
with our consolidated financial statements and the related notes included elsewhere in this annual
report. Our results of operations have varied and may continue to vary significantly from quarter
to quarter and are not necessarily indicative of the results of any future periods.
Fiscal Quarter Ended
March 27,
June 26,
September 25,
December 25,
March 26,
June 25,
September 24,
December 31,
2005
2005
2005
2005
2006
2006
2006
2006
(In thousands)
Net revenues
$
234,146
$
264,346
$
301,298
$
357,463
$
385,709
$
418,133
$
397,109
$
415,982
Cost of revenues
(209,748
)
(228,541
)
(250,588
)
(279,146
)
(309,116
)
(331,327
)
(318,185
)
(332,145
)
Gross profit
24,398
35,805
50,710
78,317
76,593
86,806
78,924
83,837
Operating expenses:
Selling, general and
administrative
32,246
33,761
34,034
35,710
39,711
39,914
30,707
29,134
Research and
development
5,942
6,536
6,243
7,350
6,973
7,909
7,632
7,932
Restructuring charges
830
—
—
—
—
—
1,938
—
Total operating
expenses
39,018
40,297
40,277
43,060
46,684
47,823
40,277
37,066
Operating income (loss).
(14,620
)
(4,492
)
10,433
35,257
29,909
38,983
38,647
46,771
Other income
(expenses), net:
Interest income
(expenses), net
(9,447
)
(8,283
)
(9,148
)
(9,337
)
(9,696
)
(10,414
)
(10,796
)
(9,509
)
Foreign currency
exchange gain (loss).
(391
)
71
880
(29
)
(9
)
(455
)
(593
)
(521
)
Equity income from
equity investee
—
—
—
—
—
—
128
24
Other
non-operating
income (expenses),
net
(1,544
)
157
227
84
275
294
453
(914
)
Total other
income
(expenses), net
(11,382
)
(8,055
)
(8,041
)
(9,282
)
(9,430
)
(10,575
)
(10,808
)
(10,920
)
51
Table of Contents
Fiscal Quarter Ended
March 27,
June 26,
September 25,
December 25,
March 26,
June 25,
September 24,
December 31,
2005
2005
2005
2005
2006
2006
2006
2006
(In thousands)
Income (loss) before
income taxes
(26,002
)
(12,547
)
2,392
25,975
20,479
28,408
27,839
35,851
Income tax expense
(1,139
)
(1,159
)
(1,247
)
(6,144
)
(5,918
)
(7,211
)
(7,137
)
(5,493
)
Income (loss) before
minority interest
(27,141
)
(13,706
)
1,145
19,831
14,561
21,197
20,702
30,358
Minority interest
22
(1,357
)
(2,156
)
(2,949
)
(2,545
)
(3,177
)
(2,205
)
(2,083
)
Net income (loss)
$
(27,119
)
$
(15,063
)
$
(1,011
)
$
16,882
$
12,016
$
18,020
$
18,497
$
28,275
Fiscal Quarter Ended
(As a Percentage of Net Revenues)
March 27,
June 26,
September 25,
December 25,
March 26,
June 25,
September 24,
December 31,
2005
2005
2005
2005
2006
2006
2006
2006
Net revenues
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Cost of revenues
(89.6
)
(86.5
)
(83.2
)
(78.1
)
(80.1
)
(79.2
)
(80.1
)
(79.8
)
Gross profit
10.4
13.5
16.8
21.9
19.9
20.8
19.9
20.2
Operating expenses:
Selling, general and
administrative
13.8
12.8
11.2
9.9
10.3
9.5
7.7
7.0
Research and
development
2.5
2.4
2.1
2.1
1.8
1.9
1.9
1.9
Restructuring
charges
0.3
0.0
0.0
0.0
0.0
0.0
0.5
0.0
Total operating
expenses
16.6
15.2
13.3
12.0
12.1
11.4
10.1
8.9
Operating income
(loss)
(6.2
)
(1.7
)
3.5
9.9
7.8
9.4
9.8
11.3
Other income
(expenses), net:
Interest income
(expenses) net
(4.0
)
(3.1
)
(3.0
)
(2.6
)
(2.5
)
(2.5
)
(2.7
)
(2.3
)
Foreign currency
exchange gain
(loss)
(0.2
)
0.0
0.3
0.0
0.0
(0.1
)
(0.1
)
(0.1
)
Equity income from
equity investee
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Other
non-operating
income (expenses),
net
(0.7
)
0.1
0.1
0.0
0.1
0.1
0.1
(0.2
)
Total other income
(expenses), net
(4.9
)
(3.0
)
(2.6
)
(2.6
)
(2.4
)
(2.5
)
(2.7
)
(2.6
)
Income (loss) before
income taxes
(11.1
)
(4.7
)
0.9
7.3
5.4
6.9
7.1
8.7
Income tax expense
(0.5
)
(0.5
)
(0.4
)
(1.7
)
(1.5
)
(1.7
)
(1.8
)
(1.3
)
Income (loss) before
minority interest
(11.6
)
(5.2
)
0.5
5.6
3.9
5.2
5.3
7.4
Minority interest
(0.0
)
(0.5
)
(0.7
)
(0.8
)
(0.7
)
(0.8
)
(0.6
)
(0.5
)
Net income (loss)
(11.6
)%
(5.7
)%
(0.2
)%
4.8
%
3.2
%
4.4
%
4.7
%
6.9
%
52
Table of Contents
Liquidity and Capital Resources
Our principal source of liquidity consists of cash flows from operating activities, bank facilities, debt financing,
and our existing cash and cash equivalents and marketable securities. As
at December 31, 2006, we had cash, cash equivalents and marketable
securities of $231.9 million. We also have available lines
of credit and banking facilities consisting of loans, letter of credits and bank guarantees,
including those available to our consolidated subsidiaries, which amounted to an aggregate of
$447.6 million, of which $105.0 million was utilized as of December 31, 2006. Our liquidity needs
arise primarily from servicing our outstanding debts, working capital needs and the funding of
capital expenditures. Our capital expenditures are largely driven by the demand for our services,
primarily to increase our packaging and testing capacity, to replace packaging and testing
equipment from time to time, and to expand our facilities. Depending on business conditions, we
expect our capital expenditure to be approximately $250.0 million in 2007 as our capital
expenditure spending continues to be targeted at demand that we see from our customers and on
long-term strategic investments. We spent $348.5 million on capital expenditures in 2006, compared
to $277.7 million in 2005. We experienced an increase in capital expenditure in 2006 as we are
expanding our assets across the various geographic operating locations based on the expected
business growth and certain
long-term
strategic investments.
At the annual general meeting in April 2006, our shareholders approved the repurchase of up to
approximately 50 million ordinary shares (2.5% of the issued ordinary share capital as of the date
of the annual general meeting). The approved amount for share repurchases under this shareholders'
mandate will terminate on the earlier of the date on which the next annual general meeting is held
or the date which the approval is revoked or varied. As of December 31, 2006, we have not
repurchased any shares. We intend to seek a renewal of the shareholders' mandate in our next annual general meeting. We may
use our available funds, draw down on our available lines of credit or seek additional financing or
a combination of these to finance our repurchase of our ordinary shares.
We believe that our cash on hand, existing credit facilities and anticipated cash flows from
operations will be sufficient to meet our currently anticipated capital expenditure requirements,
investment requirements, share repurchases, as well as capital lease and debt service repayment
obligations for 2007. Our debt service repayment obligations for 2007
include our obligation to repay the remaining $31.5 million aggregate
principal amount of our 1.75% convertible notes upon maturity in March 2007 and to meet the
redemption of the outstanding $115.0 million aggregate principal amount of our 0% convertible notes
if our noteholders exercise their put option thereunder in November 2007. Further, STSPL's
proposed tender offer for the remaining shares in our Company that STSPL does not already own,
as described above under "Recent Developments — Temasek Holdings' Subsidiary,
Singapore Technologies Semiconductors Pte Ltd's, Tender Offer", if consummated, would result in a
change in control of our Company as defined in the indenture relating to our $150.0 million of
2.5% convertible subordinated notes due 2008. In such an event, holders of our 2.5% convertible
subordinated notes due 2008 will have the right to require us to repurchase all or a portion of their notes.

If our capital expenditure requirements exceed our expectations as a result of higher than anticipated growth in the semiconductor industry,
acquisition or investment opportunities, the expansion of our business or otherwise, or if our cash
flows from operations are lower than anticipated, including as a result of an unexpected decrease
in demand for our services due to a downturn in the semiconductor industry or otherwise, we may be
required to obtain additional debt or equity financing from time to time depending on prevailing
market conditions. In such events, there can be no assurance that additional financing will be
available or, if available, that such financings will be obtained on terms favorable to us or that
any additional financing will not be dilutive to our shareholders or creditors.
Total Borrowings
As of December 31, 2006, our total debt outstanding consisted of $762.9 million of borrowings,
which included $150.0 million of 7.5% senior notes due 2010, $215.0 million of 6.75% senior notes
due 2011, $31.5 million of 1.75% convertible notes due 2007, $115.0 million of zero coupon
convertible notes due 2008, $150.0 million of 2.5% convertible subordinated notes due 2008, and
other
long-term
and
short-term
borrowings.
On January 14, 2005, we repurchased an additional $26.1 million aggregate principal amount of
our 1.75% convertible notes due 2007 with our existing cash on hand. On March 18, 2005, we redeemed
$125.9 million aggregate principal amount of our 1.75% convertible notes due 2007 pursuant to
demands for redemption from note holders in accordance with the indenture governing our 1.75%
convertible notes due 2007. We paid a total amount of $138.6 million (excluding interest) in
respect of the redeemed convertible notes. We financed the redemption from cash and short-term
borrowings.
On March 17, 2005, we drew down a total of $99.0 million under our lines of credit with
Oversea-Chinese
Banking Corporation Limited and Bank of America N.A. to pay part of the purchase
price for the redemption of our 1.75% convertible notes due 2007 described above. On July 20, 2005,
we repaid the
Oversea-Chinese
Banking Corporation Limited and Bank of America N.A. facilities with
a portion of the net proceeds from the offering of the 7.5% senior notes due 2010 described below.
On April 18, 2005, our registration statement for our exchange offer relating to our 6.75%
senior notes due 2011 was declared effective by the SEC. Pursuant to the exchange offer, we
accepted tenders to exchange $213.9 million aggregate principal amount of our 6.75% senior notes
due 2011 that were registered for a like principal amount of our then outstanding unregistered
6.75% senior notes due 2011.
53
Table of Contents
On July 19, 2005, we offered $150.0 million of 7.5% senior notes due 2010 in a private
placement. We received approximately $146.7 million after deducting debt issuance costs. A portion
of the net proceeds were used to repay the $99.0 million outstanding with
Oversea-Chinese
Banking
Corporation Limited and Bank of America N.A. In September 2005, we filed an exchange offer
registration statement with the SEC. Pursuant to the exchange offer, we accepted tenders to
exchange all $150.0 million aggregate principal amount of our 7.5% senior notes due 2010 that were
registered for a like principal amount of our then outstanding unregistered 7.5% senior notes due
2010.
In 2006, we increased our total term loan facilities from Hana Bank in South Korea to $30.0
million, an increase of $15.0 million over 2005. During 2006, we borrowed $12.0 million under these
facilities to finance our purchase of a building and land in South Korea. These borrowings are
repayable over eight equal quarterly installments from November 2006 to June 2009 and as of
December 31, 2006, $14.1 million was outstanding. Further in 2006, Winstek borrowed NT$1.6 billion
($50.3 million as of December 31, 2006) under its NT$1.8 billion ($55.2 million as of December 31,
2006) floating rate New Taiwan dollar term loan facility, obtained from a syndicate of lenders with
Mega Bank (formerly known as Chiao Tung Bank) as the agent bank. This facility is secured by a
pledge of Winstek's equipment with net book value of $50.2 million as of December 31, 2006. The
proceeds from this facility were primarily used to repay certain of Winstek's other credit
facilities.
On October 16, 2006, we repurchased the outstanding $50.0 million aggregate principal amount
of our 8.0% convertible subordinated notes due 2011. We paid a total amount of $50.5 million
(excluding interest) in respect of the subordinated convertible notes. The repurchase was financed
with our current working capital, including our cash and cash equivalents.
See "Item 10. Additional Information — C. Material Contracts" and Notes 15, 16 and 17 to our
audited consolidated financial statements for more details on our debt instruments.
Off-Balance
Sheet Arrangements
We provided tax guarantee to the South Korean tax authorities as discussed
below. We have no significant investment in any
unconsolidated entities. Our
off-balance
sheet commitments are limited to operating leases,
royalty/license agreements, purchase obligations and contingent payments to Cirrus Logic, Inc.
assumed in the merger with ChipPAC, with respect to the purchase of test assets. Our total
off-balance
sheet obligations were approximately $273.6 million as of December 31, 2006.
Contractual Obligations
Our total commitments on our loans, capital lease, operating leases, other obligations and
other agreements as of December 31, 2006, were as follows:
Payments Due
Within
More Than
1 Year
1-3 Years
3-5 Years
5 Years
Total
(In thousands)
On balance sheet commitments:
1.75% convertible notes due 2007(1)(3)
$
36,800
$
—
$
—
$
—
$
36,800
Zero coupon convertible notes due
2008(1)(2)(3)
—
131,280
—
—
131,280
2.5% convertible subordinated notes
due 2008(3)
—
150,000
—
—
150,000
6.75% senior notes due 2011(3)
—
—
215,000
—
215,000
7.5% senior notes due 2010(3)
—
—
150,000
—
150,000
Capital lease obligations(3)
3,680
—
—
—
3,680
Long-term
loans(3)
24,301
49,345
1,380
518
75,544
Short-term
loans(3)
592
—
—
—
592
Other
non-current
liabilities(4)
—
—
—
—
—
Total on balance sheet commitment
$
65,373
$
330,625
$
366,380
$
518
$
762,896
54
Table of Contents
Payments Due
Within
More Than
1 Year
1-3 Years
3-5 Years
5 Years
Total
(In thousands)
Off balance sheet commitments:
Operating leases
$
29,945
$
42,226
$
16,561
$
43,261
$
131,993
Royalty/licensing agreements
7,363
14,587
13,890
—
35,840
Contingent payments to Cirrus
750
—
—
—
750
Purchase obligations:
— Capital commitments
24,932
—
—
—
24,932
— Inventory purchase commitments
80,049
—
—
—
80,049
Total off balance sheet commitments
143,039
56,813
30,451
43,261
273,564
Total commitments
$
208,412
$
387,438
$
396,831
$
43,779
$
1,036,460
(1)
On maturity of the 1.75% convertible notes due 2007 and zero coupon convertible notes due
2008, we are required to pay the note holders 117.665% and 123.4% of the principal amounts,
respectively.
(2)
Holders of our zero coupon convertible notes due 2008 have the right to require us to
repurchase all or a portion of their convertible notes on November 7, 2007.
(3)
The convertible notes, senior notes, capital lease obligations, short-term and long-term
loans agreements contain provisions for the payment of interest
either on maturity or on a monthly,
quarterly, semi-annual or annual basis at a stated rate of interest over the term of the debt.
These payment obligations are not reflected in the table above. The interest payments due
within 1 year, 1-3 years, 3-5 years and more than 5 years amount to $32.6 million, $65.8 million, $40.4 million, and $0.01 million, respectively.
(4)
Our other non-current liabilities as of December 31, 2006 were $84.8 million, including $26.9
million related to severance benefits for our employees in South Korea which were not included
in the table due to lack of contractual certainty as to the timing of payments.
Contingencies
In the normal course of business, we are subject to claims and litigations. These claims may
include allegations of infringement of intellectual property rights of others as well as other
claims of liability. On July 31, 2002, Seagate Technology L.L.C. (Seagate) filed suit against Atmel
Corporation and Atmel SARL in Santa Clara County Superior Court. Seagate alleges that Atmel
supplied defective semiconductor chips, and that Atmel had its chips outsourced and packaged by
ChipPAC and Amkor Technology, Inc. On November 19, 2003, Atmel filed a First Amended
Cross-Complaint
against ChipPAC, Amkor and Sumitomo Bakelite, Ltd., the Japanese manufacturer of
the allegedly defective epoxy mold compound.
In February 2006, our Company, ChipPAC and STATS ChipPAC (BVI) Limited were named as
defendants in a patent infringement lawsuit filed in United States Federal Court for the Northern
District of California. The plaintiff, Tessera, has asserted that semiconductor chip packaging,
specifically devices having BGA and
multi-chip
BGA configurations used by the defendants infringe
certain patents of Tessera. Tessera has further asserted that our Company is in breach of an
existing license agreement entered into by Tessera with ChipPAC, which agreement has been assigned
by ChipPAC to our Company. We believe that we have a meritorious defense to the claims and intend
to defend the lawsuit vigorously. A court determination that our
products or processes infringe the intellectual property rights of
others could result in significant liability and/or require us to
make material changes to our products and/or processes. Due to the inherent uncertainties of the lawsuit, we cannot
accurately predict the ultimate outcome and it could result in
significant liability and/or injunction and could have a material adverse effect on the business, financial condition
and the results of operations of our Company.
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In connection with the merger with ChipPAC, we assumed certain contingent liabilities. In
2002, an assessment of approximately 16.0 billion South Korean Won (approximately $17.0 million
based on the exchange rate as of January 31, 2007) made by the South Korean National Tax Service
(NTS) relating to withholding tax not collected on the interest income on the loan between the
ChipPAC's subsidiaries in South Korea and Hungary for the period from 1999 to September 2001. The
prevailing tax treaty does not require withholding tax on the transactions in question. ChipPAC has
appealed the assessment through the NTS's MAP and believes that the assessment will be overturned.
On July 18, 2002, the Icheon tax office of the NTS approved a suspension of the proposed assessment
until resolution of the disputed assessment. The NTS required a corporate guarantee amounting to
the tax assessment in exchange for the suspension. ChipPAC complied with the guarantee request on
July 10, 2002. A further assessment of 2.7 billion South
Korean Won (approximately $2.9 million
based on the exchange rate as of January 31, 2007) was made on January 9, 2004 for interest expense
from October 2001 to May 2002. ChipPAC has applied for the MAP and obtained an approval for a
suspension of the proposed assessment by providing a corporate guarantee amounting to the
additional taxes. The MAP will terminate on July 3, 2007 if not extended by the NTS. In the event
that we are not successful with the appeal, the maximum amount payable including potential interest
and local surtax estimated to be 36.5 billion South Korean Won (approximately $38.8 million based
on the exchange rate as of January 31, 2007). As of December 31, 2006, no accrual has been made.
However, our evaluation of the likely impact of the above contingent liabilities could change in
the future and may result in additional liability assumed in the initial purchase of ChipPAC. The
final outcome of the
resolution of this matter could result in significant liability and could have a material
adverse effect on the business, financial condition and results of operations of our Company.
Cash Flows From Operating Activities
In 2006, cash provided by operations was $427.8 million compared to $270.7 million in 2005.
Cash provided and used by operations is calculated by adjusting our net income or loss by
non-cash
related items such as depreciation and amortization, share-based compensation expense, amortization
of leasing prepayments, accretion of discount on certain of our outstanding convertible notes,
amortization of debt issuance cost, loss or gain from sale of assets, loss from repurchase and
redemption of our 8% convertible subordinated notes due 2011, deferred income taxes, foreign
currency exchange loss or gain, minority interest, share of equity income and by changes in assets
and liabilities. In 2006,
non-cash
related items included $276.1 million related to depreciation
and amortization (including amortization of capitalized debt issuance costs and leasing
prepayments), $13.7 million related to
share-based
compensation expense, $6.6 million from the
accretion of discount on certain of our convertible notes, $0.5 million from loss on repurchase and
redemption of our 8.0% convertible subordinated notes due 2011, $19.9 million from the deferred
taxes, $10.0 million from the minority interest in income of our subsidiary and $0.2 million income
from investment in equity investee. In 2005,
non-cash
related items included $281.9 million related
to depreciation and amortization (including amortization of capitalized debt issuance costs and
leasing prepayments), $0.7 million related to
share-based
compensation expense, $7.4 million from
the accretion of discount, $1.7 million from loss on repurchase and redemption of the 1.75%
convertible notes due 2007, $9.4 million from the deferred taxes and $6.4 million from the minority
interest in income of our subsidiary. Working capital uses of cash included increases in accounts
receivable, inventories and decreases in amount due to affiliates. Working capital source of cash
included decreases in amount due from affiliates, other receivables, prepaid expenses and other
assets and increases in accounts payable, accrued operating expenses and other payables.
In 2005, cash provided by operations was $270.7 million compared to $136.6 million in 2004.
Cash provided and used by operations is calculated by adjusting our net income or loss by
non-cash
related items such as depreciation and amortization, amortization of leasing prepayments, accretion
of discount on certain of our outstanding convertible notes, amortization of debt issuance cost,
loss or gain from sale of assets, loss from repurchase and redemption of our 1.75% convertible
notes due 2007, deferred income taxes, foreign currency exchange loss or gain, minority interest
and by changes in assets and liabilities, accretion of discount on certain of our convertible
notes, amortization of debt issuance cost, impairment of goodwill, loss (gain) from sale of assets,
deferred income taxes, foreign currency exchange loss (gain), minority interest, and by changes in
assets and liabilities. In 2004,
non-cash
related items included $453.0 million of goodwill
impairment charges, $216.3 million related to depreciation and amortization (including
amortization of capitalized debt issuance costs and leasing prepayments), $0.7 million related to
share-based
compensation expense, $11.4 million from the accretion of discount, $0.8 million from
loss on repurchase and redemption of our 1.75% convertible notes due 2007 and our 12.75% senior
notes due 2009, $15.0 million from the deferred taxes and $3.8 million from the minority interest
in income of our subsidiary. Working capital uses of cash included increases in accounts
receivable, amounts due from affiliates, inventories and decreases in amount due to affiliates.
Working capital source of cash included decreases in other receivables, prepaid expenses and other
assets and increases in accounts payable, accrued operating expenses and other payables.
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Cash Flows From Investing Activities
In 2006, cash used in investing activities was $425.8 million compared to $263.0 million in
2005. The primary usage of cash in investing activities was related to the acquisition of property
and equipment, net of changes in payables related to property, plant and equipment purchases, of
$393.6 million in 2006 and $245.8 million in 2005. We experienced an increase in capital
expenditure in 2006 as we are expanding our assets across the various geographic operating
locations based on the expected business growth and certain
long-term
strategic investments. In
2006, we acquired a 25% shareholding in MAT for $10.2 million. In 2006 and 2005, we invested $6.4
million and $4.9 million, respectively, in the acquisition of software, licenses and other
intangible assets. In 2006 and 2005, we invested in marketable securities which amounted to $80.9
million and $32.0 million, respectively, and received proceeds from the sale and maturity of our
marketable securities of $56.2 million and $16.5 million, respectively.
In 2005, cash used in investing activities was $263.0 million compared to $264.8 million in
2004. The primary usage of cash in investing activities was related to the acquisition of property
and equipment of $245.8 million in 2005 and $287.6 million in 2004. We experienced a decrease in
capital expenditure in 2005 as we focused on extracting better utilization from our existing
equipment and benefited from our ability to redeploy assets across the various geographic operating
locations to maximize utilization. In 2005, we acquired $4.9 million of software and licenses. In
2005 and 2004, we invested in marketable securities which amounted to $32.0 million and $160.9
million, respectively, and received proceeds from the sale or maturity of our marketable securities
of $16.5 million and $177.2 million, respectively.
Cash Flows From Financing Activities
In 2006, cash used in financing activities was $54.9 million compared to $9.4 million in 2005.
In 2006, $60.3 million was borrowed and $69.9 million was repaid on our borrowings and debts,
compared to $188.1 million and $180.9 million, respectively, in 2005. In 2006, we repurchased the
outstanding $50.0 million aggregate principal amount of our 8.0% convertible subordinated notes due
2011 at an aggregate consideration of $50.5 million. In 2005, we repurchased $26.1 million and
redeemed $125.9 million aggregate principal of our 1.75% convertible notes due 2007 at an aggregate
consideration of $167.3 million. In 2005, $146.5 million, net of expenses, was provided from the
issuance of $150.0 million of 7.5% senior notes due 2010. In 2006 and 2005, we reduced our
restricted cash by $1.6 million and increased our restricted cash by $1.5 million, respectively.
In addition, $7.1 million and $11.7 million of capital lease payments were made in 2006 and 2005,
respectively. In 2006 and 2005, $13.3 million and $13.5 million, respectively, was provided by the
issuance of new ordinary shares of our Company through the employee share option plan and the
employee share purchase plan. The total number of ordinary shares issued in 2006 and 2005 were 26.5
million and 32.0 million, respectively.
In 2005, cash used in financing activities was $9.4 million compared to cash provided by
financing activities of $41.1 million in 2004. In 2005, $188.1 million was borrowed and $180.9
million was repaid on our borrowings and debts, compared to $107.6 million and $81.0 million,
respectively, in 2004. In 2005, we repurchased $26.1 million and redeemed $125.9 million aggregate
principal of our 1.75% convertible notes due 2007 at an aggregate consideration of $167.3 million.
In 2005, $146.5 million, net of expenses, was provided from the issuance of $150.0 million of 7.5%
senior notes due 2010 compared to the net proceeds of $210.5 million from the issuance of $215.0
million of 6.75% of senior notes due 2011 in 2004. In 2005 and 2004, we increased our restricted
cash by $1.5 million and reduced our restricted cash by $2.9 million, respectively. In addition,
$11.7 million and $7.2 million of capital lease payments were made in 2005 and 2004, respectively.
In 2005 and 2004, $13.5 million and $2.0 million, respectively, were provided by the issuance of
new ordinary shares of our Company through the employee share option scheme and the employee share
purchase plan. The total number of ordinary shares issued in 2005 and 2004 were 32.0 million and
5.8 million, respectively.
Special Tax Status
We were previously granted pioneer status under The Economic Expansion Incentives (Relief from
Income Tax) Act, Chapter 86 of Singapore, for "Subcontract Assembly And Testing of Integrated
Circuits
Including Wafer Probing Services". In December 2003, an application was submitted to the
Singapore Economic Development Board (EDB) to revoke our pioneer status granted from January 1,
1996 to December 31, 2003. Our pioneer trade was in a tax loss position due to the substantial
amount of capital allowances claimed arising from capital expenditure on our plant and machinery
and trade losses in certain years. As a result, we had not enjoyed any tax exemption in respect of
our income arising from the pioneer activities. On the other hand, we have paid taxes in respect of
our interest and rental income, as losses arising from the pioneer trade cannot be
set-off
against
the
non-qualifying
income during the pioneer incentive period due to the application of the law in
respect of the pioneer incentive. In September 2004, the application to revoke retroactively our
pioneer status was approved by the EDB. Accordingly, we recorded $5.0 million of tax recoverable in
December 2004 related to the expected refund of taxes paid previously on interest and rental income
as the unutilized tax losses and capital allowances arising from the trading activities would then
be allowed to
set-off
against
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the income derived in the previous years. We received a partial
refund of taxes amounting to $4.6 million in April 2005. In 2006, we received the remaining $0.4
million from EDB. We are in the process of working with the EDB for a new tax incentive for our
Singapore operations.
Derivative Financial Instruments
We are exposed to fluctuations in currency exchange rates and interest rates. From time to
time, we may employ derivative instruments such as forward foreign currency swaps, foreign forward
contracts and options and interest rate swaps to mitigate the financial risks associated with
certain anticipated cash flows, assets and liabilities.
In 2005 and 2006, the Company entered into foreign currency forward contracts to protect the
Company from fluctuations in exchange rates. At December 25, 2005 and December 31, 2006, the
Company had a series of foreign currency forward contracts qualifying as cash flow hedges with
total contract value of approximately $147.0 million and $68.0 million, respectively. In 2005, the
Company entered into a series of gold forward contracts qualifying as cash flow hedges with total
contract value of approximately $7.0 million to reduce exposure of the commodity price risk related
to gold usage in the cost of materials. The duration of these instruments are generally less than
12 months. All forward contracts qualify for hedge accounting as defined by SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities".
Foreign Currency Risk
A portion of our costs is denominated in various foreign currencies, like the Singapore
dollar, the South Korean Won, the Malaysian Ringgit, the Chinese Renminbi, New Taiwan dollars and
the Japanese yen. As a result, changes in the exchange rates of these currencies or any other
applicable currencies to the U.S. dollar will affect our cost of goods sold and operating margins
and could result in exchange losses. We cannot fully predict the impact of future exchange rate
fluctuations on our profitability.
From time to time, we may have engaged in, and may continue to engage in, foreign exchange
rate hedging activities in an effort to mitigate the impact of exchange rate fluctuations. However,
we cannot assure you that any hedging technique we implement will be effective. If it is not
effective, we may experience reduced net income.
Research and Development
See "Item 4. Information on our Company — B. Business Overview — Research and Development".
Recent Accounting Pronouncements
In December 2004, the FASB issued SFAS No. 123(R), "Share-Based Payment" (SFAS 123(R)). This
statement revises SFAS No. 123, "Accounting for Stock-Based Compensation", amends SFAS No. 95,
"Statement of Cash Flows", and supersedes APB No. 25, "Accounting for Stock Issued to Employees".
SFAS 123(R) requires companies to apply a
fair-value
based measurement method in accounting for
share-based
payment transactions with employees and to record compensation expense for all share
awards
granted, and to awards modified, repurchased or cancelled after the required effective date.
In addition, companies are required to record compensation expense (as previous awards continue to
vest) for the unvested portion of previously granted awards that remain outstanding at the date of
adoption. SFAS 123(R) is effective for annual periods beginning after June 15, 2005, which is the
Company's fiscal 2006. In March 2005, the SEC released SEC Staff Accounting Bulletin No. 107,
Share-Based
Payment (SAB 107). SAB 107 contains interpretive guidance related to the interaction
between SFAS 123(R) and certain SEC rules and regulations, as well as provides the SEC's views
regarding the valuation of
share-based
payment arrangements for public companies. SAB 107 also
highlights the importance of disclosures made related to the accounting for
share-based
payment
transactions.
The adoption of SFAS 123(R) had a material impact on our consolidated financial statements for
2006, and is expected to continue to materially impact our financial statements in the foreseeable
future. See Note 23 to the financial statements appearing herein for more information on the impact of the adoption of SFAS 123(R).
In July 2006, the FASB issued FASB Interpretation No. 48, "Accounting for Uncertainty in
Income Taxes" (FIN 48). FIN 48 is an interpretation of SFAS No. 109, "Accounting for Income Taxes",
and prescribes a recognition threshold and measurement process for financial statement recognition
and measurement of uncertain tax positions taken or expected to be taken in a tax return. In
addition, FIN 48 requires expanded disclosure with respect to the uncertainty in income taxes and
is effective for fiscal year beginning after December 15, 2006. The Company is currently evaluating
the impact, if any, that FIN 48 will have on the consolidated financial statements.
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In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" (SFAS 157),
which defines fair value, establishes guidelines for measuring fair value and expands disclosures
regarding fair value measurements. SFAS 157 does not require any new fair value measurements but
rather eliminates inconsistencies in guidance found in various prior accounting pronouncements.
SFAS 157 is effective for fiscal years beginning after November 15, 2007. Earlier adoption is
permitted, provided the company has not yet issued financial statements, including for interim
periods, for that fiscal year. The Company is currently evaluating the impact of SFAS 157, but do
not expect the adoption of SFAS 157 to have a material impact on the Company's consolidated
financial statements.
In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for Defined Benefit
Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106, and 132(R)"
(SFAS 158). This standard requires employers to recognize the underfunded or overfunded status of a
defined benefit postretirement plan as an asset or liability in its statement of financial position
and to recognize changes in the funded status in the year in which the changes occur through
accumulated other comprehensive income, which is a component of stockholders' equity. The new reporting requirements and related new footnote disclosure
rules of SFAS 158 are effective for fiscal years ending after December 15, 2006. The adoption of
SFAS 158 does not have a material impact on the Company's
consolidated financial statements. Additionally,
SFAS 158 requires employers to measure the funded status of a plan as of the date of its
year-end
statement of financial position effective for fiscal years ending
after December 15, 2008.
ITEM 6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
The following table sets forth the name, age (as at January 31, 2007) and position of each
director and member of senior management. The business address of our directors and senior
management is our principal executive office in Singapore.
Name
Age
Position
Board of Directors
Charles R. Wofford(1)(2)(3)(4)
73
Chairman of our Board to Directors
Lim Ming Seong(5)
59
Deputy Chairman of our Board of Directors
Tan Lay Koon
48
Director, President and Chief Executive Officer
Peter Seah Lim Huat(6)(7)
60
Director
Steven H. Hamblin(1)(8)(9)
58
Director
Richard J. Agnich(1)(7)(9)
63
Director
Robert W. Conn(1)(10)
64
Director
R. Douglas Norby(1)(11)
71
Director
Park Chong Sup(1)(10)
59
Director
Teng Cheong Kwee(1)(12)
53
Director
Tokumasa Yasui(1)(13)
62
Director
Senior Management
Wan Choong Hoe
53
Executive Vice President, Chief Operating Officer
Han Byung Joon
47
Executive Vice President, Chief Technology Officer
Scott J. Jewler
41
Executive Vice President, Chief Strategy Officer
Michael G. Potter
40
Senior Vice President, Chief Financial Officer
Ng Tiong Gee
44
Senior Vice President, Human Resources and Chief Information Officer
Janet T. Taylor
49
Senior Vice President, General Counsel
(1)
Determined by our Board of Directors to be independent under Rule 4200 of the Nasdaq
Marketplace Rules.
(2)
Chairman of the Executive Committee.
(3)
Chairman of the Executive Resource & Compensation Committee.
(4)
Chairman of the Nominating and Corporate Governance Committee.
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(5)
Chairman of the Budget Committee.
(6)
Member of the Executive Resource & Compensation Committee.
(7)
Member of the Nominating and Corporate Governance Committee.
(8)
Member of the Executive Committee.
(9)
Member of the Audit Committee.
(10)
Member of the Budget Committee.
(11)
Chairman of the Audit Committee.
(12)
Appointed as a director on October 1, 2006.
(13)
Appointed as a director on January 23, 2007.
Our Board of Directors held four meetings in person in 2006. The attendance by directors at
Board meetings they were scheduled to attend was 100%.
Dr. Robert W. Conn, Mr. R. Douglas Norby and Dr. Park Chong Sup were nominated for election as
our directors pursuant to the terms of the merger agreement governing our merger with ChipPAC and
elected as our directors at our extraordinary shareholders' meeting on August 4, 2004.
Other than with respect to these three persons, there are no arrangements or understandings
with any person pursuant to which any of our directors or members of senior management were
selected. There are no family relationships among any of our directors, senior management or
substantial shareholders. Mr. Peter Seah Lim Huat was an employee of Singapore Technologies Pte Ltd
(STPL), the parent company of our controlling shareholder, STSPL, until December 31, 2004, when all
the assets of STPL were transferred to STPL's parent, Temasek Holdings, pursuant to a restructuring
exercise. Mr. Seah became a member of the Temasek Advisory Panel in January 2005. Mr. Lim Ming
Seong was an employee of STPL until January 31, 2002 and immediately thereafter became a Corporate
Advisor to STPL until February 2, 2004.
Mr. Tay Siew Choon has resigned from our Board with effect from April 30, 2006.
Board of Directors
Charles R. Wofford
Mr. Charles Richard Wofford has been a member of our Board of Directors since February 1998
and the Chairman of our Board of Directors since August 2002. Mr. Wofford was with Texas
Instruments, Inc. for 33 years before leaving as Senior
Vice-President
to join Farr Company in
1991. He was the Chairman, Chief Executive Officer and President of Farr Company from 1992 to 1995 and Executive Vice
Chairman of FSI International from 1996 to 1998. He received his Bachelor of Arts degree from Texas
Western College.
Lim Ming Seong
Mr. Lim Ming Seong has been the Deputy Chairman of our Board of Directors since June 1998. He
is the Chairman of CSE Global Ltd, formerly known as CSE Systems & Engineering Ltd, and sits on the
boards of StarHub Ltd and several other companies. Since joining STPL in December 1986, he has held
various senior positions in the former Singapore Technologies group, including as Group Director of
STPL until January 31, 2002. Prior to joining STPL, he was with the Ministry of Defence of
Singapore. Mr. Lim received his Bachelor of Applied Science (Honors) in Mechanical Engineering from
the University of Toronto and his Diploma in Business Administration from the University of
Singapore. He also participated in the Advanced Management Programs at INSEAD and Harvard University.
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Tan Lay Koon
Mr. Tan Lay Koon has been our President and Chief Executive Officer and a member of our Board
of Directors since June 2002. Mr. Tan joined us in May 2000 as our Chief Financial Officer. Prior
to joining us, he was an investment banker with Salomon Smith Barney, the global investment banking
unit of Citigroup Inc. Before that, he held various positions with the Government of Singapore,
Times Publishing Limited and United Overseas Bank Limited in Singapore. Mr. Tan graduated with a
Bachelor of Engineering (First Class Honors) from the University of Adelaide, Australia as a
Colombo Plan Scholar. He also has a Master of Business Administration (Distinction) from the
Wharton School, University of Pennsylvania where he was elected a Palmer scholar.
Peter Seah Lim Huat
Mr. Peter Seah Lim Huat has been a member of our Board of Directors since July 2002. He has
been a member of the Temasek Advisory Panel since January 1, 2005. He was, until December 31, 2004,
the President and Chief Executive Officer of STPL and a member of its board of directors. He was a
banker for the past 33 years, retiring as the Vice Chairman and Chief Executive Officer of Overseas
Union Bank Limited in 2001. Mr. Seah is the Chairman of Singapore Computer Systems Limited,
SembCorp Industries Ltd and Singapore Technologies Engineering Ltd and sits on the boards of
CapitaLand Limited, Chartered and StarHub Ltd. His other appointments include being a member of S
Rajaratnam School of International Studies, Vice President of the Singapore Chinese Chamber of
Commerce and Industry and Honorary Treasurer of the Singapore Business Federation Council. Mr. Seah
also serves on the board of the Government of Singapore Investment Corporation. He was awarded the
Public Service Star (Bintang Bakti Masyarakat) in 1999. Mr. Seah graduated from the University of
Singapore in 1968 with an honors degree in Business Administration.
Steven H. Hamblin
Mr. Steven Hugh Hamblin has been a member of our Board of Directors since June 1998. Mr. Hamblin was with Compaq Computer Corporation from 1984 to 1996 and held various positions
including, Managing Director of Compaq Asia Manufacturing, Vice President Asia/Pacific Division,
Vice President and Financial Controller for Corporate Operations and Vice President of Systems
Division Operations. He was with Texas Instruments for ten years before leaving as its Marketing
Division Controller, Semiconductor Group, to join General Instrument, Microelectronics Division,
New York in 1983 as its Group Financial Executive. Mr. Hamblin is also a board member of Chartered.
He is a Certified Public Accountant. He received his Bachelor of Science in Civil Engineering from
the University of Missouri and his Master of Science in Industrial Administration
from
Carnegie-Mellon
University.
Richard J. Agnich
Mr. Richard J. Agnich has been a member of our Board of Directors since October 2001. He has
27 years of experience in the semiconductor industry. Mr. Agnich joined Texas Instruments in 1973
and held various positions, including that of Senior Vice President, Secretary and General Counsel.
He is also a
co-founder
and is currently the Chair of Entrepreneurs Foundation of North Texas, and
serves on the Board of Trustees of Austin College. Mr. Agnich received his B.A. in Economics from
Stanford University and a Juris Doctor from the University of Texas School of Law.
Robert W. Conn
Dr. Robert W. Conn has been a member of our Board of Directors since August 2004. Dr. Conn was
a member of the board of directors of ChipPAC prior to the merger. Dr. Conn has been the Managing
Director of Enterprise Partners Venture Capital since July 2002. Dr. Conn served as Dean of the
Jacobs School of Engineering, University of California, San Diego, from 1994 to 2002. From 1980 to
1994, Dr. Conn served as Professor of Engineering and Applied Science at the University of
California, Los Angeles (UCLA), where he was founding director of the Institute of Plasma and
Fusion Research. Dr. Conn
co-founded
a semiconductor equipment company in 1986, Plasma & Materials
Technologies, now Trikon Technologies, and was Chairman of the Board through 1993. Dr. Conn is a
member of the U.S. National Academy of Engineering, and served in 1997 and 1998 as a member of the
U.S. President's Committee of Advisors on Science and Technology Panel on Energy R&D Policy for the
21st Century. As Managing Director of a venture capital firm, Dr. Conn serves as a director of
eleven private companies: NEXX Systems, Inc., Pivotal Systems, Inc., Nuelight Inc., 3Leaf Networks,
Inc., Quorum Systems, Inc., Tarari Systems, Inc. Calient Networks, Inc., Hammerhead Systems, Inc.,
Novera Optics, Inc., Scoperta, Inc. and Quartics, Inc.. He is a member of one other public company
board, Intersil Corporation, and serves on Intersil's audit committee. Dr. Conn received his
Bachelor of Science in Chemical Engineering and Physics from the Pratt Institute. He received a
Masters of Science in Mechanical Engineering and a Ph.D in Engineering Science from the California
Institute of Technology.
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R. Douglas Norby
Mr. R. Douglas Norby has been a member of our Board of Directors since August 2004. Mr. Norby
was a member of the board of directors of ChipPAC prior to the merger. He was Senior Vice President
and Chief Financial Officer of Tessera Technologies, Inc. from July 2003 to January 2006. Mr. Norby
worked as a consultant for Tessera Technologies, Inc. from May to July 2003. Mr. Norby was Senior
Vice President and Chief Financial Officer of Zambeel, Inc. from March 2002 to February 2003. From
December 2000 to March 2002, Mr. Norby was Senior Vice President and Chief Financial Officer of
Novalux, Inc., and from 1996 to 2000, he was Executive Vice President and Chief Financial Officer
of LSI Logic Corporation. Mr. Norby is a director of LSI Logic Corporation, Alexion
Pharmaceuticals, Inc., Neterion, Inc., Magnachip Semiconductor Ltd. and
Nexx Systems, Inc., and serves as the Chairman of Alexion's, Neterion's,
Magnachip's and Nexx's audit committee. He received his B.A. in Economics from Harvard University
and M.B.A. from Harvard Business School.
Park Chong Sup
Dr. Park Chong Sup has been a member of our Board of Directors since August 2004. Dr. Park was
a member of the board of directors of ChipPAC prior to the merger. Dr. Park has been the Chairman
and Chief Executive Officer of Maxtor Corporation from November 2004 to May 2006. Dr. Park served
as Investment Partner and Senior Advisor at H&Q Asia Pacific from April 2004 until September 2004,
and as Managing Director from November 2002 until March 2004. Dr. Park served as the Chairman and
Chief Executive Officer of Hynix Semiconductor Inc. (formerly Hyundai Electronics Industries Co.
Ltd.) from April 2000 to May 2002. He served as President and Chief Executive Officer of Hyundai
Electronics America, Inc. from September 1996 to October 1999 and Chairman from November 1999 to
May 2002. Dr. Park is a director of Smart Modular Technologies, Inc.,
A-Max
Technology Ltd., Seagate
Technology and Ballard Power Systems, Inc. Dr. Park holds a B.A. in Management from Yonsei University, an M.A. in
Management from Seoul National University, an M.B.A. from the University of Chicago and a Doctorate
in Management from Nova Southeastern University.
Teng Cheong Kwee
Mr. Teng Cheong Kwee has been a member of our Board of Directors since October 2006. He was
previously a member of our Board from January 2001 to August 2004 and was appointed a member and
Chairman of our Audit Committee in January 2001 and January 2003, respectively. Mr. Teng was the
Head of Risk Management & Regulatory Division of the Singapore Exchange Limited and has held
various positions in regulatory and financial institutions including the Monetary Authority of
Singapore. Mr. Teng has more than 20 years of experience in the finance industry. He is also a
non-executive
Director of several other companies listed on the
SGX-ST
. Mr. Teng received his
Bachelor of Engineering (Industrial) (First Class Honors) and Bachelor of Commerce from the
University of Newcastle, Australia.
Tokumasa Yasui
Mr. Tokumasa Yasui has been a member of our Board of Directors since January 2007. Mr. Yasui
is currently Special Advisor to the President of Renesas Solutions Corp., a subsidiary of Renesas
Technology Corp., a joint venture between Hitachi Ltd. and Mitsubishi Ltd. Prior to that, he was a
Managing Director of Renesas Semiconductor (Malaysia) Sdn. Bhd. He has also held various senior
management positions with Hitachi Ltd. where he last served as Group Executive of the Semiconductor
Division. He has also served as Executive Vice President of Elpida Memory, Inc., which started as a
joint venture between Hitachi Ltd. and NEC Corp. Mr. Yasui holds a Bachelor of Engineering and a
Master of Engineering in Electrical Engineering from Kyoto University.
Senior Management
Wan Choong Hoe
Mr. Wan Choong Hoe joined us as Chief Operating Officer in September 2004. Mr. Wan was
previously Vice President and Managing Director responsible for Singapore and China operations for
National Semiconductor Manufacturer Singapore Pte. Ltd. (National Semiconductor), a position he
held since 2000. From 1994 to 2000, Mr. Wan served as National Semiconductor's Vice President and
Managing Director responsible for Singapore and previously held positions as Director of Operations
and Director of QRA/Logistics. Prior to joining National Semiconductor in 1986, Mr. Wan held
various positions at Texas Instruments Singapore Pte. Ltd. and from 1997 to 2001, served as
Chairman of the Gintic Research Institute Management Board. Mr. Wan holds a Bachelor of Electrical
and Electronics Engineering from the University of Singapore.
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Han Byung Joon
Dr. Han Byung Joon joined us as our Chief Technology Officer in December 1999. Prior to
joining us, Dr. Han was Director of Product Development at Anam Semiconductor, Inc. and, prior to
that, held various engineering positions with IBM and AT&T Bell Labs in Murray Hill, New Jersey. He
is credited with the invention of several wafer and
chip-scale
semiconductor packaging technologies
patented today. Dr. Han received his Doctorate in Chemical Engineering from Columbia University,
New York, in 1988.
Scott J. Jewler
Mr. Scott J. Jewler joined us as our Chief Strategy Officer in August 2004. Prior to joining us,
Mr. Jewler held various executive positions at Amkor Technology, Inc., including President of Amkor
Technology Taiwan and Senior Vice President, Assembly Business Unit. Before that, he held various
manufacturing operations positions at Mitsubishi Semiconductor America, Inc. Mr. Jewler holds five
U.S. patents in the area of integrated circuit packaging. Mr. Jewler graduated from Clemson
University with a Bachelor of Science degree in Mechanical Engineering.
Michael G. Potter
Mr. Michael G. Potter was appointed Chief Financial Officer in August 2004. Mr. Potter was
Acting Chief Financial Officer of ChipPAC prior to the merger, a position he had held since April
2004. Prior to that time, he served as Corporate Controller of ChipPAC from October 2000 through
April 2004. Prior to joining ChipPAC, Mr. Potter held several executive positions at Honeywell
Inc., including serving as Controller for a Strategic Business Unit of Honeywell. Mr. Potter
started his career at KPMG Peat Marwick. Mr. Potter holds a Bachelor of Commerce degree,
Accounting, from Concordia University and a Graduate Diploma of Public Accountancy from McGill
University. He is also a chartered accountant.
Ng Tiong Gee
Mr. Ng Tiong Gee
was appointed Chief Information Officer in May 2001 and Senior Vice President of Human Resources in February 2007. Mr. Ng was previously
the Chief Information Officer of Gateway Singapore, heading the technology multinational's IT
activities in Asia Pacific. Prior to that, he spent over six years with Siemens Components (now
known as Infineon Technologies Asia Pacific) where he last served as Director of Information
Systems and Services. Between 1988 and 1992, he held various key engineering positions at Digital
Equipment Singapore, now part of Hewlett Packard. Mr. Ng graduated with a Bachelor of Mechanical
Engineering with honors from the National University of Singapore in 1987. He also holds a Master's
Degree in Science (computer integrated manufacturing) and Business Administration from the Nanyang
Technological University in Singapore.
Janet T. Taylor
Ms. Janet T. Taylor joined us as General Counsel in June 2005. Prior to joining our Company,
Ms. Taylor practiced as a Foreign Legal Consultant at the law firm of Kartini Muljadi & Rekan in
Indonesia. Ms. Taylor was counsel in the U.S. Securities Practice Group of Sidley Austin Brown &
Wood's Singapore office from 2000 to 2002 and prior to that, a partner in the U.S. Securities
Practice Group of Baker & McKenzie's Singapore office. In 1999, she joined the U.S. Securities
Practice Group of Norton Rose's London office until she returned to Singapore in 2000. In 1993, she
joined LeBoeuf, Lamb Greene & MacRae's New York office until 1996 when she joined Baker &
McKenzie's New York office and subsequently worked in Baker & McKenzie's Singapore and London
offices. Ms. Taylor began her legal career in 1989 at Debevoise & Plimpton in New York. Ms. Taylor
was admitted to the New York Bar in 1990. She holds a Juris Doctor from Harvard Law School, a
Bachelor of Arts degree (History) from the University of Texas and a Bachelor of Business
Administration degree (Accounting) from Sam Houston State University.
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B. Compensation of Directors and Senior Management
The following table sets forth
the aggregate amount of compensation including bonus paid or proposed to be paid for all of our directors and
senior management with respect to services rendered in 2006.
Executive
Non executive
Director
Directors(1)
Total(2)(3)
Charles R. Wofford
$129,790
$129,790
Lim Ming Seong
58,420
58,420
Tan Lay Koon
$1,417,373
1,417,373
Peter Seah Lim Huat
50,040
50,040
Tay Siew Choon(4)
16,340
16,340
Steven H. Hamblin
81,790
81,790
Richard J. Agnich
65,790
65,790
R. Douglas Norby
52,000
52,000
Robert W. Conn
50,000
50,000
Park Chong Sup
51,000
51,000
Teng Cheong Kwee(5)
8,500
8,500
Senior management
(excluding our Executive Director) as a group
3,116,683
$1,417,373
$563,670
$5,097,726
(1)
We will seek approval at our annual general meeting in 2007 for the payment of directors'
fees of approximately $563,670 for 2006.
(2)
Does not include compensation given in the form of share options. For more information on
share options granted to our directors and senior management, see " — E. Share Ownership for
Directors and Senior Management".
(3)
Includes $283,498 representing payment of
one-third
of
the notional Economic Value Added (EVA) bank account. See discussion below.
(4)
Resigned as a director on April 30, 2006.
(5)
Appointed as a director on October 1, 2006.
As of January 31, 2007, we have eleven directors on our Board. Our executive director does not
receive any directors' fees. Our
non-executive
directors are paid directors' fees. Our
non-executive
directors are also reimbursed for reasonable expenses they incur in attending
meetings of the Board and its committees and
company-sponsored
training from time to time. They may
receive compensation for performing additional or special duties at the request of the Board. Our
directors' fees for 2006 will be submitted for approval by our shareholders at our annual general
meeting to be held in April 2007.
We have provided to our directors and officers customary directors and officers liability
insurance cover.
We obtained shareholders' approval to adopt a revised compensation scheme, including a share
repurchase program within specified mandates relating to maximum repurchase price, volume, timing
and manner of repurchases, at our last annual general meeting of shareholders held in April 2006.
We intend to effect such repurchases in compliance with
Rule 10b-18
under the Securities Exchange
Act of 1934, as amended (Exchange Act). The revised compensation scheme, among other things, allow
us the flexibility to deliver repurchased ordinary shares held in treasury (instead of issuing new
shares) for our employee share plans.
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Our
overall compensation scheme continues to include a
short-term
(annual) cash incentive plan
to reward our senior executives and other eligible employees for their performance and
contributions. The
short-term
incentive plan is funded by a pool of monies that we set aside based
on a predetermined aggregate percentage of payroll. Payment in 2007 with respect to services
rendered in 2006 is dependant on the level of achievement against corporate financial targets as
well as plant and functional goals. Each participant has a bonus target as a percentage of base
salary.
In
addition to the
short-term
incentive plan, the directors and senior executives and other
designated employees are also eligible to participate in a restricted share plan. Further, Mr.
Tan Lay Koon and a limited group of the senior employees are also eligible to participate in a
performance share plan. See "—  E. Share Ownership for Directors and Senior Management —
Employees' Share Ownership Schemes"
Finally, Mr. Tan Lay Koon and a very limited group of the most senior executives are eligible
to participate in a modified
long-term
cash incentive plan based on measuring Economic Value Added
(EVA). EVA improvement year over year funds a group EVA pool. If the group EVA pool has a net
positive balance in a given year, individual EVA bonuses would be distributed (
one-third
paid to
the participant and
two-thirds
held in an individual EVA bank account for each of the
participants).
The
group incentive EVA pool is derived from the annual wage increments of the
participants and a sharing of the positive EVA and the change in EVA over the preceding year (which
can result in a negative incentive pool if the change in EVA is significantly negative). The amount
allocated to the individuals from this pool is based on the collective achievement of the
corporate goals, achievement of individual performance targets as well as his or her scoring on
corporate values. Each eligible senior executive has his or her own notional EVA bank account. The
bonus earned each year is added to his or her notional EVA bank account, and payment is made only
when there was a positive EVA bank balance in the notional EVA bank account. This incentive plan
with regard to EVA was suspended for the year 2005 while our compensation plan was then under
review.
We do not provide any
post-retirement
benefits, other than pursuant to the plans required or
permitted by local regulations and described below.
Under the Labor Standards Law of South Korea, employees with more than one year of service are
entitled to receive a
lump-sum
payment upon termination of their employment with STATS ChipPAC
Korea Ltd., based on their length of service and rate of pay at the time of termination. Accrued
severance benefits are adjusted annually for all eligible employees based on their employment as of
the balance sheet date. The expense for severance benefits for the period August 5, 2004 to
December 31, 2004, and for 2005 and 2006 were approximately $1.8 million, $6.3 million and $9.1
million, respectively.
Under the National Pension Act of South Korea, STATS ChipPAC Korea Ltd. is required to
contribute a certain percentage for pension based on the employees' salary to the Korean National
Pension Fund. The expense for the pension benefits for the period August 5, 2004 to December 31,
2004, and for 2005 and 2006 were approximately $0.7 million, $2.1 million and $2.8 million,
respectively.
Under Singapore law, we make monthly contributions based on the statutory funding requirement
into a Central Provident Fund for substantially all of our Singapore employees who are Singapore
citizens and Singapore permanent residents. The aggregate expenses under this plan were $4.6
million for 2004, $4.8 million for 2005 and $5.3 million for 2006.
Under Chinese law and Shanghai municipal government regulations, we make monthly contributions
based on the statutory funding requirement into the Pension Fund Center and Provident Fund Center
of Shanghai for all of our Chinese employees. From August 5, 2004 to December 31, 2004, and for
2005 and 2006, the aggregate expenses under this plan were $1.2 million, $1.8 million and $2.2
million, respectively.
Under Malaysian law, we make monthly contributions based on statutory requirements to the
Employee Provident Fund for all employees except for contract and foreign workers. STATS ChipPAC
Malaysia Sdn Bhd's total expenses under this plan for the period August 5, 2004 to December 31,
2004, and for 2005 and 2006 were approximately $0.7 million, $1.9 million and $2.0 million,
respectively. Employees with more than 20 years of service with STATSChipPAC Malaysia Sdn Bhd are
entitled to a single sum payment of $2,600 upon their mandatory retirement from their employment at
age 55 years. We paid $5,300, $21,200 and $51,600 for such retirement payments for the period
August 5, 2004 to December 31, 2004, and for 2005 and 2006, respectively. Accrued gratuity benefits
for eligible employees are adjusted annually.
STATS ChipPAC, Inc. and STATS ChipPAC Test Services, Inc. have a 401(k) savings plan where the
Company matches 50% of employee contributions up to 6% of eligible employee compensation. The
Company's matching contributions under the 401(k) plan were $320,000,
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$395,000 and $457,000 in 2004, 2005 and 2006, respectively. The matching contributions are
accrued monthly and adjusted when the actual amounts are calculated. The expenses relating to the
plan are $15 per person per quarter and are accrued on a monthly
basis. Returns on the 401(k) plan from investments in mutual funds are calculated daily by an external administrator who administers
the plan.
Winstek operates a defined benefit retirement plan for a substantial portion of its employees
in Taiwan in accordance with the Labor Standards Law in Taiwan. Pension benefits are generally
based on years of service and average salary for the six months prior to the approved retirement
date. Winstek revised its contribution in 2006 from 2% to 6% of eligible wages and salaries on a
monthly basis to a pension fund maintained with the Central Trust of China, as required by the
Labor Standards Law. At each year end, Winstek actuarially determines pension benefit costs and
obligations using the projected unit credit method, and the amounts calculated depend on a variety
of assumptions. These assumptions include discount rates, rates for expected returns on plan
assets, mortality rates and retirement rates. The funding of the pension plan is determined in
accordance with statutory funding requirements. Winstek is obligated to make up any shortfall in
the plan's assets in meeting the benefits accrued to the participating staff. As at December 31,
2006, there was no shortfall in the plan's assets. Total pension plan expenses in 2004, 2005 and
2006 were approximately $76,000, $55,000 and $5,000, respectively.
C. Board Practices
Board of Directors
Our Articles of Association set the minimum number of directors at two. We currently have
eleven directors. A number of our directors are
re-elected
at each annual general meeting of
shareholders. The number of directors retiring and eligible to stand for
re-election
each year
varies, but generally it is equal to
one-third
of our board, with the directors who have been in
office longest since their last
re-election
or appointment standing for
re-election
. Our Articles
of Association also provide that the Board of Directors has the power to appoint any person to be a
director to fill a casual vacancy or as an additional director. These persons may only be directors
until the next annual general meeting of shareholders but are eligible for
re-election
.
Accordingly, the appointments of Mr. Lim Ming Seong, Dr. Robert W. Conn, Dr. Park Chong Sup, Mr. Teng Cheong Kwee and Mr. Tokumasa Yasui will expire and we will seek shareholders' approval for
their
re-election
at the next annual general meeting of shareholders to be held in April 2007.
Under the Companies Act, the term of any director shall expire at the conclusion on the date of the
annual general meeting of shareholders immediately following the date that director turns 70 years
of age, although he or she will be eligible for
re-appointment
. Directors who are aged 70 or older
are eligible for
re-appointment
upon the approval of the shareholders of our Company by way of an
ordinary resolution passed at an annual general meeting and, if
re-appointed
, will hold office
until the next annual general meeting of the shareholders. Accordingly, the appointments of Mr. Charles R. Wofford and Mr. R. Douglas Norby will expire and we will seek shareholders' approval for
their
re-appointment
at the next annual general meeting of shareholders to be held in April 2007.
As of January 31, 2007, Temasek Holdings, through its
wholly-owned
subsidiary, Singapore
Technologies Semiconductors Pte Ltd (STSPL), beneficially owned approximately 35.56% of our
outstanding ordinary shares. Temasek Holdings, a private limited company incorporated in Singapore,
is
wholly-owned
by the Minister for Finance (Incorporated) of Singapore, a body corporate
constituted by the Minister for Finance (Incorporation) Act (Cap. 183). As a result, Temasek
Holdings has significant influence over matters requiring the approval of our shareholders. The
actions of Temasek Holdings and STSPL, particularly through the election of directors and
subsequent selection of management by those directors, can affect our strategic decisions, our
legal and capital structure and our
day-to-day
operations.
Our Articles of Association permit a director to appoint an alternate director to act in place
of such director should the director be unable to perform his or her duties as director for a
period of time. Under Singapore law, the alternate director is not merely an agent of the director
but is also held accountable to the Company for his or her actions as director during the period
for which he or she acts as alternate director.
We do not have any service contracts with any of our non executive directors. The services
contract of our executive director does not provide for benefits upon termination of employment.
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Committees of our Board of Directors
Audit Committee
The Audit Committee currently consists of three members, all of whom are
non-executive
directors and determined by our Board of Directors to be independent under the Nasdaq Marketplace
Rules. The current members of the Audit Committee are Mr. R. Douglas Norby (Chairman), Mr. Steven
H. Hamblin and Mr. Richard J. Agnich. In January 2007, Mr. Richard J. Agnich resigned as Chairman
of the Audit Committee and Mr. R. Douglas Norby was appointed Chairman. The Audit Committee serves
as an independent and objective party to review the integrity and reliability of the financial
information presented by management to shareholders, regulators and the general public. It oversees
the establishment, documentation, maintenance and periodic evaluation of the system of our internal
controls and is responsible for the appointment, compensation, independence, retention, termination
and oversight of the work of our external auditors. The Audit Committee also reviews and evaluates
the performance and policies of our internal audit function and of its external auditors. Under
Singapore law, only board members of a company may serve on its Audit Committee.
The Audit Committee held five meetings in 2006.
Executive Resource & Compensation Committee
The current members of the Executive Resource & Compensation Committee are Mr. Charles R.
Wofford (Chairman), Mr. Peter Seah Lim Huat and Mr. Teng Cheong Kwee. In January 2007, Mr. Steven
H. Hamblin resigned as a member of the Executive Resource & Compensation Committee and Mr. Teng
Cheong Kwee was appointed as a member.
The Executive Resource & Compensation Committee oversees the development of leadership and
management talent in our Company, ensures that we have appropriate remuneration policies and
designs competitive compensation packages with a focus on
long-term
sustainability of business and
long-term
shareholders' return.
With effect from January 16, 2006, we have been relying on the exemption provided by Nasdaq to
permit foreign private issuers to follow home country corporate governance practices in lieu of
Nasdaq Marketplace Rule 4350(c)(3). Accordingly, in lieu of Nasdaq Marketplace Rule 4350(c)(3) that
requires the compensation of the chief executive officer and all other executive officers of a
Nasdaq-listed
company to be determined, or recommended to our Board of Directors for determination,
by a majority of the independent directors or a compensation committee comprised solely of
independent directors, we follow the following practice which is consistent with the Singapore code
of corporate governance:
•
The Executive Resource & Compensation Committee is comprised entirely of non-executive
directors, the majority of whom, including the Chairman, qualify as independent directors
under the Nasdaq Marketplace Rules and the Singapore code of corporate governance. Mr.
Peter Seah Lim Huat does not qualify as an independent director under the Nasdaq
Marketplace Rules or the Singapore code of corporate governance.
•
The Executive Resource & Compensation Committee is responsible for reviewing,
considering and approving the compensation policies, incentive programs, specific
compensation (including each award and total proposed awards under each equity based plan)
of each Executive Vice President, Senior Vice President and Vice
President who reports directly to the Chief Executive Officer. The Executive Resource & Compensation Committee has
delegated to the Chief Executive Officer the power to approve awards to employees at the
job level of Vice President and below who do not report directly to the Chief Executive
Officer. The Executive Resource & Compensation Committee also reviews and approves all our
option plans, share plans and other equity based plans.
The Executive Resource & Compensation Committee oversees the development of leadership and
management talent in our Company, ensures that we have appropriate remuneration policies and
designs competitive compensation packages with a focus on
long-term
sustainability of business and
long-term
shareholders' return.
In January 2007, our Board adopted a new charter for our Executive Resource & Compensation
Committee which became effective on January 24, 2007. Our Board has resolved, with effect from
January 24, 2007, to delegate to the Executive Resource & Compensation Committee the power to
review, vary (if necessary) and approve the entire specific remuneration package and service
contract terms for key management executives of the Company at the
job level of Executive Vice President, Senior Vice President and Vice
President who reports directly to the Chief Executive Officer as well
as the Chief Executive Officer.
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Previously, the Executive Resource and Compensation Committee would
approve the entire specific remuneration package and service contract terms for management
executives of the Company at the job level of Vice President and above.
Specifically, the duties and responsibilities of the Executive Resource & Compensation
Committee includes the following:
•
Consider, review, vary and approve our Company's policy for determining executive
remuneration including the remuneration policy with regard to
Executive Vice Presidents, Senior Vice Presidents and Vice
Presidents who reports directly to the Chief Executive Officer;
•
Consider, review, vary and approve the entire specific remuneration package and service
contract terms for each Executive Vice President, Senior Vice President and Vice
President who reports directly to the Chief Executive Officer;
•
Review and approve all our option plans, stock plans and other equity based plans; and
•
Approve the remuneration framework, including director's fees for our
non-executive
directors.
The Executive Resource & Compensation Committee held six meetings in 2006.
Budget Committee
The Budget Committee currently consists of Mr. Lim Ming Seong (Chairman), Dr. Park Chong Sup
and Dr. Robert W. Conn. In April 2006, Mr. Tay Siew Choon, who was then a member of the Budget
Committee, resigned as a member of the Board of Directors and in January 2007, Dr. Robert W. Conn
was appointed as a member. The Budget Committee meets with our senior management to review our
annual budget and to review our quarterly financial performance in relation to our budget.
The Budget Committee held four meetings in 2006.
Executive Committee
The
Executive Committee currently consists of Mr. Charles R. Wofford
(Chairman), Mr. Steven H. Hamblin and Mr. Teng Cheong Kwee. In April 2006, Mr. Tay Siew Choon, who was then a member of
the Executive Committee, resigned as a member of the Board of Directors and in October 2006, Mr.
Peter Seah Lim Huat was appointed as a member. In January 2007,
Mr. Peter Seah Lim Huat resigned as a
member of the Executive Committee and Mr. Teng Cheong Kwee was appointed as a member. The main
objective of the Executive Committee is to enable our Board to delegate some of its powers and
functions regarding the governing of our affairs and the affairs of our subsidiaries to the
Executive Committee in order to facilitate timely decision-making processes within the limits of
authority as determined by our Board.
The Executive Committee held four meetings in 2006.
Nominating and Corporate Governance Committee
The current members of the Nominating and Corporate Governance Committee are Mr. Charles R.
Wofford (Chairman), Mr. Peter Seah Lim Huat and Mr. Richard J. Agnich.
The Nominating and Corporate Governance Committee's responsibilities include identifying
suitable candidates for appointment to our Board, with a view to ensuring that the individuals
comprising our Board can contribute in the relevant strategic areas of our business and are able to
discharge their responsibilities as directors having regard to the law and high standards of
governance.
With effect from January 16, 2006, we have been relying on the exemption provided by Nasdaq to
permit foreign private issuers to follow home country corporate governance practices in lieu of
Nasdaq Marketplace Rule 4350(c)(3). Accordingly, in lieu of Nasdaq Marketplace Rule 4350(c)(3) that
requires director nominees to be selected, or recommended for the board of directors' selection, by
a majority of the independent directors or a nominating committee comprised solely of independent
directors, we follow the following practice which is consistent with the Singapore code of
corporate governance:
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•
The Nominating and Corporate Governance Committee comprises not less than three members,
the majority of whom, including the Chairman, qualify as independent directors under the
Nasdaq Marketplace Rules and the Singapore code of corporate governance. Mr. Seah does not
qualify as an independent director under the Nasdaq Marketplace Rules or the Singapore code
of corporate governance.
•
The Nominating and Corporate Governance Committee's duties and responsibilities include
the following:
(i)
the identification of qualified candidates to become Board members;
(ii)
the selection of nominees for election as directors at the next annual meeting of
shareholders (or extraordinary general meeting of shareholders at which directors are to
be elected);
(iii)
the selection of candidates to fill any vacancies on our Board;
(iv)
the development and recommendation to our Board of a set of corporate governance
guidelines and principles applicable to our Company (being our Code of Business Conduct
and Ethics); and
(v)
oversight of the evaluation of our Board and Board committees.
The Nominating and Corporate Governance Committee held three meetings in 2006.
D. Employees
As of December 31, 2006, we employed 13,817
full-time
employees and 394 temporary or contract
employees. The average number of temporary or contract employees in 2006 based on the number of
temporary or contract employees at the end of each month was 493 per month.
As of December 31, 2006, approximately 1,675 of our employees at the Icheon, South
Korea, facility were represented by the ChipPAC Korea Labor Union and are covered by collective bargaining
and wage agreements. The wage agreement is renewed every year, and the collective bargaining
agreement, which, among other things, covers basic union activities, working conditions and welfare
programs is renewed every other year. The wage agreement was renewed in 2006 and is effective
through April 30, 2007. The collective bargaining agreement was renewed in 2005 and is effective
through April 30, 2007.
The following table sets forth numbers of our employees by function and location for the dates
indicated:
December 31,
December 25,
December 31,
2004
2005
2006
Function:
Direct and indirect labor (manufacturing)
10,398
12,315
13,181
Indirect labor (administration)
653
694
770
Research and development
229
232
260
Total
11,280
13,241
14,211
Location:
Singapore
3,828
4,092
3,527
China
2,459
3,452
4,241
Malaysia
2,310
2,472
3,007
South Korea
2,031
2,407
2,513
Taiwan
443
560
645
United States
198
245
262
Others
11
13
16
Total
11,280
13,241
14,211
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E. Share Ownership for Directors and Senior Management
Based on an aggregate of 2,003,007,258 ordinary shares outstanding as of January 31, 2007,
each of our directors and senior management officers had a beneficial ownership of less than 1% of
our outstanding ordinary shares, including ordinary shares held directly or in the form of ADSs and
share options granted as of such date.
Beneficial ownership is determined in accordance with rules of the SEC and includes shares
over which the indicated beneficial owner exercises voting and/or investment power or receives the
economic benefit of ownership of such securities. Ordinary shares subject to options currently
exercisable or exercisable within 60 days are deemed outstanding for computing the percentage
ownership of the person holding the options but are not deemed outstanding for computing the
percentage ownership of any other person.
All our ordinary shares have identical rights in all respects and rank equally with one
another.
Share Options for Directors
The following table contains information pertaining to share options held by our directors as
of January 31, 2007.
Number of Ordinary Shares
Per Share Exercise
Issuable on Exercise of Option
Price (S$)
Exercisable Period
Charles R. Wofford
70,000
2.885
04/29/2003 to 04/28/2007
100,000
1.99
08/06/2004 to 08/05/2008
50,000
1.91
02/17/2005 to 02/16/2009
50,000
(1)
1.06
08/11/2005 to 08/10/2009
57,500
(1)
1.01
05/03/2006 to 05/02/2010
57,500
(1)
0.925
10/31/2006 to 10/30/2010
60,000
(1)
1.08
05/29/2007 to 05/28/2011
Lim Ming Seong
200,000
1.592
04/24/2002 to 04/23/2011
70,000
2.885
04/29/2003 to 04/28/2007
70,000
1.99
08/06/2004 to 08/05/2008
35,000
1.91
02/17/2005 to 02/16/2009
35,000
1.06
08/11/2005 to 08/10/2009
42,500
1.01
05/03/2006 to 05/02/2010
42,500
0.925
10/31/2006 to 10/30/2010
45,000
1.08
05/29/2007 to 05/28/2011
Tan Lay Koon
500,000
6.93
04/20/2001 to 04/19/2010
700,000
2.826
10/19/2001 to 10/18/2010
449,000
1.592
04/24/2002 to 04/23/2011
325,000
2.885
04/29/2003 to 04/28/2012
2,000,000
2.2
06/26/2003 to 06/25/2012
700,000
1.99
08/06/2004 to 08/05/2013
500,000
1.91
02/17/2005 to 02/16/2014
500,000
1.06
08/11/2005 to 08/10/2014
600,000
1.01
05/03/2006 to 05/02/2015
600,000
0.925
10/31/2006 to 10/30/2015
700,000
1.08
05/29/2007 to 05/28/2011
Peter Seah Lim Huat
70,000
1.99
08/06/2004 to 08/05/2013
35,000
1.91
02/17/2005 to 02/16/2014
35,000
1.06
08/11/2005 to 08/10/2014
40,000
1.01
05/03/2006 to 05/02/2010
40,000
0.925
10/31/2006 to 10/30/2010
45,000
1.08
05/29/2007 to 05/28/2011
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Number of Ordinary Shares
Per Share Exercise
Issuable on Exercise of Option
Price (S$)
Exercisable Period
Steven H. Hamblin
70,000
2.885
04/29/2003 to 04/28/2007
70,000
1.99
08/06/2004 to 08/05/2008
35,000
1.91
02/17/2005 to 02/16/2009
35,000
(1)
1.06
08/11/2005 to 08/10/2009
37,500
(1)
1.01
05/03/2006 to 05/02/2010
37,500
(1)
0.925
10/31/2006 to 10/30/2010
45,000
(1)
1.08
05/29/2007 to 05/28/2011
Richard J. Agnich
50,000
2.885
04/29/2003 to 04/28/2007
50,000
1.99
08/06/2004 to 08/05/2008
25,000
1.91
02/17/2005 to 02/16/2009
25,000
(1)
1.06
08/11/2005 to 08/10/2009
42,500
(1)
1.01
05/03/2006 to 05/02/2010
42,500
(1)
0.925
10/31/2006 to 10/30/2010
45,000
(1)
1.08
05/29/2007 to 05/28/2011
Robert W. Conn
174,000
(2)
1.88
04/15/2003 to 08/04/2009
130,500
(2)
1.36
02/05/2005 to 08/04/2009
37,500
(1)
1.01
05/03/2006 to 05/02/2010
37,500
(1)
0.925
10/31/2006 to 10/30/2010
40,000
(1)
1.08
05/29/2007 to 05/28/2011
R. Douglas Norby
174,000
(2)
1.88
04/15/2003 to 08/04/2009
130,500
(2)
0.50
03/17/2004 to 08/04/2009
130,500
(2)
1.36
02/05/2005 to 08/04/2009
37,500
(1)
1.01
05/03/2006 to 05/02/2010
37,500
(1)
0.925
10/31/2006 to 10/30/2010
45,000
(1)
1.08
05/29/2007 to 05/28/2011
Park Chong Sup
130,500
(2)
1.57
10/20/2001 to 08/04/2009
43,500
(2)
0.38
09/27/2002 to 08/04/2009
130,500
(2)
0.50
03/17/2004 to 08/04/2009
130,500
(2)
1.36
02/05/2005 to 08/04/2009
37,500
(1)
1.01
05/03/2006 to 05/02/2010
37,500
(1)
0.925
10/31/2006 to 10/30/2010
40,000
(1)
1.08
05/29/2007 to 05/28/2011
Teng Cheong Kwee (3)
50,000
2.885
04/29/2003 to 04/28/2007
70,000
1.99
08/06/2004 to 08/05/2008
35,000
1.91
02/17/2005 to 02/16/2009
(1)
The exercise prices for these options are denominated in U.S. dollars and are presented here
in Singapore dollars for comparability purposes using the exchange rate based on the Bloomberg
Close Quote on the respective dates of grant.
(2)
The exercise prices for these options are denominated in U.S. dollars and presented here in
Singapore dollars for comparability purposes using the exchange rate based on Bloomberg Close
Quote on August 5, 2004 of S$1.7214 per $1.00.
(3)
Appointed as a director on October 1, 2006.
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Employees' Share Ownership Scheme
In 2006, we engaged an outside consultant to advise us on our overall compensation scheme. As
part of our
re-evaluation
of our overall compensation scheme, we adopted the STATS ChipPAC Ltd.
Restricted Share Plan (RSP) and the STATS ChipPAC Ltd. Performance Share Plan (PSP) described below
as well as amended the STATS ChipPAC Ltd. Employee Share Purchase Plan 2004 (ESPP) and the STATS ChipPAC Ltd. Share Option Plan (STATS ChipPAC Option Plan) as described
below.
The STATS ChipPAC Option Plan, as amended, has been
phased out as of December 2006 and replaced by longer term incentives in the form of restricted
shares to be granted pursuant to the RSP.
One-half
of the share based compensation in 2006 was
granted pursuant to the STATS ChipPAC Option Plan and the other half was granted pursuant to the
RSP. Grants of restricted shares are based on our Company's performance against the prior year's
financial goals and grant targets based on job level. Vesting is over a
three-year
period from date
of grant.
Further, Mr. Tan Lay Koon and a limited group of senior employees will be eligible to
participate in the PSP. Under the PSP, fully vested shares would be granted based on grant targets for each eligible participant that are determined according to our Company's achievement of
specified
three-year
performance goals.
Effective January 30, 2006, the Companies Act was amended pursuant to the Companies Amendment
Act, as a result of which a Singapore company can repurchase shares out of its capital, as well as
from distributable profits and ordinary shares repurchased by a company can be held by that company
as treasury shares instead of being required to be cancelled. In light of these amendments, at our
annual shareholders' meeting in April 2006, we obtained shareholders' approval to repurchase up to
approximately 50 million ordinary shares (2.5% of the issued ordinary share capital as of the date
of the annual general meeting) to allow us the flexibility to deliver repurchased ordinary shares
held in treasury (instead of issuing new shares) under our equity incentive plans. The approved
amount for share repurchases under this shareholders' mandate will terminate on the earlier of the
date on which the next annual general meeting is held or the date which the approval is revoked or
varied. As of December 31, 2006, we have not repurchased any shares. We intend to seek renewal of the shareholders'
mandate in our next annual general meeting in April 2007.
Equity Incentive Plans
STATS ChipPAC Ltd. Substitute Purchase and Option Plan (Substitute Option Plan) and STATS
ChipPAC Ltd. Substitute Equity Incentive Plan (the Substitute EIP, and together with the Substitute
Option Plan, the Substitute Plans).
In connection with the merger between STATS and ChipPAC, we
adopted the Substitute Plans to enable substitute options to be granted to holders of options
granted under the ChipPAC 1999 Stock Purchase and Option Plan and the ChipPAC 2000 Equity Incentive
Plan. The number of our ordinary shares that may be issued under the Substitute Option Plan and the
Substitute EIP, may not exceed, in the aggregate, 7 million and 73 million ordinary shares,
respectively.
STATS ChipPAC Ltd. Share Option Plan, as amended.
Effective May 28, 1999, we adopted the ST
Assembly Test Services Ltd Share Option Plan 1999 (STATS 1999 option plan). The STATS 1999 option
plan was amended from time to time to accomplish various varying objectives, including among other
purposes, to comply with changes in applicable laws and to bring the plan in line with current
market practices. In connection with the consummation of the merger and, in light of the
significant increase in the number of our employees, our shareholders approved an amendment to the
STATS 1999 option plan, effective as of August 5, 2004, to increase the maximum number of ordinary
shares issuable under the plan and the issuance of new ordinary shares upon the exercise of options
granted under the plan. The STATS 1999 option plan was
re-named
the STATS ChipPAC Ltd. Share Option
Plan.
The purpose of the STATS ChipPAC Option Plan is to offer selected individuals an opportunity
to acquire or increase an ownership interest in us through the grant of options to purchase our
ordinary shares. Options granted under the STATS ChipPAC Option Plan may be either nonqualified
options or incentive stock options (ISO) intended to qualify under Section 422 of the United States
Internal Revenue Code of 1986, as amended (Internal Revenue Code).
In April 2006, the shareholders approved the resolution to limit the aggregate number of
ordinary shares that may be issued under the STATS ChipPAC Option Plan to no more than 198 million
ordinary shares (subject to
anti-dilution
adjustment pursuant to the plan), including 80 million
ordinary shares that may be issued under the Substitute Plans. To the extent any options under the
STATS ChipPAC Option Plan or the Substitute Plans expire unexercised or are otherwise cancelled or
otherwise terminated, the ordinary shares allocable to such options will again be available for
grant.
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The STATS ChipPAC Option Plan is administered by the Executive Resource and Compensation
Committee. Employees, directors and consultants are eligible for the grant of options subject to
certain exceptions as provided in the plan.
The exercise price of an ISO must not be less than 100% of the fair market value of our
ordinary share on the date of grant. However, an individual who owns more than 10% of the total
combined voting power of all classes of our outstanding shares is not eligible to be granted ISOs
unless (i) the exercise price of the ISO is at least 110% of the fair market value of the shares on
the date of grant and (ii) such ISO by its terms is not exercisable after the expiration of five
years from the date of grant.
The options typically vest over a
four-year
period. The term of an option granted to an
employee may not, prior to the amendments to the plan adopted in April 2006, exceed 10 years from
the date of grant, and pursuant to the amendments to the plan adopted in April 2006, exceed seven
years from the date of grant. The term of an option granted to a
non-employee
may not exceed five
years from the date of grant.
In 2006, we granted to our directors, officers and employees options to purchase an aggregate
of 16,498,100 ordinary shares under the STATS ChipPAC Option Plan.
As of January 31, 2007, options (under the STATS ChipPAC Option Plan and the Substitute Plans
combined) to purchase an aggregate of 114,932,062 ordinary shares were outstanding, out of which
options to purchase 22,767,300 ordinary shares were held by all our directors and executive
officers as a group. The exercise prices of these options range from S$0.25 to S$6.93. The
expiration dates of these options range from April 2007 to December 2015.
STATS ChipPAC Ltd. Employee Share Purchase Plan 2004
In August 2004, our Company adopted the STATS ChipPAC Ltd. Employee Share Purchase Plan 2004
(ESPP) to provide our employees with the opportunity to purchase our ordinary shares in order to
encourage broad employee ownership, encourage employees to remain in our employ, enhance the
ability to attract new employees by providing an opportunity to acquire a vested interest in our
success and provide a performance incentive to our employees.
The ESPP is administered by the Executive Resource and Compensation Committee. Employees of
our Company and designated subsidiaries are eligible to participant in the plan.
Prior to the amendments to the ESPP adopted in 2006, substantially all employees could
purchase our Company's ordinary shares at a price equal to 85% of the lower of the fair market
value at the beginning or the end of specified
six-month
purchase periods. Share purchases are
limited to 15% of an employee's eligible compensation.
In April 2006, changes to the terms of the ESPP were approved by the shareholders. We
eliminated the provision that the purchase price of the shares to be purchased under the ESPP be
determined by reference to the lower of the fair market value at the beginning or the end of the
specified purchase period and instead provided that the purchase price be determined by reference
to the fair market value of the shares based on the quoted market price on the date of the
purchase, or, if the shares are acquired through an open market purchase, the price actually paid
for the shares. Further, instead of providing for a 15% discount on the purchase price, our Company
may match up to 20% of the contributions of the ESPP participants by transferring or issuing shares
or providing cash contribution for the purchase of shares. As a result of these changes, the ESPP
no longer qualifies under Section 423 of the United States Internal Revenue Code.
In addition, in 2006, the maximum aggregate of ordinary shares that may be issued under the
ESPP was revised from 130 million ordinary shares to no more than 92 million ordinary shares of our
Company (subject to
anti-dilution
adjustment pursuant to the ESPP).
Unless terminated earlier, the ESPP will terminate automatically seven years from its
adoption. Our Board of Directors may amend or terminate the plan at any time and for any reason,
except that no termination of the plan may affect purchase rights previously granted (subject to
limited exceptions as provided in the plan).
STATS ChipPAC Ltd. Restricted Share Plan
In April 2006, our Company adopted the STATS ChipPAC Ltd. Restricted Share Plan (RSP). The
purpose of the RSP is to replace the STATS ChipPAC Option Plan by 2007 and to offer selected
individuals an opportunity to acquire a proprietary interest in the success of our Company, or to
increase their interest, through the grant of Restricted Share Units (RSUs).
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The RSP is administered by the Executive Resource and Compensation Committee. Employees,
directors and consultants are eligible to participant in the RSP.
An RSU represents an unfunded, unsecured promise of our Company to issue or transfer ordinary
shares of our Company with no exercise or purchase price as the award vests in accordance with a
schedule determined by the Executive Resource and Compensation Committee. RSUs may be granted
subject to performance conditions. Each RSU has a value equal to the fair market value of an
ordinary share and the Executive Resource and Compensation Committee  has the authority to settle RSUs in cash or shares. RSUs
granted under the plan are generally not transferable. Unvested portions of RSUs are generally
subject to forfeiture if employment terminates prior to vesting. A grantee of RSUs has no rights as
a shareholder with respect to any ordinary shares covered by the RSP until such ordinary shares
have been issued or transferred pursuant to the terms of the RSP.
The number of ordinary shares that may be issued under the STATS ChipPAC RSP may not exceed,
in the aggregate, 50 million ordinary shares of our Company (subject to
anti-dilution
adjustments
pursuant to the RSP). As of December 31, 2006, no grant of RSUs or shares under the RSP had been
made.
Unless terminated earlier, the RSP plan will terminate automatically seven years after the
later of the date of its adoption or shareholders' approval of an increase in the plan limit. Our
Board of Directors may amend, suspend or terminate the RSP at any time and for any reason, subject
to shareholders' approval to the extent required by Nasdaq or applicable laws or regulations.
STATS ChipPAC Ltd. Performance Share Plan
In April 2006, our Company adopted the STATS ChipPAC Ltd. Performance Share Plan (PSP). The
PSP is intended to supplement our Company's long-term compensation strategy of senior level
employees, under which the number of ordinary shares ultimately or their equivalent cash value or
combination thereof received by the employee depends on our Company's performance against specified
targets over a period of time to be determined by the Executive Resource and Compensation
Committee.
The PSP is administered by the Executive Resource and Compensation Committee. Employees,
directors and consultants are eligible to participate in the PSP.
The
ordinary shares covered by a grant under the PSP shall be fully
vested. Performance shares awards are granted subject to performance
criteria measured over performance periods as determined by the Executive Resource and Compensation
Committee, which are typically over three years. The Executive Resource and Compensation Committee
has the authority to settle performance shares in cash or shares, or a combination thereof. A
grantee of any awards under the PSP has no rights as a shareholder with respect to any ordinary
shares covered by the grantee's PSP award until such ordinary shares have been issued or
transferred pursuant to the terms of the PSP.
The number of ordinary shares that may be issued under the PSP may not exceed, in the
aggregate, 15 million ordinary shares of our Company. As of December 31, 2006, no grant of share
awards under the PSP had been made.
Unless terminated earlier, the PSP plan will terminate automatically seven years after the
later of the date of its adoption or shareholders' approval of an increase in the plan limit. Our
Board of Directors may amend, suspend or terminate the PSP at any time and for any reason, subject
to shareholders' approval to the extent required by Nasdaq or applicable laws or regulations.
ITEM 7.
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major Shareholders
As of January 31, 2007, Temasek Holdings, through its
wholly-owned
subsidiary, Singapore
Technologies Semiconductors Pte Ltd (STSPL), beneficially owned approximately 35.56% of our
outstanding ordinary shares. Temasek Holdings, a private limited company incorporated in Singapore,
is
wholly-owned
by the Minister for Finance (Incorporated) of Singapore, a body corporate
constituted by the Minister for Finance (Incorporation) Act (Cap. 183). As a result, Temasek Holdings has
significant influence over matters requiring the approval of our shareholders.
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Matters that typically require the approval of our shareholders include, among other things:
•
the election of directors;
•
the merger or consolidation of us with any other entity;
•
any sale of all or substantially all of our assets; and
•
the timing and payment of dividends.
The following table sets forth certain information regarding the ownership of our ordinary
shares as of March 7, 2007 by each person who is known by us to own beneficially more than 5% of
our outstanding ordinary shares. Beneficial ownership is determined in accordance with the rules of
the SEC and includes shares over which the indicated beneficial owner exercises voting and/or
investment power or receives the economic benefit of ownership of such securities. Ordinary shares
subject to options currently exercisable or exercisable within 60 days are deemed outstanding for
the purposes of computing the percentage ownership of the person holding the options but are not
deemed outstanding for the purposes of computing the percentage ownership of any other person.
Number of Shares
Percentage
Name of Beneficial Owner
Beneficially Owned
Beneficially Owned
Temasek Holdings(1)
712,228,050
35.35
%
FMR Corp.(2)
240,096,700
11.92
%
(1)
As provided by Temasek Holdings, a private limited company incorporated in Singapore,
wholly-owned
by the
Minister for Finance (Incorporated) of Singapore, a body corporate constituted by the Minister
for Finance (Incorporation) Act (Cap. 183), which owns 100% of the ordinary shares of STSPL. Temasek
Holdings is therefore deemed to beneficially own 712,228,050 of our
ordinary shares, which are owned directly by STSPL as of
March 1, 2007. The percentage beneficially owned is based on
an aggregate 2,014,574,554 ordinary shares outstanding as of
March 7, 2007.
(2)
As provided in a notice by FMR Corp. and Fidelity International Limited (FIL) to our Company
dated March 7, 2007. Based on Amendment No. 4 to the Schedule 13G filed by FMR Corp. and
Edward C. Johnson III, Chairman of FMR Corp., with the SEC on February 14, 2007, the shares are owned by
institutional accounts managed by direct or indirect
wholly-owned
subsidiaries of FMR Corp. and FIL, respectively,
in varying amounts. Members of the family of Edward C. Johnson, III, Chairman of FMR Corp.,
through their ownership, directly or through trusts, of equity shares of FMR Corp. representing 49%
of the voting power of FMR Corp. and a shareholders' voting agreement, form a controlling group with
respect to FMR Corp. Partnerships controlled predominantly by members of the family of Edward C. Johnson, III,
Chairman of FMR Corp. and FIL, or trusts for their benefit, own shares of FIL voting stock representing approximately
47% of the total voting power of FIL. The percentage benefically
owned is based on an aggregate 2,014,574,554 ordinary shares outstanding
as of March 7, 2007.
The
Take-Over
Code of Singapore provides that any person acquiring an interest (either on his
or her own or together with parties acting in concert with him) in 30% or more of our voting shares
or, if such person holds (either on his own or together with parties acting in concert with him)
between 30% and 50% (both inclusive) of our voting shares, and acquires (either on his or her own
or together with parties acting in concert with him) additional voting shares representing more
than 1% of our voting shares in any six-month period, may be required to extend a
take-over
offer
for the remaining voting shares in accordance with the provisions of the
Take-Over
Code. See "Item 10.
Additional Information — B. Memorandum and Articles of Association — Take-Overs".
All our ordinary shares have identical rights in all respects and rank equally with one
another.
Our ordinary shares have been traded on the
SGX-ST
since January 31, 2000, and our ADSs have
been traded on the NASDAQ Stock Market since January 28, 2000.
As of January 31, 2007, 463,700,430 of our ordinary shares, representing 23.15% of our
outstanding shares, were held by a total of 17 holders of record with addresses in the United
States. Because many of our ordinary shares and ADSs were held by brokers and other
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institutions on
behalf of shareholders in street name, we believe that the number of beneficial holders of our
ordinary shares and ADSs could be higher.
On January 31, 2007, the closing price of our ordinary shares on the
SGX-ST
was S$1.29 per
ordinary share and the closing price of our ADSs on the NASDAQ Stock Market was $8.36 per ADS.
On March 1, 2007,
STSPL announced its intention to launch a voluntary conditional cash offer for the remaining ordinary shares
and ADSs in our Company that STSPL does not already own. See "Item 4. Information on our Company —
A. History and Development of Our Company — Temasek Holdings'
Subsidiary, Singapore Technologies Semiconductors Pte Ltd's, Tender Offer".
B. Related Party Transactions
Temasek Holdings is a holding company with investments in a group of companies (the Temasek
Holdings Group). We engage in transactions with companies in the Temasek Holdings Group in the
ordinary course of business. Such transactions are generally entered into on normal commercial
terms. We entered into a turnkey contract with Chartered in March 2000 pursuant to which we agreed
to provide wafer sort, packaging and test services to Chartered. The term of this agreement, which
was due to expire in March 2003, was extended to March 2005 by an amendment agreement dated October
30, 2002. This agreement governs the conduct of business between the parties, relating, among other
things, to our provision of sort, packaging and test services to Chartered which were previously
governed solely by purchase orders executed by Chartered. The agreement does not contain any firm
commitment from Chartered to purchase or from us to supply services covered thereunder. In April
2004, we entered into another test services agreement with Chartered pursuant to which we agreed to
give Chartered priority to use six of our testers, and access to six additional testers, for which
Chartered guarantees minimum loading and issuance of purchase orders of $450,000 per month. This
test services agreement expired in March 2005. In March 2005, we entered into a
three-year
partnership agreement with Chartered pursuant to which we agreed to provide wafer sort, assembly
and test services to Chartered. This is not a firm commitment from Chartered to purchase from us
nor is it a firm commitment from us to supply services covered thereunder.
In 2004, we paid management fees of $1.1 million to STPL for various management and corporate
services provided pursuant to the Singapore Technologies Management and Support Services Agreement
entered into in December 1999 and terminated on December 31, 2004. We
believe that our arrangement with STPL approximated the cost of providing these services.
In accordance with the requirements of the Nasdaq Marketplace Rules, all new related party
transactions (as defined in Item 404 of
Regulation S-K
under the Securities Act) require approval
by the Audit Committee of our Board of Directors. In addition, more significant related party
transactions must be separately approved by a majority of our Board of Directors. We also engage in
transactions with other companies directly or indirectly controlled by Temasek Holdings, in the
ordinary course of business. These transactions, which include transactions for gas, water and
electricity, facilities management, transportation and telecommunication services are at their
prevailing market rates/prices (including where appropriate, preferential rates and discounts) and
on customary terms and conditions, and are generally not subject to review by the Audit Committee.
These expenses amounted to approximately $24.1 million, $14.7 million and $18.4 million for 2004,
2005 and 2006, respectively.
C. Interest of Experts and Counsel
Not applicable
ITEM 8.
FINANCIAL INFORMATION
A. Consolidated Statements and Other Financial Information
Please see Item 18 for a list of the financial statements filed as part of this annual report.
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Legal Proceedings
In February 2006, our Company, ChipPAC and STATS ChipPAC (BVI) Limited were named as
defendants in a patent infringement lawsuit filed in United States Federal Court for the Northern
District of California. The plaintiff, Tessera, has asserted that semiconductor chip packaging,
specifically devices having BGA and multi-chip BGA configurations used by the defendants infringe
certain patents of Tessera. Tessera has further asserted that our Company is in breach of an
existing license agreement entered into by Tessera with ChipPAC, which agreement has been assigned
by ChipPAC to our Company. We believe that we have a meritorious defense to the claims and intend
to defend the lawsuit vigorously. A court determination that our products and processes infringe the intellectual property rights of others could
result in significant liability and/or require us to make material changes to our products and/or processes. Due to the inherent uncertainties of the lawsuit, we cannot
accurately predict the ultimate outcome and it could result in
significant liability and/or injunction and could have a material adverse effect on the business, financial condition
and the results of operations of our Company.
We are not involved in any other legal or arbitration proceedings, the outcome of which we
believe would have a material adverse effect on our business, financial condition and results of
operations. From time to time, however, we are involved in claims that arise in the ordinary course
of business, and we maintain insurance that we believe to be adequate to cover these claims.
Dividend Policy
We have never declared or paid any cash dividends on our ordinary shares, including our
ordinary shares represented by ADS. We may declare dividends by ordinary resolution of our
shareholders at a general meeting, but we may not pay dividends in excess of the amount recommended
by our Board of Directors. Our Board of Directors may, without the approval of our shareholders,
also declare an interim dividend. We must pay all dividends out of profits. In making its
determinations, our Board of Directors will consider, among other things, future earnings, results
of operations, capital requirements, our general financial condition, general business conditions
and other factors which they may deem relevant. We may pay dividends in Singapore dollars or U.S.
dollars. Holders of ADS will receive any distributions in U.S. dollars.
B. Significant Changes
There has been no significant subsequent event following the close of the last financial year
up to the date of this annual report that are known to us and require disclosure in this annual
report for which disclosure was not made in this annual report.
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ITEM 9.
THE OFFER AND LISTING
A. Offer and Listing Details
Price range of our ordinary shares and ADSs
The historical 'high' and 'low' prices of our ordinary shares and ADSs for the periods stated
are as shown below.
Price per Ordinary Share
Price per ADS on
on the SGX-ST
NASDAQ Stock Market(1)
(in S$)
(in US$)
High
Low
High
Low
Annual for 2002
3.16
0.87
17.25
4.89
Annual for 2003
2.73
1.05
15.75
6.16
Annual for 2004
2.45
0.92
14.74
5.40
Annual for 2005
1.34
0.88
8.16
5.30
Annual for 2006
1.42
0.84
8.85
4.91
Quarterly highs and lows:
— quarter ended March 27, 2005
1.16
0.88
7.25
5.37
— quarter ended June 26, 2005
1.26
0.97
7.43
5.75
— quarter ended September 25, 2005
1.34
1.00
8.16
6.11
— quarter ended December 25, 2005
1.21
0.90
7.02
5.30
— quarter ended March 26, 2006
1.25
1.01
7.77
6.19
— quarter ended June 25, 2006
1.42
0.90
8.85
5.53
— quarter ended September 24, 2006
1.05
0.84
6.65
4.91
— quarter ended December 31, 2006
1.33
0.93
8.42
5.74
Monthly highs and lows:
August 2006
1.05
0.87
6.65
5.48
September 2006
1.04
0.96
6.65
5.98
October 2006
1.00
0.93
6.54
5.74
November 2006
1.33
0.97
8.42
6.08
December 2006
1.31
1.13
8.33
7.31
January 2007
1.32
1.14
8.59
7.26
February 2007
1.64
1.26
10.20
8.19
(1)
Prior to July 2006, on the Nasdaq National Market.
B. Plan of Distribution
Not applicable
C. Markets
Our ordinary shares are listed on
SGX-ST
(SGX-ST: STATSChP)
and, our ADSs are quoted on the
NASDAQ Stock Market (NASDAQ: STTS).
D. Selling Shareholders
Not applicable
E. Dilution
Not applicable
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F. Expenses of the Issue
Not applicable
ITEM 10.
ADDITIONAL INFORMATION
A. Share Capital
Not applicable
B. Memorandum and Articles of Association
We are a company limited by shares incorporated under the laws of the Republic of Singapore.
Our Company registration number in Singapore is 199407932D.
Objects
We were established mainly to manufacture, assemble, test and provide services relating to
electrical and electronic components. We also carry out research and development work in relation
to the electrical and electronic industry.
A detailed list of all the other objects and purposes of our Company can be found in Article 3
of our Memorandum of Association which was filed as an Exhibit to our registration statement on
Form F-1
(Registration Number:
333-93661
) in connection with our initial public offering
in 2000 and is available for examination at our registered office at No. 5, Yishun Street 23, Singapore
768442, Republic of Singapore.
Board of Directors
Our Articles of Association state that a director must declare at a meeting of our Board of
Directors if there are matters which may conflict with his duties or interests as a director. He is
not allowed to vote in respect of any contract or arrangement or other proposal whatsoever in which
he has any interest, directly or indirectly and shall not be counted in the quorum in relation to
any resolution with respect to which he is not entitled to vote. If an independent quorum is not
achieved, the remaining directors may convene a general meeting.
Our directors may exercise all the borrowing powers of our Company to borrow money, to
mortgage or charge its undertaking, property and uncalled capital, and to issue debentures and
other securities.
No shares are required to be held by a director for director's qualification.
Under Singapore law, no person of or over the age of 70 years shall be appointed or act as a
director of a public company or of a subsidiary of a public company unless the shareholders at an
annual general meeting vote by an ordinary resolution in favor of his appointment to hold office
until the next annual general meeting of our Company.
Our Articles of Association set the minimum number of directors at two. The number of
directors retiring and eligible to stand for
re-election
each year varies, but generally it is
equal to
one-third
of our Board, with the directors who have been in office longest since their
re-election
or appointment standing for
re-election
.
Our Articles of Association permit a director to appoint an alternate director to act in place
of such director should the director be unable to perform his or her duties as director for a
period of time. There is currently no alternate director. Under Singapore law, the alternate
director is not merely an agent of the director but is accountable to the Company for his or her
actions as director during the period for which he or she acts as alternate director.
Ordinary Shares
We have only one class of shares, namely, ordinary shares. As of December 31, 2006, there were
2,002,814,117 ordinary shares issued and allotted by our Company.
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Until January 30, 2006, our ordinary shares had a par value of S$0.25 each. The Companies
Amendment Act, which came into effect on January 30, 2006, abolished the concept of "par value" and
"authorized capital". Accordingly, as of January 30, 2006, the shares of our Company have no par or
nominal value.
Our ordinary shares have identical rights in all respects and rank equally with one another.
Our Articles of Association provide that we may issue shares of a different class with
preferential, deferred, qualified or other special rights, privileges or conditions as our Board of
Directors may think fit, and may issue preference shares which are, or at the option of our Company
are, redeemable, subject to certain limitations.
All of our ordinary shares are in registered form. All our issued ordinary shares are entitled
to voting rights described under "—Voting Rights" below. We may, subject to and in accordance with
the Companies Act and the rules of the
SGX-ST
, purchase our own ordinary shares. We may not, except
as provided in the Companies Act, grant any financial assistance for the acquisition or proposed
acquisition of our ordinary shares.
New Ordinary Shares
New ordinary shares may only be issued with the prior approval of the shareholders in a
general meeting. The approval, if granted, will lapse at the conclusion of the annual general
meeting following the date on which the approval was granted or the date by which such annual
general meeting is required by law to be held, whichever is earlier. Our shareholders have given
the general authority to allot and issue ordinary shares in the capital of our Company prior to the
next annual general meeting. Subject to the foregoing, the provisions of the Companies Act and any
special rights attached to shares currently issued, all new ordinary shares are under the control
of our Board of Directors who may allot and issue the same with such rights and restrictions as it
may think fit, provided that, amongst others, new ordinary shares may not be issued to transfer a
controlling interest in our Company without the prior approval in general meeting of our
shareholders. Our shareholders are not entitled to
pre-emptive
rights under our Articles of
Association or Singapore law.
Shareholders
Only persons who are registered in our register of members and, in cases in which the person
so registered is The Central Depository (Pte) Limited ("CDP") or its nominee, as the case may be,
the persons named as depositors in the depository register maintained by CDP for our ordinary
shares, are recognized as shareholders. We will not, except as required by law, recognize any
equitable, contingent, future or partial interest in any ordinary share or other rights in respect
of any ordinary share other than an absolute right to the entirety thereof of the registered holder
of the ordinary share or of the person whose name is entered in the depository register for that
ordinary share. We may close the register of members for any time or times. However, the register
may not be closed for more than 30 days in aggregate in any calendar year. We typically close the
register to determine shareholders' entitlement to receive dividends and other distributions for no
more than ten days a year.
Transfer of Ordinary Shares
There is no restriction on the transfer of fully paid ordinary shares except where required by
law. Our directors may decline to register any transfer of ordinary shares which are not fully paid
shares or ordinary shares on which we have a lien. Ordinary shares may be transferred by a duly
signed instrument of transfer in a form acceptable to our directors. Our directors may also decline
to register any instrument of transfer unless, among other things, it has been duly stamped if
required and is presented for registration together with the share certificate and such other
evidence of title as they may require. We will replace lost or destroyed certificates for ordinary
shares if the applicant pays a fee which will not exceed S$2 and furnishes any evidence and
indemnity that our directors may require.
General Meetings of Shareholders
We are required to hold an annual general meeting every year. Our Board of Directors may
convene an extraordinary general meeting whenever it thinks fit and must do so if shareholders
representing not less than 10% of our issued share capital request in writing that such a meeting
be held. In addition, two or more shareholders holding not less than 10% of our issued share
capital may call a meeting. Unless otherwise required by Singapore law or by our Articles of
Association, voting at general meetings is by ordinary resolution, requiring an affirmative vote of
a simple majority of the votes cast at that meeting. An ordinary resolution suffices, for example,
for the appointment of directors. A special resolution, requiring the affirmative vote of at least
75% of the votes cast at the meeting, is necessary for certain matters
under Singapore law, including the voluntary winding up of our Company, amendments to our
Memorandum and Articles of Association, a change of our corporate name and a reduction in our share
capital. We must give at least 21 days' notice in writing for every general meeting convened for
the purpose of passing a special resolution. Ordinary resolutions require at least 14 days' notice
in writing. The notice must be
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given to every shareholder who has supplied us with an address in
Singapore for the giving of notices and must set forth the place, the day and the hour of the
meeting and, in the case of special business, the general nature of that business and a statement
regarding the effect of any proposed resolution on our Company in respect of such special business.
Voting Rights
A shareholder is entitled to attend, speak and vote at any general meeting, in person or by
proxy. A proxy need not be a shareholder. A person who holds ordinary shares through the CDP
book-entry
settlement system will only be entitled to vote at a general meeting if his name appears
on the depository register maintained by CDP as at 48 hours before the time of the general meeting
as certified by CDP to our Company. Except as otherwise provided in our Articles of Association,
two or more shareholders holding at least 33
1
/3% of our total issued and
fully-paid
ordinary shares must be present in person or by proxy to constitute a quorum at any general
meeting. Under our Articles of Association, on a show of hands, every shareholder present in person
or by proxy shall have one vote (provided that in the case of a shareholder who is represented by
two proxies, only one of the two proxies as determined by that shareholder or, failing such
determination, by the chairman of the meeting (or by a person authorized by him) in his sole
discretion shall be entitled to vote on a show of hands), and on a poll, every shareholder present
in person or by proxy shall have one vote for each ordinary share held or represented. A poll may
be demanded in certain circumstances, including by the chairman of the meeting, by not less than
five shareholders present in person or by proxy and entitled to vote at the meeting, by a
shareholder present in person or by proxy and representing not less than
one-tenth
of the total
voting rights of all the shareholders having the right to vote at the meeting or, by a member
present in person or by proxy and holding not less than 10% of the total number of
paid-up
shares
of our Company (excluding treasury shares).
Dividends
We may, by ordinary resolution of our shareholders, declare dividends at a general meeting,
but we may not pay dividends in excess of the amount recommended by our directors. We must pay all
dividends out of our profits. Our directors may also declare an interim dividend without the
approval of the shareholders. All dividends in respect of shares are paid in proportion to the
number of shares held by a shareholder, unless the rights attaching any ordinary shares or the
terms of issue thereof provide otherwise. Where shares are partly paid, all dividends must be
apportioned and paid proportionately to the amounts paid or credited as paid on the partly paid
shares. All dividends must be apportioned and paid proportionately to the amounts so paid or
credited as paid during any portion or portions of the period in respect of which the dividend is
paid. An amount paid or credited as paid on a share in advance of a call is to be ignored. Unless
otherwise directed, dividends are paid by check or warrant sent through the post to each
shareholder at his registered address. Notwithstanding the foregoing, the payment to CDP of any
dividend payable to a shareholder who holds his ordinary shares through the CDP
book-entry
settlement system shall, to the extent of payment made to CDP, discharge us from any liability to that shareholder in respect of that payment.
Bonus and Rights Issue
Our directors may, with approval by our shareholders at a general meeting, issue bonus shares
for which no consideration is payable to our Company to the shareholders in proportion to their
shareholdings and/or capitalize any reserves or profits (including profit or monies carried and
standing to any reserve account) and distribute the same as bonus shares credited as
paid-up
to our
shareholders in proportion to their shareholdings. Our directors may also issue rights to take up
additional ordinary shares to shareholders in proportion to their shareholdings. Such rights are
subject to any conditions attached to such issue and the regulations of any stock exchange in which
we are listed.
Take-Overs
The
Take-Over
Code regulates the acquisition of, amongst others, ordinary shares of public
companies and contains certain provisions that may delay, deter or prevent a future
take-over
or
change in control of our Company. Any person acquiring an interest, either on his or her own or
together with parties acting in concert with him in 30% or more of our voting shares or, if such
person holds, either on his own or together with parties acting in concert with him, between 30%
and 50% (both inclusive) of our voting shares, and acquires additional voting shares representing
more than 1% of our voting shares in any
six-month
period, may be required to extend a
take-over
offer for the remaining voting shares in accordance with the provisions of the
Take-Over
Code.
Parties acting in concert" comprise individuals or companies who, pursuant to an arrangement
or understanding (whether formal or informal),
co-operate
, through the acquisition by any of them
of shares in a company, to obtain or consolidate effective control of that company. Certain persons
are presumed (unless the presumption is rebutted) to be acting in concert with each other. They are
as follows: a company, its related companies and their associated companies and companies whose
associated companies include any of these companies; a company and
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any of its directors (including their close relatives, related trusts and companies controlled by any of the directors, their close
relatives and related trusts); a company and any of its pension funds and employee share schemes; a
person and any investment company, unit trust or other fund whose investment such person manages on
a discretionary basis; a financial or other professional adviser and its client in respect of
shares held by the adviser and persons controlling, controlled by or under the same control as the
adviser and all the funds managed by the adviser on a discretionary basis, where the shareholdings
of the adviser and any of those funds in the client total 10% or more of the client's equity share
capital; directors of a company (including their close relatives, related trusts and companies
controlled by any of such directors, their close relatives and related trusts) that is subject to
an offer or where the directors have reason to believe a bona fide offer for the company may be
imminent; partners; and an individual and his close relatives, related trusts, any person who is
accustomed to act in accordance with his or her instructions and companies controlled by the
individual, his close relatives, his related trusts or any person who is accustomed to act in
accordance with his instructions.
Subject to certain exceptions, a
take-over
offer must be in cash or be accompanied by a cash
alternative at not less than the highest price paid by the offeror or parties acting in concert
with the offeror within the preceding six months.
Under the
Take-Over
Code, where effective control of a company is acquired or consolidated by
a person, or persons acting in concert, a general offer to all other shareholders is normally
required. An offeror must treat all shareholders of the same class in an offeree company equally. A
fundamental requirement is that shareholders in the company subject to the
take-over
offer must be
given sufficient information, advice and time to consider and decide on the offer.
Liquidation or Other Return of Capital
If our Company liquidates or in the event of any other return of capital, holders of ordinary
shares will be entitled to participate in any distribution of surplus assets in proportion to their
shareholdings, subject to any special rights attaching to any other class of shares.
Indemnity
As permitted by Singapore law, our Articles of Association provide that, subject to the
Companies Act, our directors and officers shall be entitled to be indemnified by our Company
against any liability incurred in defending any proceedings, whether civil or criminal, which
relate to anything done or omitted or alleged to have been done or omitted by them as officers or
employees of our Company and in which judgment is given in their favor or in which they are
acquitted or in connection with any application under any statute for relief from liability in
respect thereof in which relief is granted by the court. We may not indemnify our directors and
officers against any liability which by law would otherwise attach to them in respect of any
negligence, default, breach of duty or breach of trust of which they may be guilty in relation to
our Company.
Limitations on Rights to Hold or Vote Shares
Except as described herein, there are no limitations imposed by Singapore law or by our
Articles of Association on the rights of non-resident shareholders to hold or exercise voting
rights attached to our ordinary shares.
Substantial Shareholdings
The Companies Act and the Securities and Futures Act, Chapter 289 of Singapore require the
substantial shareholders of our Company to give notice to our Company and the
SGX-ST
, including
particulars of their interest and the circumstances by reason of which they have such interest,
within two business days of their becoming substantial shareholders of our Company and of any
change in the percentage level of their interest.
Under the Companies Act, a person has a substantial shareholding in our Company if he has an
interest (or interests) in one or more voting shares in our Company and the total votes attached to
that share, or those shares, are not less than 5% of the total votes attached to all the voting
shares in our Company.
"Percentage level" in relation to a substantial shareholder, means the percentage figure
ascertained by expressing the total votes attached to our voting shares in which the substantial
shareholder has an interest or interests immediately before or (as the case may be) immediately
after the relevant time as a percentage of the total votes attached to all the voting shares in our
Company, and, if it is not a whole number, rounding that figure down to the next whole number.
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Minority Rights
The rights of minority shareholders of Singapore-incorporated companies are protected under
Section 216 of the Companies Act, which gives the Singapore courts a general power to make any
order, upon application by any shareholder of the company, as they think fit to remedy situations
where: (1) the affairs of the company are being conducted or the powers of the board of directors
are being exercised in a manner oppressive to, or in disregard of the interests of, one or more of
the shareholders; or (2) the company takes an action, or threatens to take an action, or the
shareholders pass a resolution, or proposes to pass a resolution, which unfairly discriminates
against, or is otherwise prejudicial to, one or more of the shareholders, including the applicant.
Singapore courts have wide discretion as to the relief they may grant and such relief is not
limited to the relief listed in the Companies Act. However, Singapore courts may direct or prohibit
any act or cancel or vary any transaction or resolution, regulate the conduct of our Company's
affairs in the future, and authorize civil proceedings to be brought in the name of, or on behalf
of, our Company by a person or persons and on such terms as the courts may direct. The Singapore
courts may also direct that our Company or some of our shareholders purchase the shares of a
minority shareholder and, in the case of a purchase of shares by us, a corresponding reduction of
our share capital, and direct that our Memorandum or Articles of Association be amended or that our
Company be wound up.
C. Material Contracts
We lease the land on which our Singapore facility is situated under a
long-term
operating
lease from the Housing and Development Board, a statutory board of the Government of Singapore,
pursuant to a lease agreement dated November 18, 1996. The lease is for a
30-year
period commencing
March 1, 1996, and is renewable for a further 30 years subject to the fulfillment of certain
conditions. The rent is $43,073 (S$70,209) per month, after deducting a rebate offered by the
landlord, subject to revision to market rate in March of each year, with the increase capped at 4%
per annum. In August 2004, the rate of rental increase was changed from a cap of 4% per annum to a
cap of the lower of 5.5% per annum of the preceding annual rental rate or to the prevailing rental
rate posted by the Housing and Development Board. The new rates became effective upon the
landlord's withdrawal of the rental rebate in March 2005.
In January 2002, we established a $306.7 million (S$500.0 million) MTN Program. Under the MTN
Program, we may, from time to time, issue notes in series or tranches in Singapore dollars or any
other currencies as may be agreed upon between us and the dealers of the MTN Program. Each series
of notes may be issued in various amounts and terms, and may bear fixed or floating rates of
interest. The notes constitute unsecured obligations. The MTN Program limits our ability to pay
dividends while the interest on the notes is unpaid, to create security interests to secure our
indebtedness and to undertake any form of reconstruction, amalgamation, merger or consolidation
with another company if such arrangement would affect our ability to make payments on the notes,
among other things. We intend to use any proceeds from the MTN Program for our general corporate
purposes including capital expenditure, working capital and investments. We have not issued any
notes under the MTN Program. Our ability to issue notes under the MTN Program will depend on market
and other conditions (including our financial condition) prevailing at the time we intend to issue
notes. As a result, we may not be able to issue notes under the MTN Program.
In March 2002, we issued $200.0 million of senior unsecured and unsubordinated convertible
notes due March 18, 2007. The convertible notes bear interest at the rate of 1.75% per annum and
have a yield to maturity of 4.91%. At the maturity date, we will pay to the note holders 117.665%
of the principal amount. The notes can be converted into our ordinary shares or, subject to certain
limitations, ADSs, each of which currently represents ten ordinary shares, at a conversion price of
S$3.408 per ordinary share (at a fixed exchange rate of US$1.00 = S$1.8215). The conversion price
may be subject to adjustments for certain events. We may elect to satisfy our obligations to
deliver ordinary shares or ADSs through delivery of cash in accordance with the terms of the notes.
We may redeem all or a portion of the convertible notes at any time on or after March 18, 2004 at a
price to yield of 4.91% per year to the redemption date if our shares or ADSs trade at or above
125% of the conversion price for a period of 20 trading days in any 30 consecutive trading day
period. On March 18, 2005, we redeemed $125.9 million of the notes at a price equal to 110.081% of
the principal amount of the notes being redeemed, plus any accrued and unpaid interest accrued to
the date of redemption. We also repurchased $26.1 million of the notes during 2005. We paid an
aggregate consideration of $167.3 million for such redemptions and repurchases in 2005. In
addition, upon the occurrence of certain repayment events, including a change in control, on or
prior to March 18, 2007, each note holder may require us to repurchase all or a portion of such
holder's notes at a price to yield of 4.91% per year to the redemption date.
We have licensed patent rights from Freescale Semiconductor, Inc. to use technology in
manufacturing BGA packages under an agreement (which was initially
entered into with Motorola, Inc. in October 1996, as amended in April
2003, and which Motorola, Inc. assigned to Freescale Semiconductor, Inc. in June 2004). The agreement
expires on December 31, 2010. Under this agreement, we are required to pay Freescale Semiconductor,
Inc. a royalty based upon a
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percentage of net revenues. We cannot assure you that we will be able
to renew this agreement when it expires on terms that are favorable to us or at all.
On June 20, 2003, we executed a Strategic Assistance Loan Agreement with Simmtech, pursuant to
which we granted an
interest-free
loan of $5 million to Simmtech and Simmtech undertook to supply
such quantities of materials, substrates and other supplies to enable us to produce a specified
number of PBGA and stPBGA packages up to mid 2007. The loan is repayable in installments of
$450,000, with the first installment of the repayment amount due on June 23, 2004 and thereafter on
the first day of each subsequent three month period, except that the last repayment amount is due
no later than July 1, 2007. In order to secure Simmtech's obligations under the Strategic
Assistance Loan Agreement to us, Simmtech deposited and pledged 0.7 million shares of common stock
of Simmtech under a Pledge Agreement dated June 20, 2003 as well as transferred to us, all its
rights and interests in certain movable property to be released and
re-transferred
upon the
repayment of the loan pursuant to a Yangdo Tambo Agreement dated June 20, 2003. On December 26,
2003, we signed a Base Capacity and Continuing Support Agreement with Simmtech and a Loan Agreement
pursuant to which we granted an
interest-free
loan of $15 million to Simmtech. Under the Base
Capacity and Continuing Support Agreement which took effect from January 1, 2004, Simmtech further
committed and undertook to supply certain quantities of substrates and other supplies to enable us
to produce certain specified quantities of PBGA and stPBGA packages. In connection with this, we
executed a Strategic Assistance Loan Agreement under which we granted a loan of $15 million to
Simmtech. The loan is repayable in installments of $882,353, with the first installment paid on
January 2, 2005 and subsequent installments payable on the first day of each subsequent three-month
period, provided that the last installment shall be due no later than January 2, 2009. Under the
Loan Agreement, in the event that Simmtech spins off its substrate manufacturing operations and
forms a new company to run such operations, we are entitled to make an equity investment of up to
30% in the new company. Further, for as long as the loan is outstanding from Simmtech, we have the
right to nominate for election one
non-standing
member to the board of directors of Simmtech. In
order to secure Simmtech's obligations under the Strategic Assistance Loan Agreement to us,
Simmtech deposited and pledged 2.4 million shares of common stock of Simmtech under a Share Pledge
Agreement dated December 26, 2003. Simmtech also transferred to us, pursuant to a Yangdo Tambo
Agreement dated December 26, 2003, all its rights and interests in the equipment to be purchased
using the loan sums. These rights and interests will be released and
re-transferred
upon repayment
of the loan. In addition, we were granted a fourth priority maximum amount factory mortgage over
certain property owned by Simmtech. At Simmtech's request, we discharged the pledge of 0.7 million
shares on January 27, 2005 in consideration of the value of the 2.4 million shares pledged to us
under the December 26, 2003 Share Pledge Agreement.
In November 2003, we issued $115.0 million of senior unsecured and unsubordinated convertible
notes due November 7, 2008. The convertible notes have a yield to maturity of 4.25%. At the
maturity date, we will pay to the note holders 123.4% of the principal amount, comprising principal
and redemption interest. The notes can be converted into our ordinary shares, or subject to certain
limitations, ADSs, each of which currently represents ten ordinary shares, at an initial conversion
price of $3.05 per ordinary share (equivalent to an initial number of 570.5902 ordinary shares per
$1,000 principal amount of convertible notes, based on a fixed exchange rate of US$1.00 =
S$1.7403). The conversion price may be subject to adjustments for certain events. We may elect to
satisfy our obligations to deliver ordinary shares or ADSs through delivery of cash in accordance
with the terms of the notes. We may redeem all or a portion of the convertible notes at any time on
or after November 7, 2006 at a price to yield of 4.25% per annum to the redemption date if our
shares or ADSs trade at or above 130% of the conversion price for a period of 20 trading days in
any 30 consecutive trading day period. The note holders may require us to repurchase all or a
portion of their notes on November 7, 2007 at a price equal to 118.32% of the principal amount of
the notes being redeemed, plus any accrued and unpaid interest accrued to the date of redemption.
In addition, upon the occurrence of certain repayment events, including a change in control, on or
prior to November 7, 2008, each note holder may require us to repurchase all or a portion of such
holder's notes at a price to yield of 4.25% per year to the redemption date.
In May and June 2003, ChipPAC issued $150.0 million of 2.5% convertible subordinated notes due
2008. These convertible notes are ChipPAC's unsecured and subordinated obligations. These
convertible notes will mature on June 1, 2008, with interest at the rate of 2.5% per annum payable
semi-annually
on June 1 and December 1 of each year. On the maturity date of these convertible
notes, ChipPAC will pay to the note holders of these convertible notes 100% of the principal
amount. These convertible notes were originally convertible into ChipPAC Class A common stock.
However, as a condition precedent to the merger, we, ChipPAC and the trustee for these convertible
notes entered into a supplemental indenture to modify the conversion rights of these convertible
notes such that these convertible notes would be convertible into our ADSs. Pursuant to the
supplemental indenture, these convertible notes can be converted into our ADSs at a conversion
price of $9.267 per ADS. The conversion price may be subject to adjustments for certain events.
These convertible notes are not redeemable at the option of ChipPAC. Upon the occurrence of
specified change in control events, each holder of these notes may require ChipPAC to repurchase
all or a portion of such holder's notes at a purchase price equal to 100% of the principal amount
thereof on the date of purchase plus accrued and unpaid interest, if any. On October 11, 2004, we,
ChipPAC and the trustee for these convertible notes entered into a second supplemental indenture to
provide for an unconditional guarantee of these convertible notes on a subordinated basis by STATS
ChipPAC (but not by any of its subsidiaries). On October 18, 2004, ChipPAC commenced a consent
solicitation from holders of these convertible notes to amend the indenture
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governing these convertible notes to replace ChipPAC's obligation to file with the SEC annual reports and such
other information, documents and reports specified in Sections 13 and 15(d) of the Exchange Act
with an obligation for us to file all such reports with the SEC as are applicable to a foreign
private issuer. The consent solicitation expired on November 1, 2004. ChipPAC received valid
deliveries of consents from holders of approximately $130.5 million aggregate principal amount, or
87%, of these convertible notes outstanding. Accordingly, ChipPAC obtained the requisite consents
authorizing the adoption of the proposed amendment to the indenture. The consents were accepted and
the amendments to the indenture became effective on November 2, 2004. Payment of the consent fee of
$326,250 was made on November 4, 2004.
In March 2004, our subsidiary, Winstek entered into a Loan Agreement with a syndicate of lenders, with Mega Bank as the agent bank, for the sum of $54.6 million (NT$1.8 Billion). As of December 31, 2006, Winstek has drawn down $50.3 million (NT$1.6 billion) under the loan, which is repayable in eight equal installments commencing February 27, 2006
and ending on August 27, 2009. The interest rate on the loan is 3.5% per annum and interest on the loan is payable on a monthly basis.
In November 2004, we issued $215.0 million of 6.75% senior notes due 2011. These notes are our
unsecured senior obligations. These notes are guaranteed, on an unsecured senior basis, by all of
our existing
wholly-owned
subsidiaries (except STATS ChipPAC Test Services (Shanghai) Co., Ltd.,
STATS ChipPAC Shanghai Co., Ltd. and STATS ChipPAC Semiconductor Shanghai Co., Ltd.) and our future
restricted subsidiaries (except where prohibited by local law). These notes will mature on November 15, 2011, with interest at the rate of 6.75% per annum payable
semi-annually
on May 15 and November 15 of each year, commencing May 15, 2005. Prior to November 15, 2008,
we may redeem all or part of these notes at any time by paying a
"make-whole"
premium plus accrued and unpaid interest. We may
redeem all, but not less than all, of these notes at any time in the event of certain changes
affecting withholding taxes at 100% of their principal amount plus accrued and unpaid interest. On
or after November 15, 2008, we may redeem all or a part of these notes at any time at the
redemption prices specified under the terms and conditions of these notes plus accrued and unpaid
interest. In addition, prior to November 15, 2007, we may redeem up to 35% of these notes with the
net proceeds of certain equity offerings. Upon a change of control, we will be required to offer to
purchase these notes at 101% of their principal amount plus accrued and unpaid interest.
In July 2005, we issued $150,000 of 7.50% senior notes due 2010. These notes are our unsecured
senior obligations. The senior notes are guaranteed on an unsecured senior basis, by all of our
existing
wholly-owned
subsidiaries (except STATS ChipPAC Test Services (Shanghai) Co., Ltd., STATS
ChipPAC Shanghai Co., Ltd., STATS ChipPAC Semiconductor Shanghai Co., Ltd. and STATS ChipPAC Korea
Ltd.) and our future restricted subsidiaries (except where prohibited by local law). These notes
will mature on July 19, 2010, with interest at the rate of 7.5% per annum payable
semi-annually
on
January 19 and July 19 of each year, commencing January 19, 2006. Prior to July 19, 2010, we may
redeem all or part of these notes at any time by paying a
"make-whole"
premium plus accrued and
unpaid interest. We may redeem all, but not less than all, of these notes at any time in the event
of certain changes affecting withholding taxes at 100% of their principal amount plus accrued and
unpaid interest. In addition, prior to July 19, 2008, we may redeem up to 35% of these notes with
the net proceeds of certain equity offerings. Upon a change of control, we will be required to
offer to purchase these notes at 101% of their principal amount plus accrued and unpaid interest.
In
May 2006, we entered in a three-year term loan agreement with Hana Bank, Korea for the sum of $25.0
million. The loan drawn down under this term loan agreement bears a floating rate of interest determined by reference to LIBOR and will be payable by June 2009.
In June 2006, we entered into a strategic joint venture with CR Logic for the assembly and
test of select products in Wuxi, China. Under the agreement, CR Logic's indirect
wholly-owned
subsidiary, ANST, has agreed to purchase more than 1,000 sets of key assembly and test equipment
from us for US$35 million, to be settled in cash installments over a four year period until 2010.
We will continue to provide sales and technical support to our existing customers on specific low
lead count packages until December 31, 2009 with customer purchase orders being placed directly
with ANST. ANST, in return, has agreed to pay us a commission on the aggregate amount of revenues
generated from such orders on a quarterly basis in 2007, 2008 and 2009. In connection with this
joint venture, we acquired a 25% ownership stake in ANST for a cash consideration of US$10 million
with CR Logic owning a 75% interest.
In August 2006, we entered into a facility agreement with
Oversea-Chinese
Banking Corporation
Limited, as the arranger and agent, and six lenders for a syndicated
three-year
revolving line of
credit of $125.0 million. The purpose of the line of credit is to fund working capital requirements
and for general corporate purposes. Any loan drawn down under this
line of credit will bear a floating rate of interest determined by reference to LIBOR.
In August 2006, our subsidiary Winstek entered into a loan agreement with a syndicate of lenders, with Taishin Bank as the agent bank,
for the sum of $110.5 million (NT$3.6 Billion). Any loan drawn down under this term loan agreement will bear a floating rate of interest determined by reference to 90 days commercial paper interest rate and will be payable six years from the first draw down.
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D. Exchange Controls
Currently, there are no exchange control restrictions in Singapore.
Exchange Rates
Fluctuations in the exchange rate between the Singapore dollar and the U.S dollar will affect
the U.S. dollar equivalent of the Singapore dollar price of the ordinary shares on
SGX-ST
and, as a
result, may affect the market price of our convertible notes. Currently, there are no restrictions
in Singapore on the conversion of Singapore dollars into U.S. dollars and vice versa.
The following table sets forth, for the fiscal years indicated, information concerning the
exchange rates between Singapore dollars and U.S. dollars based on the average of the noon buying
rate in the City of New York on the last business day of each month during the period for cable
transfers in Singapore dollars as certified for customs purposes by the Federal Reserve Bank of New
York. The table illustrates how many Singapore dollars it would take to buy one U.S. dollar. These
transactions should not be construed as a representation that those Singapore dollar or U.S. dollar
amounts could have been, or could be, converted into U.S. dollars or Singapore dollars, as the case
may be, at any particular rate, the rate stated below, or at all.
Singapore Dollars per US$1.00 Noon Buying Rate
Average(1)
Low
High
Period End
Fiscal Year
2002
1.79
1.73
1.85
1.74
2003
1.74
1.70
1.78
1.70
2004
1.69
1.63
1.73
1.63
2005
1.66
1.62
1.71
1.67
2006
1.58
1.67
1.53
1.53
Month
August 2006
—
1.57
1.58
1.57
September 2006
—
1.57
1.59
1.59
October 2006
—
1.56
1.59
1.56
November 2006
—
1.54
1.57
1.54
December 2006
—
1.55
1.53
1.53
January 2007
—
1.53
1.54
1.54
February 2007
—
1.53
1.54
1.53
(1)
The average of the daily noon buying rates on the last business day of each month during the
year.
E. Taxation
Singapore Taxation
The statements made herein regarding taxation are general in nature and based on certain
aspects of the tax laws of Singapore and administrative guidelines issued by the relevant
authorities in force as of the date hereof and are subject to any changes in such laws or
administrative guidelines, or in the interpretation of these laws or guidelines, occurring after
such date, which changes could be made on a retroactive basis. The following is a summary of the
material Singapore income tax, stamp duty and estate duty consequences of the purchase, ownership
and disposal of the ordinary shares or ADSs (collectively, referred to the Securities) to a holder
of the Securities who is not tax resident in Singapore. The statements below are not to be regarded
as advice on the Singapore tax position of any holder of the Securities or of any person acquiring,
selling or otherwise dealing with the Securities or on any tax implications arising from the
acquisition, sale or other dealings in respect of the Securities. The statements made herein do not
purport to be a comprehensive description of all of the tax considerations that may be relevant to
a decision to purchase, own or dispose of the Securities and does not purport to deal with the tax
consequences applicable to all categories of investors some of which (such as dealers in
securities) may be subject to special rules. Prospective purchasers and holders of the Securities
are advised to consult their own tax advisors as to the Singapore or other tax consequences of the
acquisition, ownership or disposition of the Securities, including, in particular, the effect of
any foreign, state or local tax laws to which they are subject.
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Income Tax
General
Non-resident
corporate taxpayers are subject to income tax on income that is accrued in or
derived from Singapore, and on foreign income received or deemed received in Singapore, subject to
certain exceptions. A
non-resident
individual is subject to income tax on the income accrued in or
derived from Singapore.
Subject to the provisions of any applicable double taxation treaty,
non-resident
taxpayers who
derive certain types of income from Singapore are subject to a withholding tax on that income at a
rate of 20% for the year of assessment 2007 and 18% for the year of assessment 2008, or 15% in the case of interest and rental of moveable equipment, or 10% in the
case of royalty for the use of or the right to use any movable property, subject to certain
exceptions. We are obligated by law to withhold tax at the source.
A corporation will be regarded as being tax resident in Singapore if the control and
management of its business is exercised in Singapore (for example, if the corporation's board of
directors meets and conducts the business of the corporation in Singapore). An individual is tax
resident in Singapore in a year of assessment if, in the preceding year, he was physically present
in Singapore or exercised an employment in Singapore (other than as a director of a company) for
183 days or more, or if the individual resides in Singapore.
Dividend Distributions
Dividends received in respect of our ordinary shares or ADSs by either a resident or
non-resident
of Singapore are not subject to Singapore withholding tax.
Dividends paid out of
Tax-Exempt
Income or Income subject to Concessionary Tax Rate
If we pay dividends on the ordinary shares or ADSs out of income received that is exempt from
tax or out of our income received that is subject to tax at a concessionary rate, if any, such
dividends will be free from Singapore tax in the hands of the holders of the ordinary shares and
ADSs. See "Item 5. Operating and Financial Review and Prospects — Special Tax Status" for a
discussion of our application for tax incentive.
Dividends paid out of Income subject to Normal Corporate Taxation
Imputation System
Prior to January 1, 2003, (and to a certain extent between January 1, 2003 and December 31,
2007), pursuant to the transitional rules for the new
one-tier
corporate tax system (see "— New
One-Tier
Corporate Tax System" below) Singapore was on the imputation system of corporate taxation.
Under this system, the tax we paid on income subject to tax at the prevailing corporate income tax
rates up to year of assessment 2003 (up to December 31, 2002) would be imputed to, and deemed to be paid on behalf of, our shareholders upon distribution of such
income as dividends. Our shareholders would have received dividends (Franked Dividends) net of such
tax and would be taxed on the gross amount of dividends (that is, on the amount of net dividends
plus an amount equal to the amount of gross dividends multiplied by the prevailing corporate tax
rate). In this way, the tax we paid would be available to our shareholders as a tax credit to
offset their tax liability on their overall income subject to Singapore income tax (including the
gross amount of dividends).
A
non-resident
shareholder is effectively taxed on Franked Dividends at the corporate income
tax rate. Thus, because tax deducted from the dividend and paid by us at the corporate income tax
rate is in effect imputed to, and deemed paid on behalf of, our shareholders (as discussed in the
preceding paragraph), no further Singapore income tax will be imposed on net dividends received by
a
non-resident
holder of ordinary shares or ADSs. Further, the
non-resident
shareholder who does
not have a permanent establishment in Singapore and deductible expenses attributed to such dividend
income would normally not receive any tax refund from the Inland Revenue Authority of Singapore.
New
One-tier
Corporate Tax System
A new
one-tier
corporate tax system became effective from January 1, 2003 (subject to certain
transitional rules). Under this new system, the tax on corporate profits is final and dividends
paid by a Singapore resident company will be tax exempt in the hands of the shareholder, regardless
of whether the shareholder is a company or an individual and whether or not the shareholder is a
Singapore tax resident. Accordingly,
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under the
one-tier
corporate tax system, no further Singapore income tax will be imposed on
the net dividends received by a non-resident holder of the ordinary shares or ADSs.
However, to enable companies to make use of their unutilized dividend franking credits as at
December 31, 2002, there will be a
five-year
transition period from January 1, 2003 to December 31,
2007, during which a company may remain on the imputation system for the purposes of paying Franked
Dividends out of its unutilized dividend franking credits as at December 31, 2002. Accordingly, as
long as we remain on the imputation system, shareholders may continue to receive dividends with
credits attached as described above under "Imputation System".
For the transitional period from January 1, 2003 up to December 31, 2007, when the imputation
system
co-exists
with the
one-tier
corporate tax system, if we have not moved to the
one-tier
system, tax vouchers issued by us will distinguish between franked dividends and normal tax exempt
dividends not being exempt dividends under the
one-tier
system, such as dividends paid out of tax
exempt income, approved deduction or further deduction of expenses or certain foreign income for
which foreign tax credit was allowed. If we have fully utilized our dividend franking credits (that
is, we are required to move to the
one-tier
system) or if we elect to move to the
one-tier
system
at an earlier date, tax vouchers issued by us will distinguish between normal tax exempt dividends
and exempt dividends under the
one-tier
system. We do not presently intend to migrate to the new
one-tier
corporate tax system until our dividend franking credits as at December 31, 2002 are fully
utilized or until the transition period comes to an end on December 31, 2007, whichever is earlier.
No comprehensive tax treaty currently exists between Singapore and the United States.
Tax on Capital Gains
Singapore does not impose tax on capital gains. However, there are currently no specific laws
or regulations which address the characterization of capital gains; hence gains or profits may be
construed to be of an income nature and subject to tax, especially if they arise from activities
which the Inland Revenue Authority of Singapore regards as the carrying on of a trade or business
in Singapore. Thus, any gains or profits from the disposal of the ordinary shares or ADSs are not
taxable in Singapore unless the seller is regarded as carrying on a trade or business (for example,
one of dealing in securities) in Singapore, in which case the disposal profits would be taxable as
such profits would be considered revenue in nature.
On December 30, 2005, the Inland Revenue Authority of Singapore issued a circular entitled
"Income Tax Implications arising from the adoption of Singapore Financial Reporting Standards 39 (FRS 39) — Financial instruments: Recognition
and Measurement" (FRS 39 Circular). Legislative amendments to give effect to the FRS 39
Circular have recently been passed by the Singapore Parliament. The tax regime described in FRS 39
Circular generally applies, subject to certain
"opt-out"
provisions, to taxpayers who are required
to comply with FRS 39 for financial reporting
purposes. Holders of our ordinary shares or ADSs who are adopting FRS 39 for Singapore income tax
purposes may be required to recognize gains or losses on the shares or ADSs, irrespective of
disposal, in accordance with FRS 39. Holders of our ordinary shares or ADSs who may be subject to
the tax treatment under the FRS 39 Circular should consult their own accounting and tax advisers
regarding the Singapore income tax consequences of their acquisition, holding or disposal of our
ordinary shares or ADSs.
Stamp Duty
There is no stamp duty payable in respect of the issuance and holding of ordinary shares or
ADSs. Where ordinary shares or ADSs evidenced in certificated form are acquired in Singapore, stamp
duty is payable on the instrument of transfer of the ordinary shares or ADSs at the rate of S$0.20
for every S$100 or part thereof of the consideration for, or market value of, the ordinary shares
or ADSs, whichever is higher. The stamp duty is borne by the purchaser unless there is an agreement
to the contrary. Where an instrument of transfer is executed outside Singapore or no instrument of
transfer is executed, no stamp duty is payable on the acquisition of ordinary shares or ADSs.
However, stamp duty may be payable if the instrument of transfer is executed outside Singapore and
received in Singapore.
Estate Duty
In the case of an individual who is not domiciled in Singapore, Singapore estate duty is
imposed on the value of immovable properties of the individual situated in Singapore. Estate duty
is not imposed on the movable properties in Singapore owned by a
non-domiciled
person. Thus, an
individual holder of the ordinary shares or ADSs who is not domiciled in Singapore at the time of
his death will not be subject to Singapore estate duty on the value of the ordinary shares or ADSs
held by the individual upon the individual's death.
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Prospective purchasers of ordinary shares or ADSs, who are individuals, whether or not
domiciled in Singapore, should consult their own tax advisers regarding the Singapore estate duty
consequences of their investment and ownership of such ordinary shares and/or ADSs.
United States Federal Income Taxation
The following is a general summary of the material United States federal income tax
consequences of the ownership and disposition of ordinary shares (including ordinary shares
represented by ADSs). This summary applies only to U.S. Holders (as defined below) that have the
U.S. dollar as their functional currency and that hold ordinary shares or ADSs as "capital assets".
This discussion does not address tax considerations applicable to a U.S. Holder's special
circumstances or to U.S. Holders that may be subject to special tax rules. You are a "U.S. Holder"
if you are a beneficial owner of ordinary shares or ADSs and you are, for U.S. federal income tax
purposes, (i) a citizen or resident of the United States; (ii) a corporation (or other entity
taxable as a corporation) organized under the laws of the United States, any State thereof or the
District of Columbia; (iii) an estate the income of which is subject to U.S. federal income
taxation regardless of its source; or (iv) a trust that (a) is subject to the primary supervision
of a court within the United States and the control of one or more U.S. persons for all substantial
decisions of the trust or (b) has a valid election in effect under applicable U.S. Treasury
Regulations to be treated as a U.S. person. The following discussion is based on the tax laws of
the United States as in effect on the date hereof and on U.S. Treasury Regulations in effect or, in
some cases, proposed, as of the date hereof, as well as judicial and administrative interpretations
thereof available on or before such date. All of the foregoing authorities are subject to change,
which change could apply retroactively and could affect the tax consequences described below. U.S. Holders are urged to consult their own tax advisors with respect to the United States federal
income tax consequences of the ownership and disposition of ordinary shares and ADSs in light of
their own particular circumstances, as well as the effect of any state, local or
non-United
States
tax laws.
Distributions on Ordinary Shares or ADSs
Subject to the passive foreign investment company (PFIC) rules discussed below, distributions,
if any, made with respect to the ordinary shares or ADSs will be included in the income of a U.S. Holder as dividend income to the extent of our current and accumulated earnings and profits,
calculated pursuant to United States federal income tax principles. U.S. Holders must include such
distributions in income on the date they are actually or constructively received by the U.S. Holder, in the case of ordinary shares, or by the depositary, in the case of the ADSs. Subject to
certain limitations, for taxable years beginning before January 1, 2011, dividends paid to
non-corporate
U.S. Holders, including individuals, may be eligible for reduced rate of taxation if
we are a "qualified foreign corporation" for United States federal income tax purposes. A qualified
foreign corporation generally includes (i) a foreign corporation that is eligible for the benefits
of a comprehensive income tax treaty with the United States that includes an exchange of
information program, and (ii) a foreign corporation if its stock with respect to which a dividend
is paid or its ADSs with respect to such stock are readily tradable on an established securities
market within the United States, but does not include an otherwise qualified corporation that is a
PFIC. We believe that we will be a qualified foreign corporation for so long as we are not a PFIC
and the ordinary shares or the ADSs are considered to be readily tradable on an established
securities market within the United States. No assurance can be made that our status as a qualified
foreign corporation will not change.
A corporate U.S. Holder will not be entitled to a dividends received deduction generally
available upon the receipt of dividends distributed by United States corporations. Distributions in
excess of our current and accumulated earnings and profits will be treated as a return of capital
to the extent of the U.S. Holder's basis in the ordinary shares or ADSs and thereafter as capital
gain. Such capital gain will be
long-term
capital gain if the U.S. Holder's holding period of the
ordinary shares or ADSs is more than one year at the time of sale or exchange.
If a taxable dividend is paid in a currency other than the U.S. dollar, the amount includible
in gross income will be the U.S. dollar value of such dividend, calculated by reference to the
exchange rate in effect on the date of actual or constructive receipt of the dividend by the U.S. Holder, in the case of ordinary shares, or by the depositary, in the case of ADS, regardless of
whether the payment is actually converted into U.S. dollars. U.S. Holders should consult their own
tax advisors concerning the possibility of foreign currency gain or loss if any such currency is
not converted into U.S. dollars on the date of receipt.
Dividends received with respect to the ordinary shares or ADSs will be treated as income from
outside the United States and, for taxable years beginning before December 31, 2006, generally will
be treated as "passive income" or "financial services income" for United States foreign
tax credit purposes. For taxable years beginning after December 31, 2006, dividends will be treated
as "passive category income" or "general category income" for United States foreign tax credit
purposes. Under the Internal Revenue Code of 1986, as amended, certain portions of dividends paid
by a foreign corporation 50% or more of which is owned by United States persons may be treated as
income from sources within the United States provided that the foreign corporation has more than a
small amount of income from sources within the United States. The Singapore taxes paid under the
imputation system are paid by our Company and deemed to have been distributed to and paid by our
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shareholders. A U.S. Holder should not be subject to United States federal income tax on such
amounts, and the holder will likely not be eligible for foreign tax credits for such amounts
against its United States federal income tax liability.
Sale or Exchange of the Ordinary Shares or ADSs
Subject to the PFIC rules discussed below, upon the sale or exchange of an ordinary share or
an ADS, a U.S. Holder will generally recognize capital gain or loss equal to the difference between
(i) the amount of cash proceeds and the fair market value of any property received on the sale or
exchange and (ii) such holder's adjusted tax basis in the ordinary share or ADS. Such capital gain
or loss will be
long-term
capital gain or loss if the U.S. Holder's holding period in the ordinary
share or ADS is more than one year at the time of sale or exchange.
Long-term
capital gains
recognized by certain
non-corporate
U.S. Holders, including individuals, will generally be subject
to U.S. federal income tax at preferential rates. The deductibility of capital losses is subject to
limitations. Such gain or loss generally will be treated as income or loss from within the United
States for United States foreign tax credit purposes.
Passive Foreign Investment Company
Special United States federal income tax rules apply to U.S. persons owning shares of a PFIC.
We do not believe that we are currently a PFIC, nor do we anticipate becoming a PFIC in the
foreseeable future. However, there can be no assurance that we will not become a PFIC at some
future time as a result of changes in our assets, income or business operations.
If we were classified as a PFIC for any taxable year during which a U.S. Holder held ordinary
shares or ADSs, such U.S. Holder generally would be taxed at ordinary income tax rates on any gain
realized on the sale or exchange of the ordinary share or ADSs and on any "excess distribution"
received. Such U.S. Holder would also be subject to a special interest charge with respect to any
such gain or "excess distribution". Rather than being subject to this tax regime, if available, a
U.S. Holder of ordinary shares or ADSs may make a "qualified electing fund" or
"mark-to-market"
election. A "qualified electing fund" election generally should be made for the first taxable year
in which a company is a PFIC.
United States Information Reporting and Backup Withholding
Dividend payments with respect to ordinary shares or ADSs and proceeds from the sale, exchange
or redemption of ordinary shares or ADSs may be subject to information reporting to the Internal
Revenue Service and possible U.S. backup withholding at a current rate of 28%. Backup withholding
will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number
and makes any other required certification or who is otherwise exempt from backup withholding. U.S. Holders
who are required to establish their exempt status generally must provide such certification
on Internal Revenue Service
Form W-9
. U.S. Holders should consult their tax advisors regarding the
application of the U.S. information reporting and backup withholding rules.
Backup withholding is not an additional tax. Amounts withheld as backup withholding may be
credited against a U.S. Holder's U.S. federal income tax liability, and such holder may obtain a
refund of any excess amounts withheld under the backup withholding rules by filing the appropriate
claim for refund with the Internal Revenue Service and furnishing any required information.
F. Dividends and Paying Agents
Not applicable
G. Statements by Experts
Not applicable
H. Documents on Display
All documents relating to our Company which are referred to in this annual report are
available at our principal executive offices at 10 Ang Mo Kio Street 65,
#05-17/20
Techpoint,
Singapore 569059, Republic of Singapore and registered office at No. 5, Yishun Street 23, Singapore 768442, Republic of Singapore.
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I. Subsidiary Information
Not applicable
ITEM 11.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to financial market risks, including changes in currency exchange rates and
interest rates. To mitigate the currency exchange risks, a substantial majority of our revenue,
material and equipment supplies are transacted in U.S. dollars. We may employ derivative
instruments such as forward foreign currency swaps, foreign currency contracts and options and
interest rate swaps to manage our foreign exchange and interest rate exposures. These instruments
are generally used to reduce or eliminate the financial risks associated with our assets and
liabilities and not for trading purposes.
Investment and Interest Rates
Our exposure to market risk associated with changes in interest rates primarily relates to our
investment portfolio and debt obligations. We place our investments in time deposits and marketable
securities. We mitigate default risk by investing in marketable securities that are of at least an
"A" rating, as assigned by an internationally recognized credit rating organization, and major
Singapore banks and
government-linked
companies. We have no material cash flow exposure due to rate
changes for cash equivalents and
short-term
investments. The fair value of fixed rate debts will
vary as interest rates change. The fair value of convertible notes is also impacted by the market
price of our ordinary shares or ADSs. As of December 31, 2006, our
short-term
and
long-term
debt
obligations for the $31.5 million and $115.0 million senior unsecured and unsubordinated
convertible notes due March 18, 2007 and November 7, 2008, respectively, the $150.0 million
subordinated convertible notes due June 1, 2008 and the $215.0 million and $150.0 million senior
notes due November 15, 2011 and July 19, 2010, respectively, bear fixed interest rate. The
convertible notes due March 18, 2007 bear interest at a rate of 1.75% per annum and have a yield to
maturity of 4.91%. The convertible notes due November 7, 2008 have a yield to maturity of 4.25%.
The subordinated convertible notes due 2008, and senior notes due 2011 and 2010 bear interest of
2.5%, 6.75% and 7.5% per annum, respectively.
Currency Exchange Rates
A portion of our costs is denominated in various foreign currencies, like the Singapore
dollar, the Malaysian Ringgit, the South Korean Won, the Chinese Renminbi, the New Taiwan dollar
and the Japanese yen. As a result, changes in the exchange rates of these currencies or any other
applicable currencies to the U.S. dollar will affect our cost of goods sold and operating margins
and could result in exchange losses. We have entered into foreign currency contracts to mitigate
financial risks associated with payroll costs, materials costs and other costs denominated in
Singapore dollars, South Korean Won and Malaysia Ringgit to benefit from our expectations of future
exchange rate fluctuations.
Based on our overall currency rate exposure, we have adopted a foreign currency hedging policy
for committed or forecasted currency exposures. As of December 31, 2006, we had a series of
foreign currency forward contracts with total contract value of approximately $147.0 million, to
hedge against fluctuation in Singapore dollars, South Korean Won and Malaysian Ringgit. We may
utilize foreign currency swaps as well as foreign exchange forward contracts and options. These
programs reduce, but do not always entirely eliminate the impact of currency exchange movements.
The goal of the hedging policy is to effectively manage risk associated with fluctuations in the
value of the foreign currency, thereby making financial results more stable and predictable.
However, we cannot assure you that any hedging policy we implement will be effective and we may
experience reduced operating margins if any such policies are unsuccessful.
We have performed sensitivity analyses as of December 31, 2006 and December 25, 2005 by
measuring the change in fair values arising from a hypothetical 10% adverse movement in the
exchange rates for all the currencies relative to the U.S. dollar, with all other variables held
constant. The analyses cover our foreign currencies monetary denominated assets and liabilities.
The foreign currency exchange rates we used were based on our closing exchange rates as of December 31,
2006 and December 25, 2005. The sensitivity analyses indicated that a
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hypothetical 10% adverse movement, after taking into account offsetting positions, would
result in a further foreign exchange loss of $3.9 million and $1.4 million as of December 31, 2006
and December 25, 2005, respectively
Currency, maturity, interest rate and fair value information relating to our marketable
securities and,
short-term
and
long-term
debt are disclosed in Notes 1(m), 4, 15, 17 and 27 to our
audited consolidated financial statements, respectively.
Commodity Price
We purchase certain raw materials in the normal course of business, which are affected by
commodity prices. Therefore, we are exposed to some price volatility related to various market
conditions outside our control. However, we employ various purchasing and pricing contract
techniques in an effort to minimize volatility. Generally these techniques include setting in
advance the price for products to be delivered in the future. We do not generally make use of
financial instruments to hedge commodity prices, partly because of the contract pricing utilized.
While price volatility can occur, which would impact profit margins, there are generally
alternative suppliers available.
Limitations
Fair value estimates are made at a specific point in time and are based on relevant market
information about the financial instrument. 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.
ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable
ITEM 13.
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
None
ITEM 14.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
See "Item 10. Additional Information" for a description of the rights of securities holders,
which remain unchanged.
ITEM 15.
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As required by
Rules 13a-15
and
15d-15
under the Exchange Act, management has evaluated, with
the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of
our disclosure controls and procedures as of the end of the period covered by this report.
Disclosure controls and procedures refer to controls and other procedures designed to ensure that
information required to be disclosed in the reports we file or submit under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified in the rules and
forms of the SEC. Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed by us in our reports that
we file or submit under the Exchange Act is accumulated and communicated to management, including
our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions
regarding our required disclosure.
Based on the foregoing, our Chief Executive Officer and Chief Financial Officer have concluded
that, as of December 31, 2006, the end of the period covered by this report, our disclosure
controls and procedures were effective.
Management's Annual Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over
financial reporting as such term is defined in Rule 13a-15(f) under the Exchange Act.
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Internal control over financial reporting refers to a process designed by, or under the
supervision of, our Chief Executive Officer and Chief Financial Officer and effected by our Board
of Directors, management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles and includes those policies
and procedures that:
•
pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of
our assets;
•
provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that
our receipts and expenditures are being made only in accordance
with authorizations of our management and members of our board of
directors; and
•
provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of our
assets that could have a material effect on our financial
statements.
Internal control over financial reporting cannot provide absolute assurance of achieving
financial reporting objectives because of its inherent limitations. Internal control over financial
reporting is a process that involves human diligence and compliance and is subject to lapses in
judgment and breakdowns resulting from human failures. Internal control over financial reporting
also can be circumvented by collusion or improper override. Because of such limitations, there is a
risk that material misstatements may not be prevented or detected on a timely basis by internal
control over financial reporting. However, these inherent limitations are known features of the
financial reporting process, and it is possible to design into the process safeguards to reduce,
though not eliminate, this risk.
Management evaluated the effectiveness of our internal control over financial reporting as of
December 31, 2006 using the framework set forth in the report of the Treadway Commission's
Committee of Sponsoring Organizations (COSO), "Internal Control — Integrated Framework".
Based on the foregoing, management has concluded that our internal control over financial
reporting was effective as of December 31, 2006. Our independent registered public accounting firm,
PricewaterhouseCoopers, has issued an audit report on management's assessment of our internal
control over financial reporting, which is included herein.
Changes to Internal Controls
Management has evaluated, with the participation of our Chief Executive Officer and Chief
Financial Officer, whether any changes in our internal control over financial reporting that
occurred during our last fiscal year have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting. Based on the evaluation we
conducted, management has concluded that no such changes have occurred.
ITEM 16A.
AUDIT COMMITTEE FINANCIAL EXPERT
Our Board of Directors has determined that Mr. Steven H. Hamblin and Mr. R. Douglas Norby each
qualifies as an "audit committee financial expert" as defined in Item 16A of
Form 20-F
. Each of the
members of the Audit Committee is an "independent director" as defined in Rule 4200(15) of the
Nasdaq Marketplace Rules.
ITEM 16B.
CODE OF ETHICS
Our Company has built a reputation of integrity and ethical business practices and gained
credibility and trust from our stockholders, customers, suppliers and employees over time. We have
adopted a code of business conduct and ethics that is designed to qualify as a "code of ethics"
within the meaning of Section 406 of the
Sarbanes-Oxley
Act of 2002 and the rules promulgated
thereunder and is applicable to our employees, officers and
non-employee
directors, including our
chief executive officer, chief financial officer, principal accounting officer or controller, and
persons performing similar function. We have posted our code of ethics on our internal company
website, conducted
company-wide
awareness workshops and have included it within our new employee
orientation programs. We will provide it free of charge to the general public upon request.
93
Table of Contents
ITEM 16C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
PwC served as our independent registered public accounting firm from August 2004.
The following table shows the fees we paid or accrued for the audit and other services
provided by PwC for 2005 and 2006.
Year Ended
December 25,
December 31,
2005
2006
(In thousands)
Audit fees
$
849
$
1,935
Audit-related
fees
33
45
Tax fees
124
140
All other fees
229
36
Total
$
1,235
$
2,156
Audit Fees.
This category consists of fees billed for the audit of financial statements and
internal control over financial reporting, quarterly review of financial statements and other audit
services, which are normally provided by the independent auditors in connection with statutory and
accounting matters that arose during, or as a result of, the audit or the review of interim
financial statements and include the group audit; statutory audits required by
non-U.S.
jurisdictions; comfort letters and consents; attest services; and assistance with and review of
documents filed with the SEC.
Audit-Related
Fees.
This category consists of fees billed for assurance and related services
that are reasonably related to the performance of the audit or review of our financial statements
or that are traditionally performed by the external auditor, and include internal control reviews
of new systems, program and projects; review of security controls and operational effectiveness of
systems; due diligence related to acquisitions; accounting assistance; audits, offering of
convertible notes and audits in connection with proposed or completed acquisitions; and employee
benefit plan audits.
Tax Fees.
This category includes fees billed for tax compliance services, including the
preparation of original and amended tax returns and claims for refund; tax consultations, such as
assistance and representation in connection with tax audits and appeals, tax advice related to
mergers and acquisitions, transfer pricing, and requests for rulings or technical advice from
taxing authorities and tax planning services.
All Other Fees.
No fees were paid or billed by PwC with respect to any other services which
have not been described above in 2005 and 2006.
Audit Committee
Pre-approval
Process
Our Audit Committee reviews and
pre-approves
the scope and the cost of all audit and
permissible non-audit services performed by the independent auditors, other than those for
de
minimus
services which are approved by the Audit Committee prior to the completion of the audit.
All of the services provided by PwC during the last three fiscal years have been approved by the
Audit Committee.
ITEM 16D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEE
Not applicable.
ITEM 16E.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Neither we, nor any affiliated purchaser, made any purchase of our equity securities for the
year ended December 31, 2006.
ITEM 17.
FINANCIAL STATEMENTS
See Item 18 for a list of the Financial Statements filed as part of this annual report.
94
Table of Contents
ITEM 18.
FINANCIAL STATEMENTS
The following financial statements are filed as part of this annual report, together with the
report of the independent registered public accounting firms:
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as at December 25, 2005 and December 31, 2006
Consolidated
Statements of Operations and Comprehensive Income (Loss) for 2004, 2005 and 2006
Consolidated Statements of Shareholders' Equity for 2004, 2005 and 2006
Consolidated Statements of Cash Flows for 2004, 2005 and 2006
Notes to the Consolidated Financial Statements
ITEM 19.
EXHIBITS
The following exhibits are filed as part of this annual report:
1.1**
Memorandum of Association of STATS ChipPAC Ltd.
1.2.
Amended Articles of Association of STATS ChipPAC Ltd. — incorporated by reference to Exhibit 2 of Amendment
No. 2 to the Registration Statement on
Form 8-A
(File No. 000-29103) of STATS ChipPAC Ltd., as filed with the Securities
and Exchange Commission on May 9, 2006
2.1
Specimen ordinary share certificate of STATS ChipPAC Ltd. issued on and after January 30,
2006 in respect of transfers of shares issued before January 30, 2006 — incorporated by
reference to Exhibit 3.1 of Amendment No. 2 to the Registration Statement on
Form 8-A
(File
No. 000-29103
) of STATS ChipPAC Ltd., as filed with the Securities and Exchange Commission on
May 9, 2006
2.1.1
Specimen ordinary share certificate of STATS ChipPAC Ltd. issued on and after January 30,
2006 in respect of new issuances of shares issued after January 30, 2006 — incorporated by
reference to Exhibit 3.2 of Amendment No. 2 to the Registration Statement on
Form 8-A
(File
No. 000-29103
) of STATS ChipPAC Ltd., as filed with the Securities and Exchange Commission on
May 9, 2006
2.2
Deposit Agreement dated February 8, 2000 among ST Assembly Test Services Ltd, Citibank, N.A.,
as depositary, and the holders from time to time of American Depositary Receipts (ADRs) issued thereunder (including the form
of ADR) — incorporated by reference to Exhibit 2.2 of
Form 20-F
(File
No. 333-93661
) of ST
Assembly Test Services Ltd filed with the Securities and Exchange Commission on March 30, 2001
4.1
Lease Agreement dated November 18, 1996 by and between the Housing and Development Board and
ST Assembly Test Services Ltd — incorporated by reference to Exhibit 10.4 of Amendment No. 1
to
Form F-1
(File
No. 333-93661
) of ST Assembly Test Services Ltd filed with the Securities
and Exchange Commission on January 3, 2000
4.2
Program Agreement dated January 10, 2002 by and between Citicorp Investment Bank (Singapore)
Limited and ST Assembly Test Services Ltd establishing a S$500,000,000 Multicurrency Medium
Term Note Program — incorporated by reference to Exhibit 4.6 of
Form 20-F
(File No.
333-75080
)
of ST Assembly Test Services Ltd filed with the Securities and Exchange Commission
on February 28, 2002
4.3
Trust Deed dated January 10, 2002 by and between British and Malayan Trustees Limited and ST Assembly Test Services Ltd establishing a S$500,000,000 Multicurrency Medium Term Note
Program— incorporated by reference to Exhibit 4.7 of
Form 20-F
(File
No. 333-75080
)
of ST Assembly Test Services Ltd filed with the Securities and Exchange Commission on February 28,
2002
4.4
Agency Agreement dated January 10, 2002 by and between British and Malayan Trustees Limited,
Citicorp Investment Bank (Singapore) Limited and ST Assembly Test Services Ltd establishing a
S$500,000,000 Multicurrency Medium Term Note
95
Table of Contents
Program — incorporated by reference to Exhibit
4.8 of
Form 20-F
(File
No. 333-75080
) of ST Assembly Test Services Ltd filed with the
Securities and Exchange Commission on February 28, 2002
4.5
Indenture dated March 18, 2002 by and between ST Assembly Test Services Ltd and the Bank of
New York relating to the 1.75% Convertible Notes Due 2007 — incorporated by reference to
Exhibit 4.10 of
Form 20-F
(File
No. 333-75080
) of ST Assembly Test Services Ltd filed with the
Securities and Exchange Commission on March 31, 2003
4.6
US$168 Million Reg S Global Note issued by ST Assembly Test Services Ltd in relation to the
1.75% Convertible Notes Due 2007 — incorporated by reference to Exhibit 4.11 of
Form 20-F
(File
No. 333-75080
) of ST Assembly Test Services Ltd filed with the Securities and Exchange
Commission on March 31, 2003
4.7
US$25 Million Reg S Global Note issued by ST Assembly Test Services Ltd in relation to the
1.75% Convertible Notes Due 2007 — incorporated by reference to Exhibit 4.12 of
Form 20-F
(File
No. 333-75080
) of ST Assembly Test Services Ltd filed with the Securities and Exchange
Commission on March 31, 2003
4.8
US$7 Million Restricted Global Note issued by ST Assembly Test Services Ltd in relation to
the 1.75% Convertible Notes Due 2007 — incorporated by reference to Exhibit 4.13 of
Form 20-F
(File
No. 333-75080
) of ST Assembly Test Services Ltd filed with the Securities and Exchange
Commission on March 31, 2003
4.9
ChipPAC, Inc. Employee Retention and Severance Plan — incorporated by reference to Exhibit 10.41 to the annual report on
Form 10-K
(File
No. 000-31173
) of ChipPAC, Inc. for the fiscal
year ended December 31, 2003, as filed with the Securities and Exchange Commission on March 12, 2004
4.10#
Amendment Agreement dated April 22, 2003 renewing the Immunity Agreement dated October 18,
1996 by and between Motorola Inc. and ST Assembly Test Services Ltd — incorporated by
reference to Exhibit 4.12 of
Form 20-F
(File
No. 333-75080
) of ST Assembly
Test Services Ltd filed with the Securities and Exchange Commission on March 19, 2004
4.11
Agreement and Plan of Merger and Reorganization dated February 10, 2004 by and between ST Assembly Test
Services Ltd, ChipPAC, Inc. and Camelot Merger, Inc. — incorporated by
reference to Exhibit 4.15 of
Form 20-F
(File
No. 333-75080
) of ST Assembly
Test Services Ltd filed with the Securities and Exchange Commission on March 19, 2004
4.12
Strategic Assistance Loan Agreement dated June 20, 2003 by and between ST Assembly Test
Services Ltd and Simmtech Co. Ltd — incorporated by reference to Exhibit 4.16 of
Form 20-F
(File
No. 333-75080
) of ST Assembly Test Services Ltd filed with the Securities and Exchange
Commission on March 19, 2004
4.13
The Yangdo Tambo Agreement dated June 20, 2003 by and between ST Assembly Test Services Ltd
and Simmtech Co. Ltd — incorporated by reference to Exhibit 4.17 of
Form 20-F
(File
No. 333-75080
) of ST Assembly
Test Services Ltd filed with the Securities and Exchange Commission on March 19, 2004
4.14
Pledge Agreement dated June 20, 2003 by and between ST Assembly Test Services Ltd and
Simmtech Co. Ltd — incorporated by reference to Exhibit 4.18 of
Form 20-F
(File
No. 333-75080
) of ST Assembly
Test Services Ltd filed with the Securities and Exchange Commission
on March 19, 2004
4.15
Loan Agreement dated December 26, 2003 by and between ST Assembly Test Services Ltd and
Simmtech Co. Ltd and
Se-Ho
Chun — incorporated by reference to Exhibit 4.19 of
Form 20-F
(File
No. 333-75080
) of ST Assembly Test Services Ltd filed with the Securities and Exchange
Commission on March 19, 2004
4.16
Yangdo Tambo Agreement dated December 26, 2003 by and between ST Assembly Test Services Ltd
and Simmtech Co. Ltd — incorporated by reference to Exhibit 4.20 of
Form 20-F
(File
No. 333-75080
) of ST Assembly Test
Services Ltd filed with the Securities and Exchange Commission
on March 19, 2004
4.17
Share Pledge Agreement dated December 26, 2003 by and between ST Assembly Test Services Ltd
and
Mr. Se-Ho
Chun — incorporated by reference to Exhibit 4.21 of
Form 20-F
(File
No. 333-75080
) of ST Assembly Test Services Ltd filed with the Securities and Exchange Commission
on March 19, 2004
96
Table of Contents
4.18
Factory
Kun-Mortgage
Agreement dated December 26, 2003 by and between ST Assembly Test
Services Ltd and Simmtech Co. Ltd — incorporated by reference to Exhibit 4.22 of
Form 20-F
(File
No. 333-75080
) of ST Assembly Test Services Ltd filed with the Securities and Exchange
Commission on March 19, 2004
4.19
Base Capacity and Continuing Support Agreement dated December 26, 2003 by and between ST Assembly
Test Services Ltd and Simmtech Co. Ltd — incorporated by reference to Exhibit 4.23
of
Form 20-F
(File
No. 333-75080
) of ST Assembly Test Services Ltd filed with the Securities
and Exchange Commission on March 19, 2004
4.20
Indenture dated November 7, 2003 by and between ST Assembly Test Services Ltd and the Bank of
New York relating to the $115 million zero-rated Convertible Notes Due 2008 — incorporated by
reference to Exhibit 4.24 of
Form 20-F
(File
No. 333-75080
) of ST Assembly Test Services Ltd
filed with the Securities and Exchange Commission on March 19, 2004
4.21
US$115 Million Reg S Global Note issued by ST Assembly Test Services Ltd under the Indenture
relating to the US$115 million
zero-rated
Convertible Notes Due 2008 — incorporated by
reference to Exhibit 4.25 of
Form 20-F
(File
No. 333-75080
) of ST Assembly Test Services Ltd
filed with the Securities and Exchange Commission on March 19, 2004
4.22
Indenture dated as of May 28, 2003 by and between ChipPAC, Inc. and U.S. Bank National
Association, as trustee relating to the 2.50% Convertible Subordinated Notes Due 2008 —
incorporated by reference to Exhibit 10.40 to the Quarterly Report on
Form 10-Q
(File
No.
000-31173
) of ChipPAC, Inc. filed with the Securities and Exchange Commission on August 8,
2003 for the three months ended June 30, 2003
4.23
Employment Agreement dated as of March 17, 2004 among ST Assembly Test Services Ltd, ChipPAC,
Inc. and Michael G. Potter — incorporated by reference to Exhibit 4.8 of
Form F-4
(File
No. 333-114232
) of STATS ChipPAC Ltd., as filed with the Securities and Exchange Commission on
April 6, 2004
4.24
First Supplemental Indenture dated August 4, 2004 to the Indenture dated as of May 28, 2003
among ChipPAC Inc., ST Assembly Test Services Ltd and U.S. Bank National Association relating
to the 2.50% Convertible Subordinated Securities Due 2008 — incorporated by reference to
Exhibit 4.2 of
Form F-3
(File
No. 333-119705
) of
STATS ChipPAC, Inc. filed with the Securities
and Exchange Commission on October 13, 2004
4.25
STATS ChipPAC Ltd. Substitute Equity Incentive Plan — incorporated by reference to Exhibit
4.4 to Post-Effective Amendment No. 1 on
Form S-8
(File
No. 333-114232
)
of STATS ChipPAC Ltd., as filed with the Securities and Exchange Commission on August 25, 2004
4.26
STATS ChipPAC Ltd. Substitute Share Purchase and Option Plan — incorporated by reference to
Exhibit 4.5 to Post-Effective Amendment No. 1 on
Form S-8
(File
No. 333-114232
) of STATS
ChipPAC Ltd., as filed with the Securities and Exchange Commission on August 25, 2004
4.27
STATS ChipPAC Ltd. Employee Share Purchase Plan 2004 — incorporated by reference to Appendix 1 to STATS ChipPAC
Ltd.'s Proxy Statement which was filed as Exhibit 99.1 on
Form 6-K
(File
No. 333-75080
) of STATS ChipPAC Ltd., as filed with the Securities and Exchange Commission on
March 30, 2006
4.28**
STATS ChipPAC Ltd. Share Option Plan
4.29
STATS ChipPAC Ltd. Restricted Share Plan — incorporated by reference to Appendix 2 to STATS
ChipPAC Ltd.'s Proxy Statement which was filed as Exhibit 99.1 on
Form 6-K
(File
No. 333-75080
) of STATS ChipPAC Ltd., as filed with the Securities and Exchange Commission on
March 30, 2006
4.30**
STATS ChipPAC Ltd. Performance Share Plan
4.31
Indenture dated November 18, 2004 by and between STATS ChipPAC Ltd. and U.S. Bank National
Association relating to the 6.75% Senior Notes Due 2011 — incorporated by reference to
Exhibit 4.40 of
Form 20-F
(File
No. 333-75080
) of STATS ChipPAC Ltd., as filed with the
Securities and Exchange Commission on March 18, 2005
97
Table of Contents
4.32
Subsidiary Guarantee Agreement dated November 18, 2004 by and between STATS ChipPAC Ltd., the
Subsidiary Guarantors party thereto and U.S. Bank National Association relating to the 6.75%
Senior Notes Due 2011 — incorporated by reference to Exhibit 4.43 of
Form 20-F
(File
No. 333-75080
) of
STATS ChipPAC Ltd., as filed with the Securities and Exchange Commission on
March 18, 2005
4.33
Second Supplemental Indenture dated October 7, 2004 to the Indenture dated as of November 18,
2004 among ChipPAC International Company Limited, ChipPAC, Inc. and U.S. Bank National
Association relating to the 6.75% Senior Notes Due 2011— incorporated by reference to Exhibit 4.44 of
Form 20-F
(File
No. 333-75080
) of STATS ChipPAC Ltd., as filed with the Securities and
Exchange Commission on March 18, 2005
4.34
Second Supplemental Indenture dated October 11, 2004 to the Indenture dated as of May 28,
2003 among ChipPAC Inc., STATS ChipPAC Ltd. and U.S. Bank National Association relating to the
2.50% Convertible Subordinated Notes Due 2008 — incorporated by reference to Exhibit 4.45 of
Form 20-F
(File
No. 333-75080
) of STATS ChipPAC Ltd., as filed with the Securities and
Exchange Commission on March 18, 2005
4.35
Third Supplemental Indenture dated November 2, 2004 to the Indenture dated as of May 28, 2003
among ChipPAC Inc., STATS ChipPAC Ltd. and U.S. Bank National Association relating to the
2.50% Convertible Subordinated Notes Due 2008 — incorporated by reference to Exhibit 4.46 of
Form 20-F
(File
No. 333-75080
) of STATS ChipPAC Ltd., as filed with the Securities and
Exchange Commission on March 18, 2005
4.36
Indenture dated as of July 19, 2005 by and between STATS ChipPAC Ltd. and U.S. Bank National
Association relating to the 7.5% Senior Notes Due 2010 — incorporated by reference to Exhibit 4.1 of
Form 6-K
(File
No. 333-75080
) of STATS ChipPAC Ltd., as filed with the Securities and
Exchange Commission on August 25, 2005
4.37
Terms and Conditions of Appointment of Tan Lay Koon as President and Chief Executive Officer
of STATS ChipPAC Ltd. dated August 5, 2004 by and between Tan Lay Koon and STATS ChipPAC Ltd.
— incorporated by reference to Exhibit 4.46 of
Form 20-F
(File
No. 333-75080
) of STATS
ChipPAC Ltd., as filed with the Securities and Exchange Commission on February 28, 2006
4.38
Subsidiary Guarantee Agreement dated as of July 19, 2005 by and between STATS ChipPAC Ltd.,
the Subsidiary Guarantors party thereto and U.S. Bank National Association relating to the
7.5% Senior Notes Due 2010 — incorporated by reference to Exhibit 4.3 of
Form 6-K
(File
No. 333-75080
) of STATS ChipPAC Ltd., as filed with the Securities and Exchange Commission on
August 25, 2005
4.39
Supplemental Subsidiary Guarantee Agreement dated as of February 21, 2006 by and between
STATS ChipPAC Ltd., the Subsidiary Guarantors party thereto and U.S. Bank National Association
with respect to the 7.5% Senior Notes Due 2010 — incorporated by reference to Exhibit 4.48 of
Form 20-F
(File
No. 333-75080
) of STATS ChipPAC Ltd., as filed with the Securities and
Exchange Commission on February 28, 2006
4.40
Supplemental Subsidiary Guarantee Agreement dated as of February 21, 2006 by and between
STATS ChipPAC Ltd., the Subsidiary Guarantors party thereto and U.S. Bank National Association
with respect to the 63/4% Senior Notes due 2011 — incorporated by reference to Exhibit 4.49
of
Form 20-F
(File
No. 333-75080
) of STATS ChipPAC Ltd., as filed with the Securities and
Exchange Commission on February 28, 2006
4.41**
Subscription Agreement dated June 22, 2006 between STATS ChipPAC Ltd., China Resources Logic
Limited, Micro Assembly Technologies Limited and Wuxi China Resources Microelectronics
(Holdings) Limited
4.42**
Deed of Indemnity dated June 22, 2006 between STATS ChipPAC Ltd., China Resources Logic
Limited, Micro Assembly Technologies Limited and Wuxi China Resources Microelectronics
(Holdings) Limited
4.43**
Joint Venture Agreement dated June 22, 2006 between STATS ChipPAC Ltd., China Resources
Logic Limited, Wuxi China Resources Microelectronics (Holdings) Limited, Micro Assembly
Technologies Limited and Wuxi CR
Micro-Assembly
Technology Ltd.
98
Table of Contents
4.44**
Asset Sale and Purchase Agreement dated June 22, 2006 between STATS ChipPAC Shanghai Co.,
Ltd., STATS ChipPAC Ltd., Wuxi CR
Micro-Assembly
Technology Ltd. and China Resources Logic
Limited
4.45**
Amendment Number One dated July 14, 2006 to the Asset Sale and Purchase Agreement dated June
22, 2006 between STATS ChipPAC Shanghai Co., Ltd., STATS ChipPAC
Ltd., Wuxi CR
Micro-Assembly
Technology Ltd. and China Resources Logic Limited
4.46**
Manufacturer's Representative
Agreement dated June 22, 2006 between Wuxi CR
Micro-Assembly
Technology Ltd., China Resources Logic Limited, STATS ChipPAC (BVI) Limited and STATS ChipPAC
Ltd.
4.47**##
US$125,000,000 Syndicated Facility Agreement dated August 10, 2006 between STATS ChipPAC
Ltd. and
Oversea-Chinese
Banking Corporation Limited
4.48**##
English language translation of
Korean language US$25,000,000 Term Loan Agreement dated May 29, 2006 between STATS ChipPAC Korea Ltd. and Hana Bank
4.49**
English language summary of Chinese
language NT$1.8 Billion Syndicated Loan
Agreement dated March 2, 2004 between Winstek Semiconductor Corporation and Mega Bank
4.50**
English language summary of Chinese
language NT$3.6 Billion Syndicated Loan
Agreement dated August 18, 2006 between Winstek Semiconductor Corporation and Taishin Bank
8.1
List of subsidiaries — incorporated
by reference to Exhibit 8.1 of
Form 20-F
(File
no. 333-75080)
of STATS ChipPAC Ltd., as filed with the
Securities and Exchange Commission on February 28, 2006
12.1**
Certification by the Chief
Executive Officer pursuant to 17 CFR 240.
15d-14(a)
, as adopted
pursuant to Section 302 of the
Sarbanes-Oxley
Act of 2002
12.2**
Certification by the Chief
Financial Officer pursuant to 17 CFR 240.
15D-14(a)
, as adopted
pursuant to Section 302 of the
Sarbanes-Oxley
Act of 2002
13.1**
Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the
Sarbanes-Oxley
Act of 2002
13.2**
Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the
Sarbanes-Oxley
Act of 2002
15.1**
Consent of Pricewaterhouse Coopers, Singapore, independent registered public accounting firm
#
Certain portions of this exhibit have been omitted pursuant
to a confidential treatment order of the SEC. The
omitted portions have been filed separately with the SEC.
##
Certain portions of this exhibit have been omitted pursuant
to a request for confidential treatment filed with the SEC. The
omitted portions have been filed separately with the SEC.
**
Filed herewith.
99
Table of Contents
SIGNATURES
The
registrant hereby certifies that it meets all of the requirements for
filing on Form
20-F
and that it has duly caused and authorized the undersigned to sign this annual report on its
behalf.
Date:
March 12, 2007
STATS CHIPPAC LTD.
By:
/s/ Tan
Lay Koon
Name:
Tan Lay Koon
Title:
President and Chief Executive Officer
By:
/s/ Michael
G. Potter
Name:
Michael G. Potter
Title:
Senior Vice President, Chief Financial Officer
100
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
Page
FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
F-2
Consolidated Balance Sheets
F-4
Consolidated Statements of Operations
F-5
Consolidated
Statements of Comprehensive Income (Loss)
F-6
Consolidated Statements of Shareholders' Equity
F-7
Consolidated Statements of Cash Flows
F-8
Notes to the Consolidated Financial Statements
F-9
F-1
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders
STATS ChipPAC Ltd.:
We have completed an integrated audit of STATS ChipPAC Ltd.'s 2006 consolidated financial
statements and of its internal control over financial reporting as of December 31, 2006, and audits
of its 2005 and 2004 consolidated financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are
presented below.
Consolidated financial statements
In our opinion, the accompanying consolidated balance sheets and the related consolidated
statements of operations, of comprehensive income, of shareholders' equity and of cash flows,
present fairly, in all material respects, the financial position of STATS ChipPAC Ltd. and its
subsidiaries as of December 31, 2006 and December 25, 2005, and the results of their operations and
their cash flows for each of the three years in the period ended December 31, 2006 in conformity
with accounting principles generally accepted in the United States of America. These financial
statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our audits of these
statements in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
As
discussed in Notes 1(x) and 23 to the financial statements,
the Company changed the manner in which it accounts for
share-based
compensation in 2006.
Internal control over financial reporting
Also, in
our opinion, management's assessment, included in
Management's Annual Report on Internal Control
Over Financial Reporting, that the Company maintained effective internal control over financial
reporting as of December 31, 2006 based on criteria established in Internal Control — Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is
fairly stated, in all material respects. Furthermore, in our opinion, the
Company maintained, in all material respects, effective internal control over financial reporting
as of December 31, 2006, based on criteria established in Internal Control — Integrated Framework
issued by the COSO. The Company's management is responsible for maintaining effective internal
control over financial reporting and for its assessment of the effectiveness of internal control
over financial reporting. Our responsibility is to express opinions on management's assessment and
on the effectiveness of the Company's internal control over financial reporting based on our audit.
We conducted our audit of internal control over financial reporting in accordance with the
standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether effective internal
control over financial reporting was maintained in all material respects. An audit of internal
control over financial reporting includes obtaining an understanding of internal control over
financial reporting, evaluating management's assessment, testing and evaluating the design and
operating effectiveness of internal control, and performing such other procedures as we consider
necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinions.
A company's internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A company's
internal control over financial reporting includes those policies and procedures that (i)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of management and directors of the company;
and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company's assets that could have a material effect on the
financial statements.
F-2
Table of Contents
Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
PricewaterhouseCoopers
Singapore
March 12, 2007
F-3
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
In thousands of U.S. Dollars (except per share data)
December 25,
December 31,
Note
2005
2006
ASSETS
Current assets:
Cash and cash equivalents
3
$
224,720
$
171,457
Short-term
marketable securities
4
17,648
45,126
Accounts receivable, net
5
240,990
243,779
Amounts due from affiliates
2
6,810
2,506
Other receivables
6
11,336
6,975
Inventories
7
79,483
111,614
Short-term
restricted cash
376
—
Prepaid expenses and other current assets
8
26,351
18,364
Total current assets
607,714
599,821
Long-term
marketable securities
4
17,803
15,358
Property, plant and equipment, net
9
1,107,031
1,192,830
Investment in equity investee
2
—
10,292
Intangible assets
10
72,780
41,846
Goodwill
11
522,625
513,512
Long-term
restricted cash
2,232
981
Prepaid
expenses and other
non-current
assets
8
63,197
83,640
Total assets
$
2,393,382
$
2,458,280
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts and other payable
$
136,058
$
167,722
Payables related to property, plant and equipment purchases
79,425
34,277
Accrued operating expenses
13
96,932
97,627
Income taxes payable
2,235
6,810
Short-term
borrowings
15
16,891
592
Amounts due to affiliates
2
62
45
Current obligations under capital leases
16
7,091
3,680
Current
installments of
long-term
debts
17
18,651
61,101
Total current liabilities
357,345
371,854
Obligations under capital leases, excluding current installments
16
3,680
—
Long-term
debts, excluding current installments
17
775,425
697,523
Other
non-current
liabilities
19
66,611
84,807
Total liabilities
1,203,061
1,154,184
Minority interest
48,669
57,946
Share capital:
Ordinary shares — 2005: Authorized 3,200,000,000 shares, par value
S$0.25; 2006: Unlimited shares with no par value
Issued ordinary shares — 1,976,292,025 in 2005 and 2,002,814,117 in 2006
20, 21
303,052
1,847,002
Additional
paid-in
capital
20
1,517,118
—
Accumulated other comprehensive loss
22
(8,572
)
(7,714
)
Accumulated deficit
(669,946
)
(593,138
)
Total shareholders' equity
1,141,652
1,246,150
Commitments and contingencies
24
Total liabilities and shareholders' equity
$
2,393,382
$
2,458,280
See accompanying notes to consolidated financial statements.
F-4
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
In thousands of U.S. Dollars (except per share data)
Year Ended
December 31,
December 25,
December 31,
Note
2004
2005
2006
Net revenues
$
769,121
$
1,157,253
$
1,616,933
Cost of revenues
(643,540
)
(968,023
)
(1,290,773
)
Gross profit
125,581
189,230
326,160
Operating expenses:
Selling, general and administrative
84,501
135,751
139,466
Research and development
17,637
26,071
30,446
Restructuring charges
25
—
830
1,938
Goodwill impairment
11
453,000
—
—
Total operating expenses
555,138
162,652
171,850
Operating income (loss)
(429,557
)
26,578
154,310
Other income (expense), net:
Interest income
4,430
6,414
5,401
Interest expense
(28,816
)
(42,629
)
(45,816
)
Foreign currency exchange gain (loss)
(1,122
)
531
(1,578
)
Equity income from investment in equity investee
—
—
152
Other
non-operating
income (expense), net
26
(936
)
(1,076
)
108
Total other income (expense), net
(26,444
)
(36,760
)
(41,733
)
Income (loss) before income taxes
(456,001
)
(10,182
)
112,577
Income tax expense
14
(7,894
)
(9,689
)
(25,759
)
Income (loss) before minority interest
(463,895
)
(19,871
)
86,818
Minority interest
(3,828
)
(6,440
)
(10,010
)
Net income (loss)
$
(467,723
)
$
(26,311
)
$
76,808
Net income (loss) per ordinary share:
— basic
$
(0.33
)
$
(0.01
)
$
0.04
— diluted
$
(0.33
)
$
(0.01
)
$
0.04
Net income (loss) per ADS:
— basic
$
(3.27
)
$
(0.13
)
$
0.39
— diluted
$
(3.27
)
$
(0.13
)
$
0.37
Ordinary shares (in thousands) used in per
ordinary share calculation:
— basic
1,428,954
1,961,950
1,991,110
— diluted
1,428,954
1,961,950
2,161,545
ADS (in thousands) used in per ADS calculation:
— basic
142,895
196,195
199,111
— diluted
142,895
196,195
216,154
See accompanying notes to consolidated financial statements.
F-5
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
In thousands of U.S. Dollars
Year Ended
December 31,
December 25,
December 31,
2004
2005
2006
Net income (loss)
$
(467,723
)
$
(26,311
)
$
76,808
Other comprehensive income (loss):
Unrealized
loss on
available-for-sale
marketable securities
(548
)
(247
)
(5
)
Realized
(gain) loss on
available-for-sale
marketable securities included in net income (loss)
537
—
(5
)
Unrealized gain on hedging instruments
3,953
133
3,058
Realized gain on hedging instruments included in
net income (loss)
(168
)
(3,143
)
(3,157
)
Foreign currency translation adjustment
3,287
(2,455
)
967
Comprehensive income (loss)
$
(460,662
)
$
(32,023
)
$
77,666
See accompanying notes to consolidated financial statements.
F-6
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
In thousands of U.S. Dollars
Accumulated
Additional
Other
Total
Paid-in
Comprehensive
Accumulated
Shareholders'
Ordinary Shares
Capital
Loss
Deficit
Equity
No.
(In thousands)
Balances at January 1, 2004
1,076,620
$
172,434
$
489,355
$
(9,921
)
$
(175,912
)
$
475,956
Share issuances
5,802
856
1,112
—
—
1,968
Share issuances and assumption
of share options in connection
with acquisition
861,908
124,943
1,016,549
—
—
1,141,492
Share-based
compensation
—
—
658
—
—
658
Effect of subsidiary's equity
transaction
—
—
(62
)
—
—
(62
)
Net loss
—
—
—
—
(467,723
)
(467,723
)
Other comprehensive income
—
—
—
7,061
—
7,061
Balances at December 31, 2004
1,944,330
298,233
1,507,612
(2,860
)
(643,635
)
1,159,350
Share issuances
31,962
4,819
8,702
—
—
13,521
Share-based
compensation
—
—
743
—
—
743
Effect of subsidiary's equity
transaction
—
—
61
—
—
61
Net loss
—
—
—
—
(26,311
)
(26,311
)
Other comprehensive loss
—
—
—
(5,712
)
—
(5,712
)
Balances at December 25, 2005
1,976,292
303,052
1,517,118
(8,572
)
(669,946
)
1,141,652
Share issuances
26,522
13,197
57
—
—
13,254
Share-based
compensation
—
13,688
—
—
—
13,688
Effect of abolition of the
share par value
—
1,517,175
(1,517,175
)
—
—
—
Effect of subsidiary's equity
transaction
—
(110
)
—
—
—
(110
)
Net income
—
—
—
—
76,808
76,808
Other comprehensive income
—
—
—
858
—
858
Balances at December 31, 2006
2,002,814
$
1,847,002
$
—
$
(7,714
)
$
(593,138
)
$
1,246,150
See accompanying notes to consolidated financial statements.
F-7
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands of U.S. Dollars
Year Ended
December 31,
December 25,
December 31,
2004
2005
2006
Cash Flows From Operating Activities
Net income (loss)
$
(467,723
)
$
(26,311
)
$
76,808
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization
188,683
254,138
266,317
Goodwill impairment
453,000
—
—
Amortization of leasing prepayments
25,718
25,790
7,386
Debt issuance cost amortization
1,913
1,961
2,371
(Gain) loss on sale of property, plant and equipment
(656
)
1,529
1,251
Accretion of discount on convertible notes
11,437
7,414
6,618
Loss from repurchase and redemption of senior and convertible notes
797
1,653
500
Foreign currency exchange (gain) loss
(830
)
(134
)
758
Share-based
compensation expense
658
743
13,688
Deferred income taxes
15,005
9,351
19,853
Minority interest in income of subsidiary
3,828
6,440
10,010
Equity income from investment in equity investee
—
—
(152
)
(Gain) loss on sale of marketable securities
537
—
(5
)
Others
371
535
1,009
Changes in operating working capital:
Accounts receivable
8,149
(91,340
)
(2,789
)
Amounts due from affiliates
4,427
(4,187
)
4,304
Inventories
(1,171
)
(24,793
)
(32,268
)
Other receivables, prepaid expenses and other assets
(64,421
)
3,516
7,355
Accounts payable, accrued operating expenses and other
payables
(41,406
)
104,499
44,774
Amounts due to affiliates
(1,699
)
(75
)
(17
)
Net cash provided by operating activities
136,617
270,729
427,771
Cash Flows From Investing Activities
Proceeds from sales of marketable securities
$
130,497
$
15,726
$
35,391
Proceeds from maturity of marketable securities
46,687
787
20,841
Purchases of marketable securities
(160,943
)
(32,017
)
(80,866
)
Investment in equity investee
—
—
(10,154
)
Acquisition of intangible assets
(1,428
)
(4,853
)
(6,419
)
Acquisition of subsidiary, net of cash acquired
7,208
—
—
Purchases of property, plant and equipment
(287,574
)
(245,775
)
(393,643
)
Others, net
729
3,139
9,067
Net cash used in investing activities
(264,824
)
(262,993
)
(425,783
)
Cash Flows From Financing Activities
Repayment
of short-term debts
$
(72,006
)
$
(143,276
)
$
(42,290
)
Repayment
of long-term debts
(8,982
)
(37,670
)
(27,627
)
Proceeds from issuance of shares, net of expenses
1,968
13,521
13,254
Proceeds from issuance of senior and convertible notes, net of expenses
210,458
146,535
—
Repurchase and redemption of senior and convertible notes
(193,647
)
(167,263
)
(50,500
)
Proceeds from bank borrowings
107,620
188,085
60,308
(Increase) decrease in restricted cash
2,927
(1,487
)
1,627
Grants received
—
246
—
Capital lease payments
(7,210
)
(11,737
)
(7,091
)
Distribution to minority interest in subsidiary
—
—
(2,542
)
Contribution by minority interest in subsidiary, net
—
3,623
—
Net cash provided by financing activities
41,128
(9,423
)
(54,861
)
Net decrease in cash and cash equivalents
(87,079
)
(1,687
)
(52,873
)
Effect of exchange rate changes on cash and cash equivalents
1,425
(1,102
)
(390
)
Cash and cash equivalents at beginning of the year
313,163
227,509
224,720
Cash and cash equivalents at end of the year
$
227,509
$
224,720
$
171,457
Supplementary Cash Flow Information
Interest paid
$
21,974
$
40,738
$
28,307
Income taxes paid
1,023
185
1,418
Non-cash
items
Issuance of shares and assumption of share options in connection
with acquisition
1,066,994
—
—
Equipment acquired under capital leases
$
—
$
4,150
$
—
See accompanying notes to consolidated financial statements.
F-8
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In thousands of U.S. Dollars (except per share data)
1.
Background and Summary of Significant Accounting Policies
(a) Business and Organization
STATS ChipPAC Ltd. ("STATS ChipPAC" or "STATS" prior to consummation of the merger, and, together
with its subsidiaries, the "Company") is an independent provider of a full range of semiconductor
test and packaging services. The Company was formed in connection with the merger of ST Assembly
Test Services Ltd and ChipPAC, Inc. ("ChipPAC"), which was consummated on August 5, 2004. In the
merger, former ChipPAC stockholders received 0.87 American Depositary Shares of STATS for each
share of ChipPAC Class A common stock, par value $0.01 per share, owned by such stockholder. Upon
consummation of the merger, STATS' and ChipPAC's former shareholders owned approximately 56% and
44%, respectively, of the Company's total shares outstanding. As a result of the merger, ChipPAC
became a
wholly-owned
subsidiary of STATS. The transaction was accounted for using the purchase
method. Subsequent to the merger, STATS was renamed STATS ChipPAC Ltd.
In 2005, the Company's Taiwan subsidiary, Winstek Semiconductor Corporation ("Winstek"), issued
10,555,556 shares of its capital stock, par value NT$10 per share, in a public offering at an
offering price of NT$12.80 per share. The shares of Winstek are listed on the Taiwan
over-the-counter
securities market. The Company recognized a gain of $61 on the resulting dilution
of interest within shareholders' equity. The Company owned approximately 52% of Winstek's total
shares outstanding as of December 31, 2006.
The Company has operations in Singapore, South Korea, China, Malaysia, Taiwan, the United Kingdom,
the Netherlands, Japan and in the United States of America, its principal market.
Temasek Holdings (Private) Limited ("Temasek Holdings"), through its
wholly-owned
subsidiary,
Singapore Technologies Semiconductors Pte Ltd ("STSPL"), beneficially owned approximately 36% of
the Company as of December 31, 2006. Temasek Holdings, a private limited company incorporated in
Singapore, is
wholly-owned
by the Minister for Finance (Incorporated) of Singapore, a body
constituted by the Minister for Finance (Incorporation) Act (Cap. 183).
(b) Fiscal Year
Since the beginning of fiscal 2005, the Company has employed fiscal year and fiscal quarter
reporting periods. STATS ChipPAC's
52-53 week
fiscal year ends on the Sunday nearest to December
31. STATS ChipPAC's fiscal quarters end on a Sunday and are generally thirteen weeks in length.
Fiscal year 2006, a
53-week
year, ended on December 31, 2006, and fiscal year 2005, a
52-week
year,
ended on December 25, 2005. Unless otherwise stated, all years and dates refer to STATS ChipPAC's
fiscal years.
(c) Accounting Principles
The consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America ("U.S. GAAP") consistently applied for all
periods.
(d) Principles of Consolidation
The consolidated financial statements include the consolidated accounts of STATS ChipPAC and its
majority-owned
subsidiaries. Significant intercompany accounts and transactions have been
eliminated in consolidation.
(e) Issuances of Stock by Subsidiaries
Changes in the Company's proportionate share of the underlying net equity of a subsidiary, which
result from the issuance of additional stocks to third parties, are recognized as increases or
decreases to shareholders' equity.
F-9
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
(f) Use of Estimates
The preparation of the consolidated financial statements in accordance with U.S. 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. Significant
estimates made by management include: the useful lives of property, plant and equipment and
intangible assets as well as future cash flows to be generated by those assets; discounts and allowances relating to volume purchases and other
incentive programs offered to customers, allowances for doubtful accounts, sales returns; valuation
allowances for deferred tax assets; provision for inventory losses; fair value of reporting units;
and contingent liabilities, among others. Determining the fair value of purchased intangible
asset is judgmental in nature and involves the use of significant estimates and assumptions. These
estimates and assumptions include revenue growth rates and operating margins used to calculate
projected future cash flows,
risk-adjusted
discount rates, assumed royalty rates, future economic
and market conditions and determination of appropriate market comparables. Actual results could
differ from these estimates.
(g) Reclassifications
Certain reclassifications have been made in prior years' financial statements to conform with
classifications used in the current year.
(h) Foreign Currency Transactions
The Company predominantly utilizes the U.S. dollar as its functional currency. Assets and
liabilities which are denominated in foreign currencies are converted into the functional currency
at the rates of exchange prevailing at the balance sheet date. Income and expenses which are
denominated in foreign currencies are converted at the average rates of exchange prevailing during
the period. Foreign currency transaction gains or losses are included in results of operations.
Winstek designates the New Taiwan Dollar as its functional currency. Where the functional currency
of a subsidiary is other than the Company's U.S. dollar reporting currency, the financial
statements are translated into U.S. dollars using exchange rates prevailing at the balance sheet
date for assets and liabilities and average exchange rates for the reporting period for the results
of operations. Adjustments resulting from translation of such foreign subsidiary financial
statements are reported within accumulated other comprehensive loss, which is reflected as a
separate component of shareholders' equity.
(i) Certain Risks and Concentrations
The Company's customers are comprised of companies in the semiconductor industry located primarily
in the United States of America, Europe and Asia. The semiconductor industry is highly cyclical and
experiences significant fluctuations in customer demand, evolving industry standards, competitive
pricing pressure that leads to steady declines in average selling prices, rapid technological
changes, risk associated with foreign currencies and enforcement of intellectual property rights.
Additionally, the market in which the Company operates is very competitive. As a result of these
industry and market characteristics, key elements of competition in the independent semiconductor
packaging market include breath of packaging offerings,
time-to-market
, technical competence,
design services quality, production yields, reliability of customer service and price.
The Company's largest customer accounted for approximately 21%, 12% and 11% of revenues in 2004,
2005 and 2006, respectively. The Company's five largest customers collectively accounted for
approximately 56%, 49% and 43% of revenues in 2004, 2005 and 2006, respectively. The decommitment
from any major customer for products, or the loss of or default by any of these major customers
could have an adverse effect upon the Company's financial position, results of operations and cash
flows. The Company mitigates the concentration of credit risk in trade receivables through the
Company's credit evaluation process, credit policies, credit control and collection procedures.
F-10
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
Cash and cash equivalents are deposited with financial institutions primarily in Singapore, South
Korea, China, Malaysia, British Virgin Islands, Taiwan and the United States of America. Deposits
in the financial institutions may exceed the amount of insurance provided on such deposits, if any.
The Company utilizes forward contracts to protect against the effects of foreign currency
fluctuations. Such contracts involve the risk of
non-performance
by the counterparty, which could
result in a material loss. The Company has not experienced any losses to date from instruments held
with financial institutions.
South Korean, Chinese and Malaysian foreign currency exchange regulators may place restrictions on
the flow of foreign funds into and out of those countries. The Company is required to comply with
these regulations when entering into transactions in foreign currencies in South Korea, China and
Malaysia.
(j) Cash and Cash Equivalents
Cash equivalents consist of highly liquid investments that are readily convertible into cash and
have original maturities of three months or less. Cash and cash equivalents consisted of cash,
deposit accounts, money market funds and foreign government treasury bills at December 31, 2006.
(k) Restricted Cash
Restricted cash consists of time deposits and government bonds held in connection with foreign
regulatory requirement and as collateral for bank loans. As of December 25, 2005 and December 31,
2006, there were $376 and $nil of
short-term
restricted cash
and $2,232 and $981 of
long-term
restricted cash, respectively.
(l) Derivative Instruments and Hedging Activities
The Company recognizes all derivatives as either assets or liabilities in the statement of
financial position and measures those instruments at fair value. Changes in the fair value of those
instruments will be reported in earnings or other comprehensive income depending on the use of the
derivative and whether it qualifies for hedge accounting. The accounting for gains and losses
associated with changes in the fair value of derivatives and the effect on the consolidated
financial statements will depend on the derivatives' hedge designation and whether the hedge is
highly effective in achieving offsetting changes in the fair values of cash flows of the asset or
liability hedged.
The Company has established risk management policies for committed or forecasted exposures to
protect against volatility of future cash flows. These programs reduce, but do not always entirely
eliminate, the impact of the currency exchange or commodity price movements.
In 2005 and 2006, the Company entered into foreign currency forward contracts to protect the
Company from fluctuations in exchange rates. At December 25, 2005, and December 31, 2006, the
Company had a series of foreign currency forward contracts qualifying as cash flow hedges with
total contract value of approximately $68,000 and $147,000, respectively. In 2005, the Company
entered into a series of gold forward contracts qualifying as cash flow hedges with total contract
value of approximately $7,000 to reduce exposure of the commodity price risk related to gold usage
in the cost of materials. The duration of these instruments are generally less than 12 months. At
December 31, 2006, the Company had realized and unrealized gain of $3,157 and $3,058, respectively,
on its foreign currency forward contracts. At December 25, 2005, the Company had realized and
unrealized gain of $3,143 and $133, respectively, on its foreign currency forward and gold forward
contracts. Certain foreign currency forward contracts to economically hedge certain committed
exposures are not designated as hedges. Accordingly, the changes in fair value of these foreign
currency forward contracts are reported in earnings.
(m) Marketable Securities
Marketable securities at December 25, 2005 and December 31, 2006 consist of corporate debt
securities and certificates of deposits denominated in U.S. dollars, Singapore dollars, Chinese
Renminbi and New Taiwan dollars. The Company classifies its securities in one of three categories:
trading,
available-for-sale
,
or
held-to-maturity
. Trading securities are bought and held
principally for the purpose of selling them in the near term.
Held-to-maturity
securities are
those securities in which the Company has the ability and intent to hold the security until
maturity. All securities not included in trading or
held-to-maturity
are classified as
available-for-sale
.
F-11
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
Trading and
available-for-sale
securities are recorded at fair value.
Held-to-maturity
securities
are recorded at amortized cost, adjusted for the amortization or accretion of premiums or
discounts. Unrealized holding gains and losses on trading securities are included in earnings.
Unrealized holding gains and losses, net of the related tax effect if any, on
available-for-sale
securities are excluded from earnings and are reported as a separate component of other
comprehensive loss until realized. Realized gains and losses from the sale of
available-for-sale
securities are determined on a specific identification basis.
A decline in the market value of individual
available-for-sale
or
held-to-maturity
securities below
cost that is deemed to be other than temporary results in a reduction in its carrying amount to
fair value, with the impairment charged to earnings and a new cost basis for the security being
established. Premiums and discounts are amortized or accreted over the life of the related
held-to-maturity
security as an adjustment to yield using the effective interest method. Dividend
and interest income are recognized when earned.
(n) Inventories
Inventories are stated at the lower of standard cost, which approximates actual cost determined on
the weighted average basis, or market value. The Company generally does not take ownership of
customer supplied semiconductors, and accordingly does not include them as part of the Company's
inventories.
(o) Equity Method Investments
Investments in entities in which the Company can exercise significant influence, but owns less
than a majority equity interest are accounted for using the equity method of accounting. The
Company's unrealized profit arising from sales by the Company to equity method investee are
eliminated to the extent of the Company's ownership. In 2006, the Company acquired a 25%
shareholding in Micro Assembly Technologies Limited ("MAT") for $10,154.
(p) Business Combination
Business combinations are accounted for using the purchase method accounting. Business combinations
which are accounted for under the purchase method accounting include the results of operations of
the acquired business from the effective date of acquisition. Any excess of the purchase price over
estimated fair values of the net assets acquired is recorded as goodwill.
(q) Goodwill
The Company tests goodwill for impairment on an annual basis in the designated quarters for its
different reporting units, and whenever circumstances indicate the carrying value of the goodwill
may have been impaired. The impairment test is performed by first comparing the fair value of the
applicable reporting unit to its carrying value. If the carrying value of the reporting unit
exceeds its fair value, the second step of the impairment test is performed to determine the amount
of impairment loss, if any. The second step of the test involves the comparison of the implied
fair value of the goodwill to its carrying value. If the carrying value of reporting unit goodwill
exceeds its implied fair value, an impairment loss is recognized for an amount equal to the excess.
The implied fair value of reporting unit is determined in the same manner as the amount of
goodwill recognized in a purchase business combination.
The estimates of fair value of a reporting unit are determined using various valuation techniques
with the primary technique being a discounted cash flow analysis. A discounted cash flow analysis
requires the Company to make various judgmental assumptions including assumptions about future cash
flows, growth rates and discount rates. The assumptions about future cash flows and growth rates
are based on the Company's budget and
long-term
plans. In estimating fair values of its reporting
units, the Company also uses comparable market analyses.
F-12
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
(r) Intangible Assets
The Company acquires patent rights and technology licenses from other companies for use in its
processes. Cost of the technology licenses is amortized over the shorter of the useful life or
license period. In addition, intangible assets acquired in business combinations accounted for
under the purchase method of accounting are recorded at fair value on the Company's consolidated
balance sheet at the date of acquisition. In connection with the merger with ChipPAC, the cost of
intangible assets acquired comprising tradenames, technology, intellectual property and customer
relationships, software and licenses, were recorded based on the fair values of those intangible
assets on August 5, 2004 based on management's estimate of the fair value of these intangible
assets. Management considered a number of factors when estimating fair value, including appraisals,
discounted cash flow analysis, estimated royalty rates and appropriate market comparables.
Acquired intangible assets are stated at cost less accumulated amortization. Amortization is
calculated on the straight-line method over the following periods:
Tradenames
7 years
Technology and intellectual property
10 years
Customer relationships
2 years
Software and licenses
3 to 5 years
(s) Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is
calculated on the
straight-line
method over the following periods:
Land use rights
50 to 99 years
Building, mechanical and electrical installation
3 to 25 years
Equipment
2 to 8 years
No depreciation is provided on property, plant and equipment under installation or construction and
freehold land. Repairs and replacements of a routine nature are expensed, while those that extend
the life of an asset are capitalized.
Plant and equipment under capital leases are stated at the present value of minimum lease payments
and are amortized
straight-line
over the estimated useful life of the assets.
(t)
Long-Lived Assets
The Company reviews
long-lived
assets for impairment whenever events or changes in circumstances
indicate that its carrying amount may not be recoverable. Recoverability of a
long-lived
asset is
measured by a comparison of the carrying amount to the sum of the undiscounted cash flows expected
to result from the use and eventual disposition of the asset. If such asset is considered to be
impaired, the impairment loss is measured as the amount by which the carrying amount of a
long-lived
asset exceeds its fair value.
For
long-lived
assets held for sale, the carrying value is measured at the lower of its carrying
amount or fair value less cost to sell and depreciation is ceased.
Long-lived
assets to be
abandoned will be considered held and used until it is disposed of.
(u) Comprehensive
Income (Loss)
The Company applies SFAS No. 130, "Reporting Comprehensive Income" with respect to reporting and
presentation of comprehensive income (loss) and its components in a full set of financial statements.
Comprehensive income (loss) consists of net income, foreign currency translation adjustments and
unrealized gain or loss on
available-for-sale
marketable securities and hedging instruments, and is
presented in the consolidated statements of comprehensive income (loss).
F-13
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
(v) Revenue Recognition
Revenue is derived primarily from wafer probe and bumping, packaging and testing of semiconductor
integrated circuits. Net revenues represent the invoiced value of services rendered net of
returns, trade discounts and allowances, and excluding goods and services tax.
Revenue is recognized when there is evidence of an arrangement, fees are fixed or determinable,
collectibility is reasonably assured, the service has been rendered, the revenue to be recognized
is billable under the terms of the arrangement and not contingent upon completion of undelivered
services, and, where applicable, delivery has occurred and risk of loss has passed to the customer.
Such policies are consistent with the provisions in Securities Exchange Commission's Staff
Accounting Bulletin No. 104, "Revenue Recognition in Financial Statements."
The Company's sales arrangement include probe, bumping, packaging or test services sold on a
standalone basis, as well as
multiple-element
arrangements where probe, bumping, packaging, test,
and in some cases,
pre-production
and
post-production
services are provided together. Where
arrangements provide for multiple elements, elements are either combined into one single unit of
accounting or treated as separate units of accounting depending on whether certain specified
criteria are met. Revenue is allocated to each unit of accounting based on fair value, determined
by reference to prices of services sold on a standalone basis.
The Company generally does not take ownership of customer supplied semiconductors as these
materials are sent to the Company on a consignment basis. Accordingly, the values of the customer
supplied materials are neither reflected in revenue nor in cost of revenue.
Provisions are made for estimates of potential sales returns and discounts allowance for volume
purchases and early payments and are recorded as a deduction from gross revenue based upon
historical experience and expectations of customers' ultimate purchase levels and timing of
payment. Actual revenues may differ from estimates if future customer purchases or payment timing
differ, which may happen as a result of changes in general economic conditions, market demand for
the customers' products, or by customers' desire to achieve payment timing discounts. Actual
returns and discounts have not historically been significantly different from estimates. In
addition, specific returns and discounts are provided for at the time their existence is known and
the amounts are estimable.
The following sets forth the percentage of net revenues by packaging products group and testing
services:
Year Ended
December 31,
December 25,
December 31,
2004
2005
2006
Revenue
— packaging — array
40.6
%
50.2
%
55.5
%
— packaging — leaded
20.9
22.0
18.3
— test and other services
38.5
27.8
26.2
Total
100.0
%
100.0
%
100.0
%
Provisions are made for collectibility of accounts receivable when there is doubt as to the
collectibility of individual accounts. Collectibility is assessed based on the age of the balance,
the customer's historical payment history, its current
credit-worthiness
and current economic
trends.
(w) Grants
Asset-related
government grants consist of grants for the purchase of equipment used for research
and development activities.
Asset-related
grants are presented in the consolidated balance sheet
as deferred grants and are credited to income on the
straight-line
basis over the estimated useful
lives of the relevant assets.
Income-related
government grants are subsidies of training and research and development expenses.
Income-related
grants are credited to income when it becomes probable that expenditures already
incurred will constitute qualifying expenditures for purposes of reimbursement under the grants,
which is typically substantially concurrent with the expenditures.
F-14
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
There are no restrictions on transferring technology or manufacturing products developed with
government grants.
(x)
Share-Based Compensation
Share-based
compensation represents the cost related to
share-based
awards made to employees and
directors. Effective December 26, 2005, the Company adopted the provisions of SFAS No. 123(R),
"
Share-Based
Payment" ("SFAS 123(R)"), which requires the measurement of
share-based
compensation
expense for all
share-based
payment awards based on estimated fair value. The Company measures
grant-date
fair value estimates, and recognizes the
share-based
compensation expense on a graded
vesting basis net of estimated forfeitures over the requisite service period. Prior to December 26,
2005, the Company measured
share-based
employee compensation expense in accordance with the
intrinsic method of APB No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), and its
related interpretations, and included pro forma information in accordance with SFAS No. 123,
"Accounting for
Stock-Based
Compensation" ("SFAS 123") as amended by SFAS No. 148,
"
Accounting for
Stock-Based
Compensation — Transition and Disclosure."
In March 2005, the Securities and Exchange Commission released SEC Staff Accounting Bulletin No.
107, "
Share-Based
Payment" ("SAB 107"). SAB 107 contains interpretive guidance related to the
interaction between SFAS 123(R) and certain SEC rules and regulations, as well as provides the
SEC's views regarding the valuation of
share-based
payment. The Company has applied the provisions
of SAB 107 in its adoption of SFAS 123(R). At December 31, 2006, the Company has four
share-based
compensation plans, which are more fully described in Note 23.
(y) Employee Benefit Plans
Winstek operates a defined benefit retirement plan for a substantial portion of its employees in
Taiwan in accordance with the Labor Standards Law in Taiwan. Pension benefits are generally based
on years of service and average salary for the six months prior to the approved retirement date.
Winstek revised its contribution in 2006 from 2% to 6% of eligible wages and salaries on a monthly
basis to a pension fund maintained with the Central Trust of China, as required by the Labor
Standards Law. At each year end, Winstek actuarially determines pension benefit costs and
obligations using the projected unit credit method, and the amounts calculated depend on a variety
of assumptions. These assumptions include discount rates, rates for expected returns on plan
assets, mortality rates and retirement rates. The funding of the pension plan is determined in
accordance with statutory funding requirements. Winstek is obligated to make up any shortfall in
the plan's assets in meeting the benefits accrued to the participating staff. As at December 31,
2006, there was no shortfall in the plan's assets. Total pension plan expenses in 2004, 2005 and
2006 were approximately $76, $55 and $5, respectively.
STATS ChipPAC, Inc. and STATS ChipPAC Test Services, Inc. have a 401(k) savings plan where the
Company matches 50% of employee contributions up to 6% of eligible employee compensation. The
Company's matching contributions under the 401(k) plan were $320, $395 and $457 in 2004, 2005 and
2006, respectively. The matching contributions are accrued monthly and adjusted when the actual
amounts are calculated. The expenses relating to the plan are $15 per person per quarter and are
accrued on a monthly basis. Returns of the 401(k) plan from investments in mutual funds are
calculated daily by an external administrator who administers the plan.
Employees with more than one year of service are entitled to receive a
lump-sum
payment upon
termination of their employment with STATS ChipPAC Korea Ltd. ("STATS ChipPAC Korea"), based on
their length of service and rate of pay at the time of termination. Accrued severance benefits are
adjusted annually for all eligible employees based on their employment as of balance sheet date. In
accordance with the National Pension Act of South Korea, a certain portion of severance benefits
has been deposited with the Korean National Pension Fund and deducted from accrued severance
benefits. The amount contributed will be refunded to employees from the Korean National Pension
Fund upon retirement. Annual severance benefits expense charged to operations is based upon the
change in the accrued severance benefits payable at the balance sheet date. The expense for
severance benefits for the period from August 5, 2004 to December 31, 2004 and for the years ended
December 25, 2005 and December 31, 2006 were approximately $1,793, $6,333 and $9,119, respectively.
F-15
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
The Company participates in a number of defined contribution retirement benefit plans in certain
countries of operations. Contributions are based on a percentage of each eligible employee's salary
and are expensed as the related salaries are incurred. The Company incurred expenses of
approximately $7,226, $10,711 and $12,849 with respect to these retirement plans in 2004, 2005 and
2006, respectively.
(z) Operating Leases
Rental payments under operating leases are expensed on a
straight-line
basis over the periods of
the respective leases.
(aa) Product Warranties
The Company guarantees that work performed will be free from any defects in workmanship, materials
and manufacture generally for a period ranging from three to twelve months to meet the stated
functionality as agreed to in each sales arrangement. Products are tested against specified
functionality requirements prior to delivery, but the Company nevertheless from time to time
experiences claims under its warranty guarantees. The Company accrues for estimated warranty costs
under those guarantees based upon historical experience, and for specific items at the time their
existence is known and the amounts are determinable. Warranty costs incurred in 2004, 2005 and
2006 were insignificant.
(bb) Research and Development
Research and development costs are expensed as incurred.
(cc) Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and
liabilities are recognized for the future tax consequences attributable to differences between the
carrying amounts of existing assets and liabilities in the financial statements and their respective tax bases, and
operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that includes the
enactment date. A valuation allowance is recorded for loss carryforwards and other deferred tax
assets where it is more likely than not that such loss carryforwards and deferred tax assets will
not be realized.
(dd) Net Income (Loss) Per Share
Basic net income (loss) per share is computed using the weighted average number of ordinary shares
outstanding. Diluted net income (loss) per share is computed using the weighted average number of
ordinary shares outstanding and dilutive potential ordinary shares from the assumed exercise of
share options outstanding during the period, if any, using the treasury stock method plus other
potentially dilutive securities outstanding, such as convertible notes.
The Company excluded certain potentially dilutive securities for each period presented from its
diluted net income (loss) per share computation because either the exercise price of the securities
exceeded the average fair value of the Company's ordinary shares or the Company had net losses, and
therefore these securities were
anti-dilutive
.
A summary of the excluded potentially dilutive securities outstanding and the range of related
exercise prices follows:
December 31,
December 25,
December 31,
2004
2005
2006
Convertible debt
369,235
287,999
82,454
Share options
131,997
124,175
103,508
The conversion price of convertible debt outstanding was approximately $0.93 to $1.87 per
share (equivalent to approximately $9.30 to $18.70 per ADS) as of December 31, 2006. The weighted
average exercise prices
F-16
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
of share options outstanding were approximately $1.01, $1.01 and $0.99
(equivalent to $10.10, $10.10 and $9.90 per ADS) as of December 31, 2004, December 25, 2005 and
December 31, 2006, respectively. The excluded share options have per share exercise prices ranging
from approximately $0.14 to $3.99 (equivalent to $1.40 to $39.90 per ADS) as of December 31, 2004
and December 25, 2005 and $0.68 to $3.99 (equivalent to $6.80 and $39.90 per ADS) as of December 31, 2006.
The following is a reconciliation of the numerators and denominators of the basic and diluted net
income (loss) per ordinary share computations for the periods presented below:
Year Ended
December 31,
December 25,
December 31,
2004
2005
2006
Net income (loss)
$
(467,723
)
$
(26,311
)
$
76,808
Adjusted net income (loss)
(467,723
)
(26,311
)
79,058
Weighted average number
of ordinary shares
outstanding (basic)
1,428,954
1,961,950
1,991,110
Weighted average dilutive
shares from share plans
—
—
8,564
Weighted average dilutive
convertible notes
—
—
161,871
Weighted average number
of ordinary shares and
equivalent ordinary
shares outstanding
(diluted)
1,428,954
1,961,950
2,161,545
(ee) New Accounting Pronouncements
In December 2004, the FASB issued SFAS No. 123(R),
"Share-Based
Payment" ("SFAS 123(R)"). This
statement revises SFAS No. 123, "Accounting for
Stock-Based
Compensation," amends SFAS No. 95,
"Statement of Cash Flows," and supersedes APB No. 25, "Accounting for Stock Issued to Employees."
SFAS 123(R) requires companies to apply a
fair-value
based measurement method in accounting for
share-based
payment transactions with employees and to record compensation expense for all share
awards granted, and to awards modified, repurchased or cancelled after the required effective date.
In addition, companies are required to record compensation expense (as previous awards continue to
vest) for the unvested portion of previously granted awards that remain outstanding at the date of
adoption. SFAS 123(R) is effective for annual periods beginning after June 15, 2005, which is the Company's fiscal 2006. In March 2005,
the Securities and Exchange Commission released SEC Staff Accounting Bulletin No. 107,
Share-Based
Payment ("SAB 107"). SAB 107 contains interpretive guidance related to the interaction between SFAS 123(R) and
certain SEC rules and regulations, as well as provides the SEC's views regarding the
valuation of
share-based
payment arrangements for public companies. SAB 107 also highlights the
importance of disclosures made related to the accounting for
share-based
payment transactions.
The adoption of SFAS 123(R) had a material impact on our consolidated financial statements for the
year ended December 31, 2006, and is expected to continue to materially impact our financial
statements in the foreseeable future. See note 23 below for more information on the impact of the
adoption of SFAS 123(R).
In July 2006, the FASB issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income
Taxes" ("FIN 48"). FIN 48 is an interpretation of SFAS No. 109, "Accounting for Income Taxes," and
prescribes a recognition threshold and measurement process for financial statement recognition and
measurement of uncertain tax positions taken or expected to be taken in a tax return. In addition,
FIN 48 requires expanded disclosure with respect to the uncertainty in income taxes and is
effective for fiscal year beginning after December 15, 2006. The Company is currently evaluating
the impact, if any, that FIN 48 will have on the consolidated financial statements.
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS 157"), which
defines fair value, establishes guidelines for measuring fair value and expands disclosures
regarding fair value measurements. SFAS 157 does not require any new fair value measurements but
rather eliminates inconsistencies in guidance found in various prior accounting pronouncements.
SFAS 157 is effective for fiscal years beginning after November 15, 2007. Earlier adoption is
permitted, provided the company has not yet issued financial statements, including for interim
periods, for that fiscal year. The Company is currently evaluating the impact of SFAS 157, but do
not expect the adoption of SFAS 157 to have a material impact on the Company's consolidated
financial statements.
F-17
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for Defined Benefit Pension
and Other Postretirement Plans an amendment of FASB Statements No. 87, 88, 106, and 132(R)" ("SFAS 158"). This standard requires employers to recognize the underfunded or overfunded status of a
defined benefit postretirement plan as an asset or liability in its statement of financial position
and to recognize changes in the funded status in the year in which the changes occur through
accumulated other comprehensive income, which is a component of stockholders' equity. The new reporting requirements and related new footnote disclosure
rules of SFAS 158 are effective for fiscal years ending after December 15, 2006. The adoption of
SFAS 158 does not have a material impact on the Company's consolidated financial statements. Additionally,
SFAS 158 requires employers to measure the funded status of a plan as of the date of its
year-end
statement of financial position effective for fiscal year ending
after December 15, 2008.
2.
Related Party Transactions
As of December 31, 2006, Temasek Holdings, through its wholly-owned subsidiary, Singapore
Technologies Semiconductors Pte Ltd ("STSPL"), beneficially owns approximately 36% of the Company's
outstanding ordinary shares. Singapore Technologies Pte Ltd ("STPL"), a
wholly-owned
subsidiary of
Temasek Holdings, was the holding company of STSPL prior to
a restructuring completed on December 31, 2004 pursuant to which all the assets of STPL were transferred to Temasek Holdings.
The Company's operations in Singapore are conducted in a building constructed on land held on a
long-term
operating lease from a statutory board of the Government of Singapore. The lease is for
a
30-year
period commencing March 1, 1996 and is renewable for a further 30 years subject to the
fulfillment of certain conditions.
STPL previously provided management and corporate services to the Company. Under a service
agreement effective January 1, 2000, annual management fees were payable for the provision of
specified services on mutually agreed terms which the Company believed approximated the cost of
providing those services. The fees were subjected to review by the parties every three years. The
service fee expense amounted to $1,146 in 2004. The service agreement was terminated on December 31, 2004.
The Company has contracts with Chartered Semiconductor Manufacturing Ltd ("Chartered"), majority
owned by Temasek Holdings through STSPL, to provide wafer sort, packaging and test services and priority usage
of the Company's testers in return for minimum loads and orders. Net revenues earned from Chartered
in 2004, 2005 and 2006 were $18,537, $12,647 and $11,109, respectively.
The Company also engages in transacting with other companies, directly or indirectly controlled by
Temasek Holdings, in the ordinary course of business. These transactions which include transactions
for gas, water and electricity, facilities management, transportation and telecommunication
services are at their prevailing market rates or prices and on customary terms and conditions.
These expenses amounted to $24,095, $14,672 and $18,375 in 2004, 2005 and 2006, respectively.
The amounts owing by (to) affiliates were as follows:
December 25,
December 31,
2005
2006
Amounts due from affiliates
Accounts receivable, net of allowance for sales returns
$
6,810
$
2,506
Amounts due to affiliates
Accounts payable
$
(62
)
$
(45
)
In 2006, the Company entered into an agreement to sell packaging and test equipment related to
specific low lead count packages to Wuxi CR
Micro-Assembly
Technology Ltd. ("ANST") for $35,000
payable over 4 years and a
performance-based
contingent
earn-out
of $5,000. ANST is a wholly owned
subsidiary of MAT, of which the Company has a 25% shareholding. As a result of the planned
sale of these assets to ANST, the Company has separately classified the related assets of
$28,688 to assets held for sale, a component of other
non-current
assets. During 2006, $2,429 of
the related assets have been transferred to ANST and $430 of gain has been recognized in year ended
December 31, 2006. In addition to the transfer of assets, the
F-18
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
Company entered into an agreement to provide sales and technical
support to ANST on a quarterly commission basis from 2007 to 2009.
3.
Cash and Cash Equivalents
Cash and cash equivalents consist of the following:
December 25,
December 31,
2005
2006
Cash at banks and on hand
$
29,126
$
62,551
Cash equivalents
Bank fixed deposits
153,991
77,309
Money market funds
39,891
30,039
Foreign government treasury bills
1,712
1,558
$
224,720
$
171,457
4.
Marketable Securities
Marketable securities consist of the following:
December 25, 2005
December 31, 2006
Gross
Gross
Gross
Gross
Amortized
Unrealized
Unrealized
Fair
Amortized
Unrealized
Unrealized
Fair
Cost
Gains
Losses
Value
Cost
Gains
Losses
Value
Available-for-sale
corporate debt securities
$
27,562
$
—
$
(1,027
)
$
26,535
$
61,521
$
35
$
(1,072
)
$
60,484
Held-to-maturity
certificates of deposit
$
8,916
$
—
$
—
$
8,916
$
—
$
—
$
—
$
—
Maturities of marketable securities (at fair value) are as follows:
December 25,
December 31,
2005
2006
Marketable securities:
Due in one year or less
$
17,648
$
45,126
Due after one year through five years
17,803
15,358
$
35,451
$
60,484
Gross realized gains and losses in 2004 were $86 and $623, respectively. Gross realized gains
and losses in 2005 were $nil and $nil, respectively. Gross realized gains and losses in 2006 were
$5 and $nil, respectively. Proceeds from the sales or maturities of
available-for-sale
marketable securities
during 2004, 2005 and 2006 were $177,184, $16,513 and $56,232, respectively.
5.
Accounts Receivable
Accounts receivable consists of the following:
December 25,
December 31,
2005
2006
Accounts receivable — third parties
$
243,830
$
247,185
Allowance for sales returns
(2,840
)
(3,406
)
$
240,990
$
243,779
F-19
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
Movements in the allowance for sales returns are as follows:
Year Ended
December 31,
December 25,
December 31,
2004
2005
2006
Beginning
$
1,362
$
1,899
$
2,840
Utilized during the year
(4,511
)
(1,094
)
—
Charged during the year
5,048
2,517
3,034
Writeback during the year
—
(482
)
(2,468
)
Ending
$
1,899
$
2,840
$
3,406
6.
Other Receivables
Other receivables consist of the following:
December 25,
December 31,
2005
2006
Deposits and staff advances
$
1,229
$
718
Grants receivable
1,313
—
Forward contract receivable
1,051
196
Taxes receivable
3,796
2,533
Other receivables
3,947
3,528
$
11,336
$
6,975
7.
Inventories
Inventories consist of the following:
December 25,
December 31,
2005
2006
Raw materials
$
63,079
$
88,339
Work-in-progress
15,727
19,395
Finished goods
677
3,880
$
79,483
$
111,614
8.
Prepaid Expenses and Other Assets
Prepaid expenses and other current assets consist of the following:
December 25,
December 31,
2005
2006
Leasing prepayments
$
10,054
$
11
Other prepayments and assets
9,543
14,035
Deferred income tax assets
1,425
289
Loans to a vendor
5,329
4,029
$
26,351
$
18,364
Prepaid expenses and other non-current assets consist of the following:
December 25,
December 31,
2005
2006
Leasing prepayments
$
2,623
$
—
Deferred income tax assets
38,879
39,028
Other deposits
289
285
Loans to a vendor
8,441
4,412
Debt issuance cost, net of
accumulated amortization of
$3,026 and $5,397
10,895
9,510
Assets held for sale
—
26,259
Others
2,070
4,146
$
63,197
$
83,640
F-20
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
Leasing prepayments represent prepayments of lease rental obligations for certain plant and
machinery leased under sale and
lease-back
arrangements.
The Company extended $5,000 and $15,000 loans to a vendor in June 2003 and January 2004,
respectively, to secure a specified minimum quantity of substrates up to December 2008. The loans
are
interest-free
and are collateralized by equipment purchased by the loan monies, mortgage on the
factory of the vendor and 2,400 shares of the vendor. The loans of $5,000 and $15,000 are repayable
in quarterly installments of $450 and $882 up to June 2007 and December 2008, respectively. During
the year ended December 31, 2006, $5,329 was repaid.
9.
Property, Plant and Equipment
Property, plant and equipment consist of the following:
December 25,
December 31,
2005
2006
Cost:
Freehold land
$
5,857
$
5,972
Land and land use rights
19,864
19,864
Buildings, mechanical and electrical installation
170,206
236,179
Equipment
1,660,504
1,880,982
Total cost
$
1,856,431
$
2,142,997
Total accumulated depreciation
$
749,400
$
950,167
Property, plant and equipment, net
$
1,107,031
$
1,192,830
Depreciation charged to results of operations, including depreciation related to assets under
capital leases, amounted to $163,975, $195,923 and $229,067 in 2004, 2005 and 2006, respectively.
In the third quarter of 2004, following the consummation of the merger, the Company adopted
ChipPAC's policy to depreciate equipment on a
straight-line
basis over 8 years, from
5 years previously. The impact of this change was depreciation savings of $23,373 in 2004. The
change resulted in an increase in net income of $19,698, net of tax effects of $3,675. This also
resulted in a decrease in loss per share and ADS by $0.01 and $0.14, respectively, in 2004.
The Company routinely reviews the remaining estimated useful lives of its equipment to determine if
such lives should be adjusted due to the likelihood of technological obsolescence arising from
changes in production techniques or in market demand for the use of its equipment. However, due to
the nature of the packaging and testing operations, which may include sudden changes in demand in
the end markets, and due to the fact that certain equipment is dedicated to specific customers, the
Company may not be able to accurately anticipate declines in the utility of its equipment.
Land use rights represent payments to secure, on a
fully-paid
up basis, the use of properties where
the Company's facilities are located in Shanghai, China and Kuala Lumpur, Malaysia for a period of
50 and 99 years, respectively. The land use rights expire in the year 2044 for Shanghai, China and
in the year 2086 for Kuala Lumpur, Malaysia. The Company's Singapore facilities are located in a
building constructed on land held on a
30-year
operating lease which is renewable for a further
30-year
period subject to the fulfillment of certain conditions. The facilities in
Hsin-Chu
Hsien,
Taiwan are located on a freehold land.
Included in property, plant and equipment are equipment acquired under capital lease at a cost of
$20,406 and $20,891 as of December 25, 2005 and December 31, 2006, respectively. The accumulated
depreciation for these leased assets as of December 25, 2005 and December 31, 2006 amounted to
$3,775 and $6,397, respectively.
F-21
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
10.
Intangible Assets
Intangible assets consist of the following:
December 25, 2005
December 31, 2006
Gross
Accumulated
Net
Gross
Accumulated
Net
Assets
Amortization
Assets
Assets
Amortization
Assets
Tradenames
$
7,700
$
(1,558
)
$
6,142
$
7,700
$
(2,658
)
$
5,042
Technology and
intellectual property
32,000
(4,533
)
27,467
32,000
(7,733
)
24,267
Customer relationships
99,300
(70,338
)
28,962
99,300
(99,300
)
—
Software, licenses
and others
18,528
(8,319
)
10,209
24,855
(12,318
)
12,537
$
157,528
$
(84,748
)
$
72,780
$
163,855
$
(122,009
)
$
41,846
Amortization
expense related to
finite-lived
intangible assets is summarized as follows:
Year Ended
December 31,
2004
December 25,
2005
December 31,
2006
Tradenames
$
458
$
1,100
$
1,100
Technology and intellectual property
1,333
3,200
3,200
Customer relationships
20,688
49,650
28,962
Software, licenses and others
2,229
4,265
3,988
$
24,708
$
58,215
$
37,250
Finite-lived intangible assets are generally being amortized over estimated useful lives of
two to ten years. Estimated future amortization expense as of December 31, 2006 is summarized as
follows:
2007
$
7,592
2008
7,069
2009
6,237
2010
4,995
2011
4,281
Thereafter
11,672
Total
$
41,846
11.
Goodwill
The changes in the carrying value of goodwill are as follows:
December 25,
2005
December 31,
2006
Beginning
$
523,598
$
522,625
Purchase adjustments
(973
)
(9,113
)
Ending
$
522,625
$
513,512
As of December 31, 2006, the Company had goodwill of $2,209 related to the acquisition of
Winstek and $511,303 related to the acquisition of ChipPAC. In 2005, purchase adjustments of $973
related to the cost of acquisition of $453 and fair value of liabilities acquired of $520 were
recorded. In 2006, purchase adjustments of $9,113 related to the deferred taxes valuation were
recorded.
Pursuant to business combination accounting rules, the goodwill associated with the acquisition of
ChipPAC was recorded based on share prices at the time the merger was announced. The Company
performed its annual test for impairment of goodwill related to ChipPAC during the fourth quarter
of 2004, 2005 and 2006. Goodwill was allocated to reporting units associated with the Company's
acquisitions.
In 2005 and 2006, the Company performed its annual test for impairment and determined that the fair
value of the reporting units exceeds their carrying value, and therefore goodwill was not impaired.
F-22
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
The annual impairment review completed in 2004 indicated that the reported book value of the
ChipPAC reporting units exceeded its fair value, with the determination of fair value supplemented
by independent appraisal using a combination of discounted cash flows and market multiples
methodologies. The Company believed that the decline in the fair values of the ChipPAC reporting
units in 2004 were primarily due to:-
(a)
longer than expected
slow-down
in the industry beginning late 2004 as customers corrected
excess inventory position. This reduction in demand, coupled with the competitive pressures in
the packaging and testing business had affected the
short-term
earnings expectation of the
Company; and
(b)
a revision of the industry outlook beyond 2005 as compared to the time the merger was
announced.
The Company compared the fair values of the ChipPAC reporting units to the fair values of their
tangible and identifiable intangible net assets for purposes of determining the implied fair value
of goodwill in 2004. Upon completion of the assessment, the Company
recorded a
non-cash
impairment
charge of $453,000 to reduce the carrying value of goodwill related to the acquisition of ChipPAC
to its estimated fair value of $521,389 in 2004.
12.
Business Combination
On August 5, 2004, STATS and ChipPAC consummated the previously announced merger which resulted in
ChipPAC becoming a
wholly-owned
subsidiary of STATS. The transaction had been accounted for using
the purchase method. ChipPAC is a full portfolio provider of semiconductor packaging, design, test
and distribution services. By combining the testing expertise of STATS with the packaging expertise
of ChipPAC, STATS ChipPAC offers its global customers one of the broadest portfolios of
comprehensive
end-to-end
packaging and test services in the semiconductor industry.
The number of STATS ChipPAC ADSs issued pursuant to the merger was 86,190,753, determined based
upon the exchange ratio of 0.87 STATS ADS for each share of ChipPAC Class A common stock and the
number of outstanding shares of ChipPAC Class A common stock as of August 5, 2004. The average
market price per STATS ADS of $12.402 is based upon an average of the closing prices for a range of
trading days (February 8 through 12, 2004) around February 10, 2004, the date on which the merger
was announced.
The fair values of STATS ChipPAC substitute options, both vested and unvested, were determined
using a Black-Scholes valuation model with the following assumptions: no dividend yield, an
expected volatility of 62.47%, and a
risk-free
interest rate of 3.12%. The model assumed an
expected life of five to seven years for vested and unvested options.
The number of STATS ChipPAC ordinary shares that were subjected to STATS ChipPAC substitute options
in connection with the merger was 76,492,951, based upon the total number of shares of ChipPAC
Class A common stock subjected to outstanding ChipPAC options as of August 5, 2004, at an exercise
price range of $0.15 to $1.47 per STATS ChipPAC ordinary share.
Based on the above, the estimated total purchase price of the ChipPAC acquisition was as follows:
Value of STATS ChipPAC ADSs issued
$
1,068,955
Value of STATS ChipPAC substitute options
74,548
Total value of STATS ChipPAC securities
1,143,503
Estimated direct transaction costs
9,369
Total estimated purchase price
$
1,152,872
Under the purchase method of accounting, the total estimated purchase price as shown in the
table above was allocated to ChipPAC's net tangible and identifiable intangible assets based on
their estimated fair values as at merger date. In determining the price allocation, management
considered, among other factors, its intention for use of acquired assets as well as historical
demand and estimates of future demand for ChipPAC's products and services. Based on these
assumptions, the estimated purchase price was allocated as follows:
Current and other assets
$
170,332
Property, plant and equipment
447,568
Current liabilities
(161,203
)
F-23
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
Long-term
debts
(375,519
)
Other
long-term
liabilities
(51,924
)
Net assets
29,254
Amortizable intangible assets:
Tradenames
7,700
Technology and intellectual property
32,000
Customer relationships
99,300
Software and licenses
8,218
Unearned compensation on unvested options
2,011
Goodwill
974,389
$
1,152,872
Certain adjustments were made to goodwill subsequent to the acquisition date and are described
in Note 11, Goodwill.
Of the total estimated purchase price, an estimate of $29,254 had been allocated to net assets
assumed and $147,218 had been allocated to amortizable identifiable intangible assets acquired. The
final allocation of purchase price was subjected to adjustments as described in Note 11.
The fair value of tangible assets was estimated primarily based on the cost and sales comparison
approaches. In applying the cost approach, the replacement or reproduction cost estimates for the
buildings, machinery and other equipment were based on indexed original costs or manufacturer
reported replacement costs. Original historical cost data was segregated by appraisal class and
year of acquisition, and indexed to estimated reproduction cost. Inflation trend factors were
derived using indices from nationally recognized indexes. Replacement or reproduction costs were
reduced by depreciation factors that reflect the estimated physical deterioration and functional
obsolescence of assets. The sales comparison approach was used for tangible assets that have an
active resale market. Similar assets recently sold or offered for sale were analyzed and their
prices adjusted to reflect the difference between the comparable asset and the asset and the
conditions of the sale to estimate the value of the acquired assets.
The fair value assigned to intangible assets was estimated by discounting the estimated future cash
flows of the intangibles assets to their present value. The cash flow estimates used for
technology and intellectual property were based on estimates of product revenue and appropriate
royalty rates (based on an analysis of rates for similar technologies and forecast product
margins). The cash flow estimates used for customer relationships were based on estimates of
revenue attributed to the current customers and the programs they have been qualified on as well as
the profitability attributed to each customer related asset. The rate used to discount these net
cash flows was determined after consideration of market returns on debt and equity capital, the
weighted average return on invested capital, the nature of each asset and the risk associated with
achieving the forecast.
The fair
value of the ChipPAC tradename was amortized on a
straight-line
basis over an estimated
life of seven years. Technology and intellectual property were related to ChipPAC's technology for
ball grid array,
lead-frame
and chip scale package. The fair value of these assets was amortized
on a
straight-line
basis over an average estimated life of ten years.
Customer relationships represent those customers with which ChipPAC had current sales
relationships. The fair value of these assets was amortized on a
straight-line
basis over an
average estimated life of two years.
The Company recorded $2,011 of unearned compensation on unvested options, in accordance with FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation." This
amount represents the intrinsic value of stock options assumed that is earned as the employees
provide services over the next four years.
Of the total estimated purchase price, $974,389 had been allocated to goodwill. Goodwill
represents the excess of the purchase price of an acquired business over the fair value of the
underlying net tangible and identifiable intangible assets. In accordance with SFAS No. 142,
"Goodwill and Other Intangible Assets,"
F-24
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
goodwill and intangible assets with indefinite lives resulting from business combinations will not
be amortized but instead will be tested for impairment at least annually or more frequently if
certain indicators are present.
The following pro forma financial information presents a summary of the results of operations of
the Company assuming the merger was consummated on January 1, 2004. The pro forma financial
information is not necessarily indicative of the operating results or financial position that would
have occurred if the merger had been consummated on January 1, 2004, nor is it necessarily
indicative of future operating results or financial position of the Company.
Year Ended
December 31,
2004
Revenues
$
1,084,165
Net loss
(484,695
)
Net loss per ordinary share:
Basic and diluted
$
(0.25
)
Net loss per ADS:
Basic and diluted
$
(2.52
)
The
proforma financial information above included the following material,
non-recurring
charges: impairment of goodwill of $453,000 and merger related expenses of $5,399 in 2004.
13.
Accrued Operating Expenses
Accrued operating expenses consist of the following:
December 25,
2005
December 31,
2006
Staff costs
$
31,324
$
33,957
Purchase of raw materials
25,082
10,875
Maintenance fees, license fees and royalties
5,378
2,828
Interest expense
7,780
7,553
Provision for vacation liability
4,732
3,299
Others
22,636
39,115
$
96,932
$
97,627
14.
Income Taxes
Income (loss) before income taxes consists of the following:
Year Ended
December 31,
2004
December 25,
2005
December 31,
2006
Singapore
$
6,674
$
6,698
$
951
Foreign
(462,675
)
(16,880
)
111,626
$
(456,001
)
$
(10,182
)
$
112,577
F-25
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
Income tax benefit (expense) consists of the following:
Year Ended
December 31,
2004
December 25,
2005
December 31,
2006
Current tax:
Singapore
$
7,283
$
(72
)
$
—
Foreign
(172
)
(373
)
(5,935
)
Total current tax
$
7,111
$
(445
)
$
(5,935
)
Deferred tax:
Singapore
$
(9,145
)
$
(617
)
$
(1,400
)
Foreign
(5,860
)
(8,627
)
(18,424
)
Total deferred tax
$
(15,005
)
$
(9,244
)
$
(19,824
)
$
(7,894
)
$
(9,689
)
$
(25,759
)
A reconciliation of the expected tax expense (benefit) at the Singapore statutory rate of tax
to actual tax expense (benefit) is as follows:
Year Ended
December 31,
2004
December 25,
2005
December 31,
2006
Income tax expense (benefit) computed at Singapore
statutory rate of 20.0% (2005 and 2004: 20.0%)
$
(91,200
)
$
(2,036
)
$
22,515
Non-deductible
expenses, including goodwill
impairment charges
91,488
1,989
4,892
Non-taxable
income
(1,212
)
(2,194
)
(461
)
Differences in tax rates
6,898
15,434
5,550
Effect of recognizing deferred tax assets at
concessionary tax rate and tax credits
(13,199
)
(6,539
)
(13,926
)
Change in statutory tax rate
—
—
(651
)
Tax benefits from employee share option plans
—
(2,084
)
(665
)
Reinvestment allowance
(10,415
)
(5,755
)
(5,632
)
Change in valuation allowance
23,137
30,133
9,114
Effect of tax loss carryforwards and unutilized
capital allowance previously not recognized
—
(21,685
)
—
Benefit of tax status change
(935
)
—
—
Taxable foreign exchange adjustment
2,639
1,283
4,575
All other items, net
693
1,143
448
Income tax expense
$
7,894
$
9,689
$
25,759
Deferred income taxes reflect the net tax effects of (a) temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used
for income tax purposes, and (b) operating loss, unutilized capital allowance and investment tax
credit carryforwards. The tax effect of significant items comprising the Company's deferred income
tax assets and liabilities at December 25, 2005 and December 31, 2006 are as follows:
December 25,
2005
December 31,
2006
Deferred income tax assets:
Operating loss carryforwards
$
34,787
$
27,079
Investment, and research and development tax credits
50,136
57,804
Reinvestment allowance
29,336
34,968
Property, plant and equipment
32,551
32,185
Others
4,165
7,066
150,975
159,102
Valuation allowance
(110,671
)
(119,785
)
$
40,304
$
39,317
Deferred income tax liabilities:
Property, plant and equipment
$
26,386
$
34,147
Allowances and reserves
20,618
22,610
47,004
56,757
Net deferred income tax assets (liabilities)
$
(6,700
)
$
(17,440
)
F-26
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
In 2004, as part of the acquisition of ChipPAC, the Company acquired approximately $103,351 of
net operating loss carryforwards, $32,185 of tax credit carryforwards and $47,023 of reinvestment
allowance that were recognized as deferred tax assets upon acquisition. The Company established a
valuation allowance of $53,973 against all of the net operating loss carryforwards and reinvestment
allowance, and a portion of the Korean tax credit carryforwards. If utilized, these attributes will
be treated as a reduction in acquired goodwill. In 2004, $5,916 of the South Korea tax credit
carryforwards was utilized. In 2006, a further $9,113 of the South Korea and China net operating
loss carryforwards and tax credit carryforwards was utilized.
The deferred tax assets as of December 25, 2005 and December 31, 2006 arose principally as a result
of the deferred tax benefit associated with operating loss carryforwards, investment, and research
and development tax credits, reinvestment allowance and deductible temporary differences on
property, plant and equipment. The Company recorded a valuation allowance of $110,671 and $119,785
as of December 25, 2005 and December 31, 2006, respectively, which represents an increase of
$30,133 and $9,114 in 2005 and 2006, respectively, to reduce the assets to the amounts that the
Company deemed, more likely than not, that the deferred tax asset will not be realized. In
assessing the realizability of deferred tax assets, management considers whether it is more likely
than not that some portion or all of the deferred tax assets will not be realized. The ultimate
realization of deferred tax assets is dependent upon the generation of future taxable income during
the periods in which those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning
strategies in making this assessment. Based upon the level of historical taxable income and
projections for future taxable income over the periods which the deferred tax assets are
deductible, the Company establish a partial valuation allowance against its gross deferred tax
assets to reduce the assets to the amount the Company deemed, more likely than not, to be
recoverable.
As at December 31, 2006, the Company has approximately $113,197 of tax loss carryforwards available
to offset against future taxable income, certain amounts of which will expire in varying amounts
from 2007 to 2024. Changes in stock ownership can result in a limitation on the amount of net
operating loss that is available as carryforwards. The Company determined it had undergone such an
ownership change in 2004 in connection with its merger with ChipPAC. In 2005, the limitations in
connection with the merger with ChipPAC related to the carryforward of certain Singapore tax losses
and capital allowances for offset against future taxable profits of the Company were waived by the
Singapore tax authorities, subject to fulfillment of certain continuing conditions. Consequently,
approximately $21,685 of such tax loss and capital allowance carryforwards were recognized as
deferred tax assets in 2005. As at December 31, 2006, the Company has approximately $2,960 of tax
deductions in the United States as a result of the exercise of employee share options reflected in
net operating loss carryforwards and valuation allowance, of which the tax benefit has not been
realized.
As at December 31, 2006, the Company has approximately $7,969, $303,600, $49,834 and $134,493 of
research and development, unutilized capital allowances, investment tax credits and reinvestment
allowance, respectively, which can be used to offset income tax payable in future years. Certain
credits will expire in varying amounts from 2007 through 2013.
The Company's pioneer trade was in an adjusted tax loss position due to the substantial amount of
capital allowances claimed arising from capital expenditure on its plant and machinery and trade
losses in certain years. As a result, the Company had not enjoyed any tax exemption in respect of
its income arising from the pioneer activities. On the other hand, the Company had paid taxes in
respect of its interest and rental income as losses arising from the pioneer trade cannot be
set-off
against the
non-qualifying
income during the pioneer incentive period due to the
application of the law in respect of the pioneer incentive. In September 2004, the application for
the revocation of the Company's pioneer status granted from January 1, 1996 to December 31, 2003
under the Singapore Economic Expansion Incentives (Relief from Income Tax) Act, Chapter 86, for
"Subcontract Assembly And Testing Of Integrated Circuits Including Wafer Probing
Services" was approved by the Singapore Economic Development Board ("EDB"), an agency of the
Government of Singapore. Accordingly, the Company recorded $5,039 of tax recoverable in 2004
related to expected tax refund of taxes paid previously on interest and rental income as the
unutilized tax losses and capital allowances arising from the trading activities would then be
allowed to
set-off
against the income derived in the previous years, of which $4,559 has been
refunded in 2005. The remaining $480 has been refunded in 2006. The Company is in the process of
working with the EDB for a new tax incentive for its Singapore operations.
F-27
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
15.
Short-Term Borrowings
The
short-term
borrowings relate to the lines of credit with Shin Han Bank (formerly known as Cho
Hung Bank), Hana Bank and the National Agricultural Cooperation Federation Bank in South Korea,
with credit limits of $25,000, $5,000 and $14,000, respectively, and
short-term
borrowings from Mega Bank of $544. These facilities bore average
interest rates of 4.8% and 4.6% in 2005 and 2006, respectively. As of December 25, 2005 and
December 31, 2006, $16,891 and $592 were borrowed against these
facilities, and $27,109 and
$43,952 of unutilized South Korean lines of credit were available,
respectively. These South Korean lines of credit are subject to
annual review by the lenders for the continued use of the facilities.
16.
Capital Leases
Future minimum lease payments under capital leases for equipment as of December 31, 2006 are as
follows:
Payable in year
2007
$
3,729
2008
—
2009
—
2010
—
Thereafter
—
Total minimum obligations
3,729
Less amounts representing interest at rates ranging from 4.4% to
4.7% per annum
(49
)
Present value of minimum obligations and current installments of
obligations under capital lease
$
3,680
All leasing arrangements are for testers with
3-year
terms. At the end of the lease term, the
Company may choose to terminate, renew the lease or purchase the equipment at fair market value.
17.
Long-term Debts
Long-term
debts consist of the following:
December 25,
2005
December 31,
2006
1.75% convertible senior
fixed-rate
notes
$
31,500
$
31,500
0% convertible senior
fixed-rate
notes
115,000
115,000
2.5% convertible subordinated
fixed-rate
notes
150,000
150,000
8% convertible subordinated
fixed-rate
notes
50,000
—
6.75% senior
fixed-rate
notes
215,000
215,000
7.5% senior
fixed-rate
notes
150,000
150,000
U.S. dollars bank loan at floating rates
2,760
14,070
Taiwan dollar loans at floating rates
53,987
58,615
Taiwan dollar loans and commercial papers at fixed rates
10,866
2,859
Accrued
yield-to-maturity
interest on convertible notes
14,963
21,580
794,076
758,624
Less current amounts
(18,651
)
(61,101
)
$
775,425
$
697,523
In March, 2002, the Company issued $200,000 of senior, unsecured and unsubordinated
convertible notes due March 18, 2007 for net proceeds of $195,032. The convertible notes bear
interest at the rate of 1.75% per annum payable
semi-annually
on March 18 and September 18 of each
year and have a yield to maturity of 4.91%. At the maturity date, the Company will pay to the note
holders 117.665% of the principal amount. The notes can be converted into the Company's ordinary
shares or, subject to certain limitations, ADSs, each of which currently represents ten ordinary
shares, at a conversion price of S$3.408 per ordinary share (at a fixed exchange rate of US$1.00 =
S$1.8215). The Company may elect to satisfy its obligations to deliver ordinary shares or ADSs
through delivery of cash in accordance with the terms of the notes. The Company may redeem all or
a portion of the convertible notes at any time on or after March 18, 2004 at a price to yield of
4.91% per annum to the redemption date if the Company's shares or ADSs trade at or above 125% of
the conversion price for a period of 20 trading days in any 30 consecutive trading day period. In
2004, the
F-28
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
Company repurchased $16,500 aggregate principal of these convertible notes for $18,150 and recorded
a loss of $266. In 2005, the Company repurchased a further $26,080 aggregate principal amount of
these convertible notes for $28,796 and recorded a loss of $390. Holders of these convertible notes
had the right to require the Company to repurchase all or a portion of their notes on March 18,
2005 at a price equal to 110.081% (to arrive at effective yield of 4.91%) of the principal amount
of the notes being redeemed, plus any accrued and unpaid interest accrued to the date of
redemption. In addition, upon the occurrence of certain repayment events, including a change in
control, on or prior to March 18, 2007, each note holder may require the Company to repurchase all
or a portion of such holder's notes at a price to yield 4.91% per year to the redemption date. The
Company received notices of demand for redemption of $125,920 aggregate principal amount of these
convertible notes which the Company redeemed in March 2005 at a loss of $1,263. The Company
financed the redemption from cash and
short-term
borrowings. In July 2005, the Company repurchased and cancelled
$42,580 aggregate principal amount of these convertible notes. Following
the redemption and cancellation, $31,500 aggregate principal amount of these convertible notes
remained outstanding at December 31, 2006.
On November 7, 2003, the Company issued $115,000 of senior, unsecured and unsubordinated
convertible notes due November 7, 2008, for net proceeds of $112,345. The convertible notes have a
yield to maturity of 4.25%. At the maturity date, the Company will pay to the note holders 123.4%
of the principal amount, comprising principal and redemption interest. The notes can be converted
into the Company's ordinary shares or, subject to certain limitations, ADSs, each of which
currently represents ten ordinary shares, at an initial conversion price of S$3.05 per ordinary
share (equivalent to an initial number of 570.5902 ordinary shares per $1,000 principal amount of
convertible notes, based on a fixed exchange rate of US$1.00 = S$1.7403). The Company may elect to
satisfy its obligations to deliver ordinary shares or ADSs through delivery of cash in accordance
with the terms of the notes. The Company may redeem all or a portion of the convertible notes at
any time on or after November 7, 2006 at a price to yield of 4.25% per annum to the redemption date
if the Company's shares or ADSs trade at or above 130% of the conversion price for a period of 20
trading days in any 30 consecutive trading day period. The note holders may require the Company to
repurchase all or a portion of their notes on November 7, 2007 at a price equal to 118.32% (to
arrive at effective yield of 4.25%) of the principal amount of the notes being redeemed, plus any
accrued and unpaid interest accrued to the date of redemption. In addition, upon the occurrence of
certain repayment events, including a change in control, on or prior to November 7, 2008, each note
holder may require the Company to repurchase all or a portion of such holder's notes at a price to
yield of 4.25% per year to the redemption date.
The conversion price of the 1.75% convertible senior notes and zero coupon convertible senior notes
may be subject to adjustments upon occurrence of the following: (1) on share distribution,
share split or share consolidation; (2) on issue or distribution of the Company's ordinary shares,
or subsidiaries' issue of any securities or rights which are convertible into or exchangeable for
the Company's ordinary shares, to all or substantially all holders of the Company's ordinary shares
for below the reasonable range of fair market value; (3) on issue or distribution to all or
substantially all holders of the Company's ordinary shares of warrants or rights to purchase or
subscribe for the Company's ordinary shares for below the reasonable range of fair market value;
(4) on issue or distribution to all or substantially all holders of the Company's ordinary shares
of assets or other securities, including rights to acquire those assets or other securities, for
below the reasonable range of the assets or other securities' fair market value; (5) on issue or
distribution of "extraordinary dividends" (defined as a total dividend that is equal to or exceeds
(i) 2% of the one year average closing price of the Company's ordinary shares if the Company has
never paid cash dividends, or (ii) the lower of (a) two times the largest aggregate cash dividends
in any previous year, and (b) the largest aggregate cash dividends in any previous year plus 1% of
the one year average closing price of the Company's ordinary shares if the Company has paid cash
dividends at least once); and (6) on
spin-off
of any of the Company's subsidiaries or other
business units.
The terms of the indentures governing the 1.75% convertible senior notes and zero coupon
convertible senior notes provide that the ordinary shares deliverable upon conversion would not be
registered under the Securities Act of 1933.
The $50,000 8.0% convertible subordinated notes due 2011 are ChipPAC's unsecured and subordinated
obligations. These convertible notes will mature on June 15, 2011 and bear interest rate of 8.0%
per annum payable
semi-annually
on June 15 and December 15 of each year. On the maturity date of
these convertible notes, ChipPAC will pay to the note holders of these convertible notes 100% of
the principal amount. These convertible notes can be converted into the Company's ADSs at a
conversion price of $11.448 per ADS.
F-29
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
ChipPAC may redeem all or a portion of these convertible notes at any time on or after June
15, 2004 at the designated redemption price, expressed as a percentage of principal amount of the
convertible notes, plus, in each case, accrued interest to the date of redemption:
Year
Percentage
2004
104.00
%
2005
103.33
%
2006
102.67
%
2007
102.00
%
2008
101.33
%
2009
101.67
%
2010 and thereafter
100.00
%
Upon the occurrence of specified change in control events, each holder of these convertible
notes may require ChipPAC to repurchase all or a portion of such holder's notes at a purchase price
equal to 100% of the principal amount thereof plus accrued and unpaid interest. In October 2006,
the Company repurchased the outstanding $50,000 aggregate principal amount of these convertible
notes for $50,500 and recorded a loss of $500. The repurchase was financed with current working
capital, including the Company's cash and cash equivalents.
The $150,000 2.5% convertible subordinated notes due 2008 are ChipPAC's unsecured and subordinated
obligations. These convertible notes will mature on June 1, 2008 and bear interest rate of 2.5% per
annum payable
semi-annually
on June 1 and December 1 of each year. On the maturity date of these
convertible notes, ChipPAC will pay to the note holders of these convertible notes 100% of the
principal amount. These convertible notes can be converted into the Company's ADSs at a
conversion price of $9.267 per ADS. These convertible notes are not redeemable at the option of
ChipPAC. Upon the occurrence of specified change in control events, each holder of these notes may
require ChipPAC to repurchase all or a portion of such holder's notes at a purchase price equal to
100% of the principal amount thereof on the date of purchase plus accrued and unpaid interest. On
October 11, 2004, STATS ChipPAC, ChipPAC and the trustee for these convertible notes entered into a
second supplemental indenture to provide for an unconditional guarantee of these convertible notes
on a subordinated basis by STATS ChipPAC (but not by any of its subsidiaries). On October 18, 2004,
ChipPAC commenced a consent solicitation from holders of these convertible notes to amend the
indenture governing these convertible notes to replace ChipPAC's obligation to file with the SEC
annual reports and such other information, documents and reports specified in Section 13 and 15(d)
of the Exchange Act of 1934 with an obligation of STATS ChipPAC to file all such reports with the
SEC as are applicable to a foreign private issuer. The consent solicitation expired on November 1,
2004. ChipPAC received valid deliveries of consents from holders of approximately $130,500
aggregate principal amount, or 87%, of these convertible notes outstanding. Accordingly, ChipPAC
obtained the requisite consents authorizing the adoption of the proposed amendment to the
indenture. The consents were accepted and the amendments to the indenture became effective on
November 2, 2004.
The conversion price of the 8.0% convertible subordinated notes and 2.5% convertible subordinated
notes may be subject to adjustments upon occurrence of the following: (1) on share distribution,
share split or share consolidation; (2) on issue or distribution to all or substantially all
holders of the Company's ordinary shares of warrants or rights to subscribe for or purchase the
Company's ordinary shares, or securities convertible into the Company's ordinary shares, at a price
per share or a conversion price per share below the reasonable range of fair market value; (3) on
issue or distribution to all or substantially all holders of the Company's ordinary shares any
shares of capital stock of the Company, evidences of indebtedness or other
non-cash
assets
(excluding (i) dividends, distributions and rights or warrants referred to above, and (ii)
dividends or distributions paid in cash), or rights or warrants to subscribe for, or purchase any
of the Company's securities (excluding those rights or warrants referred to above); (4) on issue or
distribution to all or substantially all holders of the Company's ordinary shares of all cash
distributions in an aggregate amount that, together with (a) any cash and any other consideration
payable in respect of any purchase by the Company of the Company's ordinary shares
consummated within the preceding 12 months not triggering a conversion price adjustment and (b) all
cash distributions to all or substantially all holders of the Company's ordinary shares made within
the preceding 12 months not triggering a conversion price adjustment, exceeds, in the case of the
2.5% convertible subordinated notes, 10% of the Company's then market capitalization, and in the
case of the 8.0% convertible subordinated notes, 12.5% of the Company's then market capitalization;
and (5) on purchase by the Company of the Company's ordinary shares to the extent it involves
aggregate consideration that, together with (a) any cash and any other consideration payable in
respect of any purchase by the Company of the Company's ordinary shares consummated within the
F-30
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
preceding 12 months not triggering a conversion price adjustment and (b) all cash distributions to
all or substantially all holders of the Company's ordinary shares made within the preceding 12
months not triggering a conversion price adjustment, exceeds, in the case of the 2.5% convertible
subordinated notes, 10% of the Company's then market capitalization, and in the case of the 8%
convertible subordinated notes, 12.5% of the Company's then market capitalization.
The terms of the indentures governing the 2.5% convertible subordinated notes and the 8.0%
convertible subordinated notes permits only issuance of new shares. There is no net cash or net
share settlement provisions. Also, pursuant to the registration rights agreement relating to the
2.5% convertible subordinated notes and the 8.0% convertible subordinated notes, shelf registration
is required to be maintained for a period of two years. The shelf registration requirement of the
8.0% convertible subordinated notes had expired as of the date of the merger of the Company and
ChipPAC, and the shelf registration requirement of the 2.5% convertible subordinated notes has been
continued via a registration statement on Form
F-3/S-3
filed on October 13, 2004 and which offering
had been terminated on October 11, 2006.
The various provisions of the convertible notes were evaluated by the Company to determine whether
any specific conversion features should be bifurcated from the debt host instrument and accounted
for as separate derivatives. The Company concluded that conversion options, conversion price
adjustments, option to settle for cash upon conversion, the Company's call option and note holders'
put option embedded in the convertibles notes may be classified as equity and therefore do not need
to be accounted for separately from the debt host instruments. The change in control put options
are determined to be clearly and closely related to the debt host instrument and are not required
to be accounted for separately. Further, the conversion prices were
out-of-the-money
at the
commitment dates and did not result in bifurcation of beneficial conversion features.
On November 18, 2004, the Company issued $215,000 of senior unsecured notes due November 15, 2011,
for net proceeds of $210,458. The senior notes bears interest of 6.75% per annum payable
semi-annually
on May 15 and November 15 of each year. At the maturity date, the Company will pay to
the note holders 100.0% of the principal amount, comprising principal and redemption interest.
Prior to November 15, 2008, the Company may redeem all or a part of the senior notes at any time by
paying a "make whole" premium plus accrued and unpaid interest. The Company may redeem all, but not
less than all, of these notes at any time in the event of certain changes affecting withholding
taxes at 100% of their principal amount plus accrued and unpaid interest. On or after November 15,
2008, the Company may redeem all or a part of these notes at any time at the redemption prices
specified under the terms and conditions of the senior notes plus accrued and unpaid interest. In
addition, prior to November 15, 2007, the Company may redeem up to 35% of these notes with the net
proceeds of certain equity offerings. Upon a change of control, the Company will be required to
offer to purchase these notes at 101.0% of their principal amount plus accrued and unpaid interest.
On July 19, 2005, the Company issued $150,000 of senior unsecured notes due July 19, 2010 for net
proceeds of $146,535. The senior notes bear interest rate of 7.5% per annum payable
semi-annually
on January 19 and July 19 of each year. At the maturity date, the Company will pay to the note
holders 100.0% of the principal amount, comprising principal and redemption interest. Prior to July
19, 2010, the Company may redeem all or a part of the senior notes at any time by paying a "make
whole" premium plus accrued and unpaid interest. The Company may redeem all,
but not less than all, of these notes at any time in the event of certain changes affecting
withholding taxes at 100% of their principal amount plus accrued and unpaid interest and liquidated
damages, if any. In addition, prior to July 19, 2008, the Company may redeem up to 35% of these
notes at a redemption price of 107.5% of the principal amount, plus accrued and unpaid interest and
liquidated damages, if any, to the redemption date, with the net proceeds of certain equity
offerings. Upon a change of control, the Company will be required to offer to purchase these notes
at 101.0% of their principal amount plus accrued and unpaid interest. A portion of the net proceeds
were used to repay the then outstanding $99,000
short-term
debts with
Overseas-Chinese
Banking
Corporation Limited and Bank of America N.A.
The Company has two U.S. dollars term loan facilities of $25,000 and $5,000 from Hana Bank in South
Korea, of which $14,070 was outstanding as of December 31, 2006. As at December 31, 2006, the
average interest rate on the loans was 7.1% per annum. The principal and interest on these loans
are repayable over eight equal quarterly installments from November 2006 to June 2009.
F-31
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
Winstek has a NT$1.8 billion ($55,232) floating rate New Taiwan dollar term loan facility with a
syndicate of lenders, with Mega Bank (formerly known as Chiao Tung Bank) as the agent bank. As of
December 31, 2006, Winstek has drawn down NT$1.6 billion ($50,338) under the loan, which is
repayable in eight equal installments commencing February 27, 2006 and ending on August 27, 2009.
The interest rate on the loan was 3.5% per annum and interest on the loan is payable on a monthly
basis. This loan is secured by a pledge of equipment with net book value of $50,163 as of December
31, 2006.
In August 2006, Winstek obtained another floating rate New Taiwan dollar term loan facility of
NT$3.6 billion ($110,463) with a syndicate of lenders, with Taishin bank as the agent bank. The
loan drawdowns must be made within 24 months from the date of first drawdown, not to be later than
February 18, 2007. As of December 31, 2006, Winstek has not utilized the term loan facility and
there was no outstanding balance on this facility.
Additionally,
Winstek has NT$1.4 billion ($43,449) of other bank and credit facilities from various
banks and financial institutions, of which $18,394 borrowings was outstanding as of December 31,
2006. These credit facilities have varying interest rates ranging from 2.1% to 3.6% per annum and
maturities ranging from 2007 through 2012. The $18,394 borrowings are secured by a pledge of
equipment with net book value of $33,487 as of December 31, 2006.
Annual maturities of
long-term
debts as of December 31, 2006 are as follows:
Payable in year
2007
$
61,101
2008
312,575
2009
18,050
2010
150,690
2011
215,690
Thereafter
518
$
758,624
The STATS ChipPAC consolidated group, with the exception of Winstek, the China
non-guarantor
entities (comprising STATS ChipPAC Shanghai Co., Ltd., STATS ChipPAC Test Services Shanghai Co.,
Ltd. and STATS ChipPAC Semiconductor Shanghai Co., Ltd.), and, in the case of the 7.5% Senior Notes
due 2010, STATS ChipPAC Korea Ltd., fully and unconditionally guaranteed the obligations under the
indentures of the 6.75% Senior Notes due 2011 or the 7.5% Senior Notes due 2010, on an unsecured
senior basis. See Note 30, Condensed Consolidating Financial Information. The STATS ChipPAC
consolidated group, with the exception of Winstek, are subjected to the covenant restrictions under
the terms of the 6.75% Senior Notes due 2011 or the 7.5% Senior Notes due 2010, which, among other
things, limit the incurrence of additional indebtedness, prepay subordinated debts, investments,
dividends, transaction with affiliates, asset sales, sale and leaseback, liens and encumbrances,
merger and consolidations and other
customary restrictions. The 6.75% Senior Notes due 2011 and the 7.5% Senior Notes due 2010 are
cross-defaulted
to the Company's other indebtedness.
18.
Unutilized Credit Facilities
The Company established a syndicated
3-year
revolving line of credit of $125,000 in August 2006.
The line of credit was arranged by
Oversea-Chinese
Banking Corporation Limited and includes a total
of six lenders. The new facility is irrevocable for the
3-year
period unless the Company is in
breach of covenants, including minimum tangible assets, interest coverage ratios and debt ratios,
or if it commits an event of default, such as failing to pay any amount due under the line of
credit. As of December 31, 2006, the Company had not used this line of credit and there was no
outstanding balance on this facility.
At December 31, 2006, the Company had other undrawn banking and credit facilities consisting of
long-term
loans and bank guarantees of $337,624 with financial institutions.
The notional letters of credit amounts outstanding at December 25, 2005 and December 31, 2006 were
$8,951 and $122, respectively.
F-32
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
19.
Other
Non-Current
Liabilities
Other
non-current
liabilities consist of the following:
December 25,
2005
December 31,
2006
Deferred tax liabilities
$
46,654
$
56,747
Accrued severance benefits
19,957
26,892
Others
—
1,168
$
66,611
$
84,807
Changes in accrued severance benefits in 2004, 2005 and 2006 are as follows:
Year Ended
December 31,
2004
December 25,
2005
December 31,
2006
Beginning
$
—
$
16,587
$
20,210
Increase due to acquisition
13,819
—
—
Provision for severance benefits
1,793
6,334
9,119
Severance payments
(704
)
(3,138
)
(4,172
)
Foreign currency loss
1,679
427
1,997
Ending
$
16,587
$
20,210
$
27,154
Payments on deposits with Korean
National Pension Fund
(262
)
(253
)
(262
)
Ending, net of payments on deposits
$
16,325
$
19,957
$
26,892
20.
Share Capital and Additional
Paid-in
Capital
On August 5, 2004, the Company issued 861,907,530 new ordinary shares and assumed options to
purchase 76,492,951 ordinary shares to effect the acquisition of ChipPAC.
As a result of the employees exercising their share options and purchase rights in 2004, 2005 and
2006, 5,802,800, 31,961,575 and 26,522,092 ordinary shares were issued, respectively.
Additional
paid-in
capital represents principally the excess of proceeds received from issues of
share capital (net of the costs of issue) over the par value of shares issued, which under
Singapore law must be credited to the share premium account. The share premium may only be applied
in paying up unissued shares to be issued to shareholders, paying up in whole or in part the
balance unpaid on shares in issue, in payment of dividends, if such dividends are satisfied by the
issue of shares to members of the Company, in writing off preliminary expenses and share and
debenture issue expenses and by provision for premiums payable on the redemption of redeemable
preferred shares. The Company has not utilized any amounts in the share premium account for the
above mentioned purposes. As of December 25 2005, the Company's share premium account amounted to
$1,414,721.
Under Singapore law, all increases in share capital (including rights issues) require prior
shareholders' approval. Effective January 30, 2006, the Company was subjected to the amendments
promulgated under the Companies (Amendment) Act of 2005 of Singapore. These amendments included the
abolition of the ordinary share par value and authorized capital. The relevant amendments have
resulted in all ordinary shares being recorded with no par value. The amendments do not affect the
actual number of ordinary shares issued and the paid up capital of the Company. As a result of the
abolition of the ordinary share par value, the balance of the additional
paid-in
capital amounting
to $1,517,175 became part of the share capital as of January 30, 2006 and increased the share
capital account on that date to $1,820,277.
21.
Share Repurchase
The Companies (Amendment) Act 2005 of Singapore was made effective on January 30, 2006. As a result
of these amendments, a Singapore company can now repurchase shares out of capital, as well as from
distributable profits, and ordinary shares repurchased by a company can be held by that company as
treasury shares instead of being cancelled. In light of these amendments, at the annual general
meeting in April 2006, the Company obtained shareholders' approval for the repurchase of up to
approximately 50
F-33
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
million ordinary shares (2.5% of the issued ordinary share capital as of the date of the annual
general meeting) and the amendment of its employee share plans to, among other things, allow the
Company the flexibility to deliver repurchased ordinary shares held in treasury (instead of issuing
new shares) to eligible plan participants. The approved amount for share repurchases under this
shareholders' mandate will terminate on the earlier of the date on which the next annual general
meeting is held or the date which the approval is revoked or varied. As of December 31, 2006, the
Company had not repurchased any shares.
22.
Accumulated Other Comprehensive Loss
The components of accumulated other comprehensive loss are as follows:
December 25,
2005
December 31,
2006
Currency translation loss
$
(8,320
)
$
(7,353
)
Unrealized gain on hedging instruments
775
676
Unrealized loss on
available-for-sale
marketable securities
(1,027
)
(1,037
)
$
(8,572
)
$
(7,714
)
23.
Share Options and Incentive Plans
In April 2006, the Company's shareholders authorized the Company to issue restricted share units of
the Company in respect of ordinary shares of the Company and grant performance shares under the
STATS ChipPAC Ltd. Restricted Share Plan ("RSP") and the STATS ChipPAC Ltd. Performance Share Plan
("PSP"), respectively.
Under the RSP, the Company is permitted to grant Restricted Share Units ("RSUs") to eligible
participants. The RSP is intended to replace the STATS ChipPAC Ltd. Share Option Plan, as amended,
by 2007. The RSUs are share awards that entitle the grantee to ordinary shares of the Company or
their equivalent cash value or combinations thereof as the award vests in accordance with a
schedule determined by the Board of Directors or committee thereof. The unvested portions of the
RSUs are generally subject to forfeiture if employment terminates prior to vesting. A grantee of
RSU has no rights as a shareholder with respect to any ordinary shares covered by the RSP until
such ordinary shares have been issued or transferred pursuant to the terms of the RSP. The PSP is
intended to supplement the Company's long term compensation strategy of senior level employees,
under which the number of ordinary shares or their equivalent cash value or combinations thereof
ultimately received by the employee depends on the Company's performance against specified targets
over a period of time to be determined by the Board of Directors or committee thereof. The ordinary
shares covered by a grant under the PSP shall vest in accordance with a schedule determined by the
Board of Directors or committee thereof. A grantee of any ordinary shares under the PSP has no
rights as a shareholder with respect to any ordinary shares covered by the grantee's PSP award
until such ordinary shares have been issued or transferred pursuant to the terms of the PSP. The
number of ordinary shares that may be issued under the STATS ChipPAC RSP and the STATS ChipPAC PSP
may not exceed, in the aggregate, 50 million and 15 million ordinary shares of the Company,
respectively. As of December 31, 2006, no grant of share awards under the RSP and PSP had been
made.
In April 2006, the shareholders approved the resolution to limit the aggregate number of ordinary
shares that may be issued under the STATS ChipPAC Ltd. Share Option Plan, as amended, ("STATS
ChipPAC Option Plan") to not exceed 198 million ordinary shares (subject to adjustment under the
plan), including the 80 million ordinary shares subject to the STATS ChipPAC Ltd. Substitute
Purchase and Option Plan ("Substitute Option Plan") and STATS ChipPAC Ltd. Substitute Equity
Incentive Plan ("Substitute EIP"). The purpose of the STATS ChipPAC Option Plan is to offer
selected individuals an opportunity to acquire or increase an ownership interest in the Company
through the grant of options to purchase ordinary shares. Options granted under the STATS ChipPAC
Option Plan may be either nonqualified options or incentive stock options intended to qualify under
Section 422 of the United States Internal Revenue Code. The options typically vest over a four-year
period. Option periods may not exceed 10 years from the date of grant.
F-34
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
The plan is administered by a committee appointed by the directors. Employees, outside
directors and consultants are eligible for the grant of options except for (i) employees of
affiliates, outside directors and consultants, who are not eligible for the grant of incentive
stock options; and (ii) employees, outside directors and consultants of affiliates resident in the
United States, who are not eligible for the grant of options. The exercise price of an incentive
stock option is the fair market value of the shares at the date of the grant. In certain
circumstances, the exercise price may be higher than the fair market value but in no event will the
exercise price be below the par value of the share.
In August 2004, the Company adopted the STATS ChipPAC Ltd. Employee Share Purchase Plan 2004
("ESPP") for the benefit of its employees. Under the ESPP, substantially all employees could
purchase the Company's ordinary shares through periodic payroll deductions or lump sum payments at
a price equal to 85% of the lower of the fair market value at the beginning or the end of the
specified
six-month
offering period commencing on each February 15 and August 16, except for the
first purchase period which commenced on September 1, 2004 and ended on February 14, 2005. Share
purchases are limited to 15% of an employee's eligible compensation.
In April 2006, changes to the terms of the ESPP were approved by the shareholders. The Company
eliminated the provision that the purchase price of the shares to be purchased under the ESPP be
determined on the lower of the fair market value at the beginning or the end of the specified
purchase period, and instead provided that the purchase price be determined by reference to the
fair market value of the shares based on the quoted market price on the date of the purchase, or,
if the shares are acquired through an open market purchase, the price actually paid for the shares.
Further, instead of providing for a 15% discount on the purchase price, the Company may match up to
20% of the contributions of the ESPP participants by transferring or issuing newly issued shares,
existing shares (including treasury shares), shares acquired on the open market or providing cash
contribution for the purchase of shares. As a result of these changes, the ESPP no longer qualifies
under Section 423 of the United States Internal Revenue Code. The maximum aggregate of ordinary
shares that may be issued under the ESPP has been revised from 130 million ordinary shares in 2005
to not exceed 92 million ordinary shares of the Company in 2006.
Prior to December 26, 2005, the Company measured
share-based
employee compensation expense in
accordance with the intrinsic method of APB 25 and its related interpretations, and includes pro
forma information in accordance with SFAS 123, as amended by SFAS No. 148, "Accounting for
Stock-Based
Compensation — Transition and Disclosure." In the Company's pro forma information, the
Company accounted for forfeitures as they occurred.
Effective December 26, 2005, the Company adopted the fair value recognition provisions of SFAS
123(R). The Company has elected to adopt the
modified-prospective
transition method permitted by
SFAS 123(R) and accordingly prior periods have not been restated to reflect, and do not include,
the impact of SFAS 123(R). The
modified-prospective
transition method requires that
share-based
compensation expense be recorded for (a) any
share-based
payments granted through, but not yet
vested as of December 25, 2005 based on the
grant-date
fair value estimated in accordance with the
pro forma provisions of SFAS 123, and (b) any
share-based
payments granted subsequent to December
25, 2005, based on the
grant-date
fair value estimated, and adjusted for estimated forfeitures. For
share option awards, the Company continued to recognize compensation expense on a graded vesting
basis over the requisite service period of the award. The impact of recording
share-based
compensation expense related to share options and employee share purchase rights as a result of the
adoption of SFAS 123(R) was as follows:
Year Ended
December 31,
2006
Cost of revenues
$
5,965
Selling, general and administrative
6,143
Research and development
1,580
$
13,688
As a result of adopting SFAS 123(R), the Company's net income for the year ended December 31,
2006 was $13,307 lower than if it had continued to account for
share-based
compensation under APB
25.
If the Company had not adopted SFAS 123(R), basic and diluted earnings per share for the year ended
December 31, 2006 would have been $0.05 and $0.04, respectively, compared to reported basic and
diluted
F-35
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
earnings per share of $0.04 and $0.04, respectively. This is equivalent to basic and diluted
earnings per ADS of $0.45 and $0.43, respectively, for the year ended December 31, 2006,
respectively, compared to reported basic and diluted earnings per ADS of $0.39 and $0.37,
respectively.
The following table illustrates the pro forma amounts if the Company had applied the fair value
recognition provisions of SFAS 123 to
share-based
compensation in 2004 and 2005:
Year Ended
December 31,
2004
December 25,
2005
Net loss as reported
$
(467,723
)
$
(26,311
)
Add: Total
share-based
employee
compensation expenses included in
reported net loss, net of related
tax effects
658
743
Deduct: Total
share-based
employee
compensation expenses determined
under fair value method for all
awards, net of related tax effects
(18,492
)
(19,612
)
Pro forma net loss
$
(485,557
)
$
(45,180
)
Basic and diluted net loss per share:
As reported
$
(0.33
)
$
(0.01
)
Pro forma
$
(0.34
)
$
(0.02
)
Basic and diluted net loss per ADS:
As reported
$
(3.27
)
$
(0.13
)
Pro forma
$
(3.40
)
$
(0.23
)
The Company estimates the
grant-date
fair value of employee share purchase rights granted
prior to August 16, 2006, and share options using the
Black-Scholes
option-pricing
model. The
Black-Scholes
option-pricing
model incorporates various and highly subjective assumptions including
expected volatility, expected term and interest rates. The expected volatility is based on the
implied volatility and trading history of the Company's shares over the most recent period that
commensurates with the estimated expected term of the Company's employee share purchase rights or
share options. The estimated term of the Company's share options is derived from historical
experience. Estimates of fair value are not intended to predict actual future events or the value
ultimately realized by persons who receive equity awards.
The terms of the STATS ChipPAC Ltd. Employee Share Purchase Plan 2004 ("ESPP") for the purchase
period which commenced on August 16, 2006 and ends on February 14, 2007 were based on the changes
approved by the shareholders in April 2006. For these employee share purchase rights, the total
number of shares to be purchased under the plan and the Company matching of up to 20% of the
contribution of the ESPP participants, by transferring or issuing shares or providing cash
contribution for the purchase of shares, can vary as the purchase price per share is determined
based on the fair market value at the end of the purchase period. Therefore the final measure of
compensation cost for these rights is determined at the end of the purchase period, on which the
number of shares an employee is entitled and the purchase price are determinable. The Company
calculates estimated compensation cost as of the balance sheet date prior to the end of the
purchase period based on the current estimation of the number of shares and the level of
contribution, as determined in accordance with the terms of the ESPP.
The fair value of share options granted in 2004, 2005 and 2006 is estimated on the date of grant
using the
Black-Scholes
option-pricing
model with the following assumptions:
Year Ended
December 31,
2004
December 25,
2005
December 31,
2006
Expected term
5 — 10 years
5 — 9 years
3 — 7 years
Dividend yield
0.0%
0.0%
0.0%
Risk free interest rate
0.8% — 4.3%
2.6% — 3.3%
3.0% — 3.4%
Weighted average volatility
61.0%
55.9%
39.1%
SFAS 123(R) requires the cash flows resulting from the tax benefits for tax deductions in
excess of the compensation expense recorded for those options (excess tax benefits) to be
classified as financing cash flows. For the year ended December 31, 2006, the windfall tax benefit
realized from exercised employee share options was insignificant.
F-36
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
The following table summarizes share option activity in 2004, 2005 and 2006:
Weighted
Average
Aggregate
Options
Exercise Price
Intrinsic Value
(In thousands)
(In thousands)
Options outstanding at January 1, 2004
61,022
$
1.58
Assumed through ChipPAC acquisition
76,493
0.55
Granted
11,523
0.87
Lapsed and forfeited
(11,239
)
1.16
Exercised
(5,802
)
0.33
Options outstanding at December 31, 2004
131,997
1.01
Granted
27,299
0.59
Lapsed and forfeited
(16,972
)
1.03
Exercised
(18,149
)
0.35
Options outstanding at December 25, 2005
124,175
1.01
Granted
16,498
0.68
Lapsed and forfeited
(17,596
)
1.11
Exercised
(6,277
)
0.41
Options outstanding at December 31, 2006
116,800
$
0.99
$
11,670
Exercisable at December 31, 2004
66,097
$
1.13
Exercisable at December 25, 2005
62,785
$
1.30
Exercisable at December 31, 2006
70,732
$
1.19
$
6,136
The aggregate intrinsic value in the table above is based on the difference between the market
price and the price payable by option holders to exercise their share options. During the year
ended December 31, 2006, the total amount of cash received from the exercise of share options was
$2,575.
The following table summarizes information about share options outstanding at December 31, 2006:
Options Outstanding
Options Exercisable
Weighted
Weighted
Average
Weighted
Average
Weighted
Number
Remaining
Average
Number
Remaining
Average
Range of Exercise
Outstanding at
Contractual
Exercise
Exercisable at
Contractual
Exercise
Prices
12/31/2006
Life
Price
12/31/2006
Life
Price
(In thousands)
(In thousands)
$0.14 to $0.15
89
2.8 years
$
0.15
89
2.8 years
$
0.15
$0.21 to $0.29
8,751
5.6 years
$
0.27
6,299
5.4 years
$
0.26
$0.33 to $0.47
3,740
4.3 years
$
0.43
3,709
4.3 years
$
0.43
$0.53 to $0.89
66,764
6.9 years
$
0.69
26,547
6.1 years
$
0.74
$0.91 to $1.09
1,606
4.9 years
$
0.96
1,189
4.1 years
$
0.97
$1.16 to $1.66
28,321
5.1 years
$
1.37
25,370
4.9 years
$
1.39
$2.01 to $2.61
2,692
2.9 years
$
2.05
2,692
2.9 years
$
2.05
$3.99
4,837
3.3 years
$
3.99
4,837
3.3 years
$
3.99
116,800
6.0 years
70,732
5.2 years
The fair value of employee share purchase rights granted prior to August 16, 2006 is estimated
on the date of grant using the
Black-Scholes
option-pricing
model with the following assumptions:
Year Ended
December 25,
2005
December 31,
2006
Expected term
0.5 years
0.5 years
Dividend yield
0.0%
0.0%
Risk free interest rate
1.3 — 1.9%
2.7%
Weighted average volatility
39.4%
35.4%
As of December 31, 2006, there was $8,420 of unrecognized
share-based
compensation expenses
related to approximately 46.1 million of unvested share option awards net of $716 of estimated
share option award forfeitures. This cost is expected to be recognized over a
weighted-average
period of 1.6 years.
F-37
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
Total
grant-date
fair value of share options that vested during the year ended December 31, 2006
was $15,306, respectively. Total intrinsic value of share options exercised during the year ended
December 31, 2006 was $1,912. For the year ended
December 31, 2006, the value of the 20,245,050 shares issued
for ESPP purchases was $10,679 and the employees contributed $10,139 to the ESPP.
24.
Commitments and Contingencies
(a) Commitments
As of December 25, 2005 and December 31, 2006, unconditional purchase obligations consist of the
following:
December 25,
December 31,
2005
2006
Capital commitments
Building, mechanical and electrical installation
$
3,204
$
4,039
Plant and equipment
144,169
20,893
Other commitments
Inventories
$
121,822
$
80,049
These unconditional purchase obligations include agreements to purchase goods or services that
are enforceable and legally binding on the Company and specify all significant terms, including
fixed or minimum quantities to be purchased, fixed or variable price provisions and the approximate
timing of transactions. The duration of these purchase obligations are generally less than 12
months.
The Company is party to certain royalty and licensing agreements which have anticipated payments of
approximately $7,363 per annum for 2007 through 2011. Following the acquisition of ChipPAC, the
Company assumed the obligation to pay until September 30, 2007 additional contingent incentive
payments to Cirrus Logic, Inc. of up to approximately $750 subject to achievement of certain
milestones.
The Company leases certain of its facilities in Singapore, South Korea and the United States under
operation lease arrangements and has lease agreements for the land located in Singapore, Malaysia
and China related to its facilities in these locations. Operating lease rental expense in 2004,
2005 and 2006 was $4,781, $8,499 and $11,084, respectively.
The Company has leased certain plant and equipment under operating leases and under sale and
lease-back
arrangements. These leases extend through 2009. Operating lease rental expenses,
including amortization of lease prepayments, in respect of these leases for in 2004, 2005 and 2006
were $39,543, $30,514 and $21,749, respectively.
Future minimum lease payments under
non-cancelable
operating leases as of December 31, 2006 were:
Payable in year
2007
$
29,945
2008
28,473
2009
13,753
2010
8,534
2011
8,027
Thereafter
43,261
$
131,993
(b) Contingent Liabilities
The Company is subject to claims and litigations, which arise in the normal course of business.
These claims may include allegations of infringement of intellectual property rights of others as
well as other claims of liability. The Company accrues liabilities associated with these claims and
litigations when they are probable and reasonably estimable.
F-38
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
In February 2006, the Company, ChipPAC and STATS ChipPAC (BVI) Limited were named as defendants in
a patent infringement lawsuit filed in United States Federal Court for the Northern District of
California. The plaintiff, Tessera Technologies, Inc. ("Tessera"), has asserted that semiconductor
chip packaging, specifically devices having Ball Grid Array ("BGA") and
multi-chip
BGA
configurations used by the defendants infringe certain patents of Tessera. Tessera has further
asserted that the Company is in breach of an existing license agreement between Tessera and
ChipPAC, which agreement has been assigned by ChipPAC to the Company. The Company believes that it
has a meritorious defense to the claims and intend to defend the
lawsuit vigorously. A court determination that the Company's products or
processes infringe the intellectual property rights of others could
result in significant liability and/or require the Company to make material
changes to its products and/or processes. Due to the
inherent uncertainties of the lawsuit, the Company cannot accurately
predict the ultimate outcome and it could result in significant
liability and/or injunctions and could have a material
adverse effect on the business, financial condition and results of operations of the Company.
In addition, the Company is subject to various taxes in the different jurisdictions in which it
operates. These include taxes on income, property, goods and services, and other taxes. The
Company submits tax returns and claims with the respective government taxing authorities, which are
subject to examination and agreement by those taxing authorities. The Company will regularly assess
the likelihood of adverse outcomes resulting from these examinations to determine adequacy of
provision for taxes.
In connection with the merger with ChipPAC, the Company assumed certain contingent liabilities. In
2002, an assessment of approximately 16.0 billion South Korean Won (approximately $17,233 as of
December 31, 2006) was made by the South Korean National Tax Service, or NTS, relating to
withholding tax not collected on the interest income on the loan between the ChipPAC's subsidiaries
in South Korea and Hungary for the period from 1999 to September 2001. The prevailing tax treaty
does not require withholding tax on the transactions in question. ChipPAC has appealed the assessment
through the NTS's Mutual Agreement Procedure ("MAP") and believes that the assessment will be
overturned. On July 18, 2002, the Icheon tax office of the NTS approved a suspension of the
proposed assessment until resolution of the disputed assessment. The NTS required a corporate
guarantee amounting to the tax assessment in exchange for the suspension. ChipPAC complied with
the guarantee request on July 10, 2002. A further assessment of 2.7 billion South Korean Won
(approximately $2,871 as of December 31, 2006) was made on January 9, 2004 for interest expense
from October 2001 to May 2002. ChipPAC has applied for the MAP and obtained an approval for a
suspension of the proposed assessment by providing a corporate guarantee amounting to the
additional taxes. The MAP will terminate on July 3, 2007 if not extended by the NTS. In the event
that the Company is not successful with the appeal, the maximum amount payable including potential
interest and local surtax as of December 31, 2006 is estimated to be 36.5 billion South Korean Won
(approximately $39,235 as of December 31, 2006). As of December 31, 2006, no accrual has been made.
However, the Company's evaluation of the likely impact of the above contingent liabilities could
change in the future and may result in additional liability assumed in the initial purchase of
ChipPAC. The final outcome of the resolution of this matter could result in significant liability
and could have a material adverse effect on the business, financial condition and results of
operations of the Company.
25.
Restructuring Charges
In the first quarter of 2005 and third quarter of 2006, certain restructuring plans were executed
to realign the Company's organization and reduce operating costs to better align the Company's
expenses with revenues, which resulted in a total reduction in workforce of 88 and 556 employees,
respectively, related to the restructuring. Severance and related charges of $830 and $1,938 were
incurred and expensed in the first quarter of 2005 and third quarter of 2006, respectively.
F-39
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
26.
Other
Non-Operating
Income (Expense)
Year Ended
December 31,
December 25,
December 31,
2004
2005
2006
Gain (loss) on sale and maturity of marketable securities
$
(537
)
$
—
$
5
Loss from repurchase and redemption of senior and
convertible notes
(797
)
(1,653
)
(500
)
Other income, net
398
577
603
$
(936
)
$
(1,076
)
$
108
27.
Fair Value of Financial Instruments
December 25, 2005
December 31, 2006
Carrying
Estimated
Carrying
Estimated
Amount
Fair Value
Amount
Fair Value
Financial Assets:
Cash and cash equivalents
$
224,720
$
224,720
$
171,457
$
171,457
Marketable securities
35,451
35,451
60,484
60,484
Restricted cash
2,608
2,608
981
981
Financial Liabilities:
Short-term
borrowings
16,891
16,891
592
592
Long-term
debts, excluding
senior and convertible
notes
67,613
67,476
75,544
75,414
Senior and convertible notes
$
726,463
$
708,110
$
683,080
$
690,217
The estimated fair value of financial instruments has been determined by the Company using
available market information and appropriate methodologies. However, considerable judgment is
required in interpreting market data to develop the estimates for fair value. Accordingly, these
estimates are not necessarily indicative of the amounts that the Company could realize in a current
market exchange. Certain of these financial instruments are with major financial institutions and
expose the Company to market and credit risks and may at times be concentrated with certain
counterparties or groups of counterparties. The creditworthiness of counterparties is continually
reviewed, and full performance is anticipated.
The methods and assumptions used to estimate the fair value of significant classes of financial
instruments is set forth below:
Cash and cash equivalents
Cash and cash equivalents are due on demand or carry a maturity date of less than three months when
purchased. The carrying amount of these financial instruments is a reasonable estimate of fair
value.
Marketable securities
The fair value is estimated based upon the quoted market price on the last business day of the
fiscal year. For securities where there are no quoted market prices, the carrying amount is assumed
to be its fair value.
Restricted cash
The fair value is based on current interest rates available to the Company for time deposits and
government bonds of similar terms and remaining maturities.
Short-term
borrowings and
long-term
debts
The fair value is based on current interest rates available to the Company for issuance of debts of
similar terms and remaining maturities.
F-40
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
Senior and convertible notes
The fair value is estimated by obtaining quotes from market and brokers.
Limitations
Fair value estimates are made at a specific point in time, and are based on relevant market
information and information about the financial instrument. 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.
28.
Business Segment, Geographic and Major Customer Data
Operating segments, as defined under SFAS No. 131, "Disclosures About Segments of an Enterprise and
Related Information" ("SFAS 131") are components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance. The Company has identified its
individual geographic operating locations as its operating segments. All material geographical
operating locations qualify for aggregation under SFAS 131 due to similarities in economic
characteristics, nature of services, market base and production process. Accordingly, the
operating segments have been aggregated into one reportable segment.
Revenues by major service line and by geographical areas (identified by location of customer
headquarters) were:
Year Ended
December 31,
December 25,
December 31,
2004
2005
2006
United States
— packaging — array
253,595
444,066
648,258
— packaging — leaded
145,511
230,462
265,012
— test and other services
195,082
210,511
269,939
594,188
885,039
1,183,209
Asia
— packaging — array
49,506
129,082
231,946
— packaging — leaded
9,415
17,227
21,861
— test and other services
80,905
98,736
132,720
139,826
245,045
386,527
Europe
— packaging — array
9,264
7,672
17,585
— packaging — leaded
6,172
6,750
9,610
— test and other services
19,671
12,747
20,002
35,107
27,169
47,197
Total
— packaging — array
312,365
580,820
897,789
— packaging — leaded
161,098
254,439
296,483
— test and other services
295,658
321,994
422,661
$
769,121
$
1,157,253
$
1,616,933
Long-lived
assets by geographical area were:
Year Ended
December 25,
December 31,
2005
2006
Singapore
$
350,960
$
332,784
United States
25,574
24,310
Rest of Asia
730,497
835,736
Total
$
1,107,031
$
1,192,830
F-41
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
Net assets by geographical area were:
Year Ended
December 25,
December 31,
2005
2006
Singapore
$
531,141
$
411,340
United States
6,843
96,162
Rest of Asia
603,668
738,648
Total
$
1,141,652
$
1,246,150
Revenues from major customers, as a percentage of net revenues, were as follows:
Year Ended
December 31,
December 25,
December 31,
2004
2005
2006
Customer A
20.6
%
11.6
%
10.7
%
Customer B
11.1
10.4
10.1
Customer C
8.5
10.1
8.7
Others
59.8
67.9
70.5
100.0
%
100.0
%
100.0
%
29.
Recent Event
On
March 1, 2007, STSPL, a
wholly-owned
subsidiary of Temasek Holdings, announced its intention to
launch a voluntary conditional cash offer for the remaining ordinary shares and ADSs in the Company
that STSPL does not already own (the "Offer"). As of January 31, 2007, STSPL owned approximately
36% of the Company's outstanding ordinary shares. The information in the following paragraph is
based on STSPL's Offer announcement.
The offer price will be S$1.75 for each ordinary share and S$17.50 for each ADS in cash. The Offer
will be conditioned upon, among other matters, STSPL receiving acceptance of such number of
ordinary shares and ADSs which, together with all other ordinary shares and ADSs owned, acquired or
agreed to be acquired by STSPL, would represent more than 50% of the Company's outstanding ordinary
shares and ADSs following the close of the Offer. If ordinary shares and ADSs tendered into the
Offer result in STSPL owning at least 90% of the Company's outstanding ordinary shares and ADSs
(other than those owned by STSPL and its related corporations at the commencement of the Offer), STSPL intends to offer a higher purchase price of S$1.88 per ordinary share or S$18.80 per ADS to
all shareholders who accept the Offer, regardless of when their ordinary shares and ADSs are
tendered. The Offer would also include an offer by STSPL for the Company's outstanding $115,000
senior, unsecured and unsubordinated convertible notes due 2008 and the $150,000 2.5% convertible
subordinated notes due 2008. The offer for the convertible notes is conditioned on the offer for
the ordinary shares and ADSs becoming unconditional in all respects.
Consummation of the Offer is subject to conditions described above and other customary conditions.
The Company expects in due course to make further announcements on important information about the
Offer, the Company's board of director's recommendations, the advice of independent financial
adviser and other related matters.
30.
Condensed Consolidating Financial Information
In connection with the merger with ChipPAC in 2004, the Company assumed the $150,000 2.5%
Convertible Subordinated Notes due 2008 issued by ChipPAC. In October 2004, in connection with the
filing of the prospectus to register the resale of the Convertible Notes issued by ChipPAC, the
Company, but not any of its direct or indirect subsidiaries, provided a full and unconditional
guarantee of the Convertible Notes on a subordinated basis.
In November 2004, the Company issued $215,000 of 6.75% Senior Notes due 2011. The Senior Notes
issued by STATS ChipPAC are fully and unconditionally guaranteed, jointly and severally, on a
senior basis, by the following wholly owned subsidiaries, (1) ChipPAC, (2) STATS ChipPAC (Barbados)
Ltd., STATS ChipPAC (BVI) Limited, ChipPAC International Company Limited, STATS ChipPAC Malaysia
Sdn. Bhd., STATS ChipPAC, Inc., STATS ChipPAC Test Services, Inc., STATS Holdings Limited, ChipPAC
Luxembourg S.a.R.L., ChipPAC Liquidity Management Hungary Limited Liability Company and STATS
ChipPAC Taiwan Co., Ltd. ("Guarantor Subsidiaries") and (3) STATS ChipPAC Korea Ltd. STATS
ChipPAC Shanghai Co., Ltd., STATS ChipPAC Test Services (Shanghai) Co., Ltd., STATS ChipPAC
Semiconductor Shanghai Co., Ltd. and Winstek (
"Non-Guarantor
Subsidiaries") did not provide
guarantees.
In July 2005, the Company issued $150,000 of 7.5% Senior Notes due 2010. The Senior Notes are fully
and unconditionally guaranteed, jointly and severally, on a senior basis, by all of STATS ChipPAC's
wholly owned subsidiaries, except STATS ChipPAC Shanghai Co., Ltd., STATS ChipPAC Test Services
(Shanghai) Co., Ltd., STATS ChipPAC Semiconductor Shanghai Co., Ltd., Winstek (
"Non-Guarantor
Subsidiaries") and STATS ChipPAC Korea Ltd.
The following is the consolidated financial information segregated between STATS ChipPAC as the
parent company and guarantor of the Convertible Notes and issuer of the $215,000 6.75% Senior Notes
due 2011 and the $150,000 7.5% Senior Notes due 2010; ChipPAC as issuer of the Convertible Notes
and a guarantor of the $215,000 6.75% Senior Notes due 2011 and the $150,000 7.5% Senior Notes due
2010; STATS ChipPAC Korea Ltd. as a guarantor of the $215,000 6.75% Senior Notes due 2011 and
non-guarantor
of the $150,000 7.5% Senior Notes due 2010; the other Guarantor Subsidiaries and
other
Non-Guarantor
Subsidiaries of the $215,000 6.75% Senior Notes due 2011 and the $150,000 7.5%
Senior Notes due 2010.
F-42
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the Year Ended December 31, 2004
STATS
Non-
STATS
ChipPAC
Guarantor
Guarantor
ChipPAC
ChipPAC
Korea
Subsidiaries
Subsidiaries
Eliminations
Consolidated
Net revenues
$
462,697
$
9,703
$
148,382
$
259,785
$
83,382
$
(194,828
)
$
769,121
Cost of revenues
(390,673
)
(203
)
(130,630
)
(243,295
)
(73,690
)
194,951
(643,540
)
Gross profit
72,024
9,500
17,752
16,490
9,692
123
125,581
Operating expenses:
Selling, general and administrative
42,259
7,803
3,271
25,895
5,229
44
84,501
Research and development
10,811
1,047
2,933
1,952
894
—
17,637
Goodwill impairment
—
—
271,734
89,135
92,131
—
453,000
Total operating expenses
53,070
8,850
277,938
116,982
98,254
44
555,138
Operating income (loss)
18,954
650
(260,186
)
(100,492
)
(88,562
)
79
(429,557
)
Other income (expense), net:
Interest income
7,774
9
59
3,596
123
(7,131
)
4,430
Interest expense
(19,173
)
(2,875
)
(1,399
)
(10,944
)
(1,556
)
7,131
(28,816
)
Foreign currency exchange gain (loss)
(206
)
—
(1,915
)
881
118
—
(1,122
)
Equity loss from investment in subsidiaries
(472,535
)
(67,882
)
—
(87,677
)
—
628,094
—
Other
non-operating
income (expense), net
(675
)
12
11
(542
)
258
—
(936
)
Total other income (expense), net
(484,815
)
(70,736
)
(3,244
)
(94,686
)
(1,057
)
628,094
(26,444
)
Loss before income taxes
(465,861
)
(70,086
)
(263,430
)
(195,178
)
(89,619
)
628,173
(456,001
)
Income tax benefit (expense)
(1,862
)
(14
)
(6,500
)
(515
)
997
—
(7,894
)
Loss before minority interest
(467,723
)
(70,100
)
(269,930
)
(195,693
)
(88,622
)
628,173
(463,895
)
Minority interest
—
—
—
—
—
(3,828
)
(3,828
)
Net loss
$
(467,723
)
$
(70,100
)
$
(269,930
)
$
(195,693
)
$
(88,622
)
$
624,345
$
(467,723
)
F-43
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the Year Ended December 31, 2004
STATS
Non-
STATS
ChipPAC
Guarantor
Guarantor
ChipPAC
ChipPAC
Korea
Subsidiaries
Subsidiaries
Eliminations
Consolidated
Cash Flows From Operating Activities
Net income loss
$
(467,723
)
$
(70,100
)
$
(269,930
)
$
(195,693
)
$
(88,622
)
$
624,345
$
(467,723
)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization
104,141
628
17,008
37,312
29,638
(44
)
188,683
Goodwill impairment
—
—
271,734
89,135
92,131
—
453,000
Amortization of leasing prepayments
25,718
—
—
—
—
—
25,718
Debt issuance cost amortization
1,741
—
—
—
172
—
1,913
Loss (gain) on sale of property, plant and equipment
(631
)
—
—
5
(30
)
—
(656
)
Accretion of discount on convertible notes
11,923
—
—
(486
)
—
—
11,437
Loss from repurchase and redemption of senior and
convertible notes
266
—
—
531
—
—
797
Foreign currency exchange gain
(516
)
—
—
—
(314
)
—
(830
)
Share-based
compensation expense
582
—
—
—
76
—
658
Deferred income taxes
9,145
—
6,204
461
(805
)
—
15,005
Minority interest in income of subsidiary
—
—
—
—
—
3,828
3,828
Equity loss from investment in subsidiaries
472,535
67,882
—
87,677
—
(628,094
)
—
Gain on sale and maturity of marketable securities
503
—
—
—
34
—
537
Others
580
127
—
(193
)
(108
)
(35
)
371
Changes in operating working capital:
Accounts receivable
3,670
—
—
8,789
(4,310
)
—
8,149
Amounts due from affiliates
(242,237
)
26,486
(1,171
)
6,976
15,986
198,387
4,427
Inventories
(77
)
—
(632
)
(314
)
(148
)
—
(1,171
)
Other receivables, prepaid expenses and other assets
(64,078
)
(1,442
)
(2,459
)
2,683
875
—
(64,421
)
Accounts payable, accrued operating expenses and other
payables
(2,709
)
(23,934
)
3,506
(14,644
)
(3,625
)
—
(41,406
)
Amounts due to affiliates
(2,918
)
(85
)
94
191,182
8,415
(198,387
)
(1,699
)
Net cash provided by (used in) operating activities
(150,085
)
(438
)
24,354
213,421
49,365
—
136,617
Cash Flows From Investing Activities
Proceeds from sales of marketable securities
$
101,323
$
—
$
—
$
—
$
29,174
$
—
$
130,497
Proceeds from maturity of marketable securities
46,687
—
—
—
—
—
46,687
Purchases of marketable securities
(137,124
)
—
—
222
(24,041
)
—
(160,943
)
Acquisition of intangible assets
—
(399
)
(45
)
(510
)
(474
)
—
(1,428
)
Acquisition of subsidiary, net of cash acquired
(9,369
)
—
—
—
—
16,577
7,208
Cash injection in subsidiary
(4,680
)
—
—
—
—
4,680
—
Purchases of property, plant and equipment
(172,320
)
(1,090
)
(35,893
)
(24,434
)
(81,225
)
27,388
(287,574
)
Others, net
20,926
33
133
3,011
4,014
(27,388
)
729
Net cash used in investing activities
(154,557
)
(1,456
)
(35,805
)
(21,711
)
(72,552
)
21,257
(264,824
)
Cash Flows From Financing Activities
Repayment of
short-term
debts
$
(50,000
)
$
—
$
—
$
—
$
(22,006
)
$
—
$
(72,006
)
Repayment of
long-term
debts
—
—
—
—
(8,982
)
—
(8,982
)
Proceeds from issuance of shares, net of expenses
1,968
—
—
—
4,680
(4,680
)
1,968
Proceeds from issuance of senior notes, net of expenses
210,458
—
—
—
—
—
210,458
Repurchase and redemption of senior and convertible
notes
(18,083
)
—
—
(175,564
)
—
—
(193,647
)
Proceeds from bank borrowings
50,000
—
8,016
—
49,604
—
107,620
Decrease in restricted cash
—
—
—
—
2,927
—
2,927
Capital lease payments
(2,042
)
—
(1,727
)
(2,663
)
(778
)
—
(7,210
)
Net cash provided by (used in) financing activities
192,301
—
6,289
(178,227
)
25,445
(4,680
)
41,128
Net increase (decrease) in cash and cash equivalents
(112,341
)
(1,894
)
(5,162
)
13,483
2,258
16,577
(87,079
)
Effect of exchange rate changes on cash and cash
equivalents
—
—
—
—
1,425
—
1,425
Cash and cash equivalents at beginning of the year
297,165
2,427
7,138
5,519
17,491
(16,577
)
313,163
Cash and cash equivalents at end of the year
$
184,824
$
533
$
1,976
$
19,002
$
21,174
$
—
$
227,509
F-44
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
CONDENSED CONSOLIDATING BALANCE SHEETS
As of December 25, 2005
STATS
Non-
STATS
ChipPAC
Guarantor
Guarantor
ChipPAC
ChipPAC
Korea
Subsidiaries
Subsidiaries
Eliminations
Consolidated
ASSETS
Current assets:
Cash and cash equivalents
$
144,841
$
635
$
32,291
$
9,865
$
37,088
$
—
$
224,720
Short-term marketable securities
—
—
—
—
17,648
—
17,648
Accounts receivable, net
90,825
—
—
130,129
20,036
—
240,990
Amounts due from affiliates
360,343
202,224
8,575
96,148
13,612
(674,092
)
6,810
Other receivables
3,936
245
6,047
204
904
—
11,336
Inventories
25,365
—
32,024
4,621
17,473
—
79,483
Short-term
restricted cash
—
—
—
—
376
—
376
Prepaid expenses and other current assets
15,096
1,357
3,468
1,216
5,214
—
26,351
Total current assets
640,406
204,461
82,405
242,183
112,351
(674,092
)
607,714
Long-term
marketable securities
17,803
—
—
—
—
—
17,803
Property, plant and equipment, net
350,960
4,800
261,650
218,202
271,504
(85
)
1,107,031
Investment in subsidiaries
738,852
12,186
—
—
—
(751,038
)
—
Intangible assets
1,998
2,281
1,615
63,990
2,896
—
72,780
Goodwill
—
—
312,337
102,385
105,694
2,209
522,625
Long-term
restricted cash
—
—
745
—
1,487
—
2,232
Prepaid expenses and other
non-current
assets
28,850
369
28,186
202
5,590
—
63,197
Total assets
$
1,778,869
$
224,097
$
686,938
$
626,962
$
499,522
$
(1,423,006
)
$
2,393,382
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts and other payables
$
23,665
$
477
$
63,150
$
11,302
$
37,464
$
—
$
136,058
Payables related to property, plant
and equipment purchases
22,404
—
23,980
12,694
20,347
—
79,425
Accrued operating expenses
56,620
10,377
10,317
9,334
10,284
—
96,932
Income taxes payable
—
68
1,555
612
—
—
2,235
Short-term
borrowings
—
—
16,891
—
—
—
16,891
Amounts due to affiliates
8,065
1,882
89,351
542,979
31,877
(674,092
)
62
Current obligations under capital leases
—
—
7,091
—
—
—
7,091
Current installments of
long-term
debts
—
—
—
—
18,651
—
18,651
Total current liabilities
110,754
12,804
212,335
576,921
118,623
(674,092
)
357,345
Obligations under capital leases,
excluding current installments
—
—
3,680
—
—
—
3,680
Long-term
debts, excluding current installments
526,463
200,000
2,760
—
46,202
—
775,425
Other
non-current
liabilities
—
—
50,112
11,763
4,736
—
66,611
Total liabilities
637,217
212,804
268,887
588,684
169,561
(674,092
)
1,203,061
Minority interest
—
—
—
—
—
48,669
48,669
Total shareholders' equity
1,141,652
11,293
418,051
38,278
329,961
(797,583
)
1,141,652
Total liabilities and shareholders' equity.
$
1,778,869
$
224,097
$
686,938
$
626,962
$
499,522
$
(1,423,006
)
$
2,393,382
F-45
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the Year Ended December 25, 2005
STATS
Non-
STATS
ChipPAC
Guarantor
Guarantor
ChipPAC
ChipPAC
Korea
Subsidiaries
Subsidiaries
Eliminations
Consolidated
Net revenues
$
435,630
$
40,268
$
387,830
$
684,290
$
163,870
$
(554,635
)
$
1,157,253
Cost of revenues
(363,092
)
(384
)
(347,964
)
(612,676
)
(142,909
)
499,002
(968,023
)
Gross profit
72,538
39,884
39,866
71,614
20,961
(55,633
)
189,230
Operating expenses:
Selling, general and administrative
44,488
24,862
9,007
94,754
9,635
(46,995
)
135,751
Research and development
10,779
5,556
6,986
10,015
1,452
(8,717
)
26,071
Restructuring charges
734
—
—
96
—
—
830
Total operating expenses
56,001
30,418
15,993
104,865
11,087
(55,712
)
162,652
Operating income (loss)
16,537
9,466
23,873
(33,251
)
9,874
79
26,578
Other income (expense), net:
Interest income
24,292
17
226
2,531
229
(20,881
)
6,414
Interest expense
(31,358
)
(8,240
)
(3,372
)
(18,827
)
(1,713
)
20,881
(42,629
)
Foreign currency exchange gain (loss)
(1,125
)
(3
)
(535
)
1,529
665
—
531
Equity gain (loss) from investment in
subsidiaries
(32,320
)
414
—
—
—
31,906
—
Other non-operating income (expense), net
(1,648
)
(91
)
(19
)
93
589
—
(1,076
)
Total other income (expense), net
(42,159
)
(7,903
)
(3,700
)
(14,674
)
(230
)
31,906
(36,760
)
Income (loss) before income taxes
(25,622
)
1,563
20,173
(47,925
)
9,644
31,985
(10,182
)
Income tax benefit (expense)
(689
)
(56
)
(7,767
)
(1,909
)
732
—
(9,689
)
Income (loss) before minority interest
(26,311
)
1,507
12,406
(49,834
)
10,376
31,985
(19,871
)
Minority interest
—
—
—
—
—
(6,440
)
(6,440
)
Net income (loss)
$
(26,311
)
$
1,507
$
12,406
$
(49,834
)
$
10,376
$
25,545
$
(26,311
)
F-46
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the Year Ended December 25, 2005
STATS
Non-
STATS
ChipPAC
Guarantor
Guarantor
ChipPAC
ChipPAC
Korea
Subsidiaries
Subsidiaries
Eliminations
Consolidated
Cash Flows From Operating Activities
Net income (loss)
$
(26,311
)
$
1,507
$
12,406
$
(49,834
)
$
10,376
$
25,545
$
(26,311
)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization
81,823
2,073
41,982
86,275
42,064
(79
)
254,138
Amortization of leasing prepayments
25,790
—
—
—
—
—
25,790
Debt issuance cost amortization
1,848
113
—
—
—
—
1,961
Loss (gain) on sale of property, plant and equipment
445
—
220
(62
)
926
—
1,529
Accretion of discount on convertible notes
7,414
—
—
—
—
—
7,414
Loss from repurchase and redemption of convertible notes
1,653
—
—
—
—
—
1,653
Foreign currency exchange loss (gain)
48
—
—
168
(350
)
—
(134
)
Share-based
compensation expense
703
—
—
—
40
—
743
Deferred income taxes
617
—
7,767
1,574
(607
)
—
9,351
Minority interest in income of subsidiary
—
—
—
—
—
6,440
6,440
Equity loss (gain) from investment in subsidiaries
32,320
(414
)
—
—
—
(31,906
)
—
Others
(5
)
134
344
311
(249
)
—
535
Changes in operating working capital:
Accounts receivable
(23,950
)
—
—
(59,685
)
(7,705
)
—
(91,340
)
Amounts due from affiliates
(109,865
)
(4,564
)
4,426
(16,358
)
(9,893
)
132,067
(4,187
)
Inventories
(5,449
)
—
(8,156
)
(49
)
(11,139
)
—
(24,793
)
Other receivables, prepaid expenses and other assets
7,357
315
(1,667
)
(153
)
(2,336
)
—
3,516
Accounts payable, accrued operating expenses and other
payables
35,737
89
30,918
12,200
25,555
—
104,499
Amounts due to affiliates
3,124
1,709
39,146
89,352
(1,339
)
(132,067
)
(75
)
Net cash provided by operating activities
33,299
962
127,386
63,739
45,343
—
270,729
Cash Flows From Investing Activities
Proceeds from sales of marketable securities
$
—
$
—
$
—
$
—
$
15,726
$
—
$
15,726
Proceeds from maturity of marketable securities
—
—
—
787
—
—
787
Purchases of marketable securities
—
—
—
—
(32,017
)
—
(32,017
)
Cash injection in subsidiary
(25,587
)
—
—
(25,500
)
—
51,087
—
Acquisition of intangible assets
(787
)
(698
)
(812
)
(837
)
(1,719
)
—
(4,853
)
Purchases of property, plant and equipment
(53,718
)
(187
)
(94,163
)
(78,419
)
(61,648
)
42,360
(245,775
)
Others, net
18,726
10
4,927
9,629
12,207
(42,360
)
3,139
Net cash used in investing activities
(61,366
)
(875
)
(90,048
)
(94,340
)
(67,451
)
51,087
(262,993
)
Cash Flows From Financing Activities
Repayment of
short-term
debts
$
(100,464
)
$
—
$
(35,779
)
$
—
$
(7,033
)
$
—
$
(143,276
)
Repayment of
long-term
debts
—
—
(7,101
)
—
(30,569
)
—
(37,670
)
Proceeds from issuance of shares, net of expenses
13,521
—
—
21,479
33,231
(54,710
)
13,521
Proceeds from issuance of convertible notes, net of
expenses
146,535
—
—
—
—
—
146,535
Repurchase and redemption of convertible notes
(167,263
)
—
—
—
—
—
(167,263
)
Proceeds from bank borrowings
100,464
—
42,657
—
44,964
—
188,085
Increase in restricted cash
—
—
(18
)
—
(1,469
)
—
(1,487
)
Grants received
246
—
—
—
—
—
246
Capital lease payments
(4,955
)
—
(6,782
)
—
—
—
(11,737
)
Contribution by minority interest in subsidiary, net
—
—
—
—
—
3,623
3,623
Net cash provided by (used in) financing activities
(11,916
)
—
(7,023
)
21,479
39,124
(51,087
)
(9,423
)
Net increase (decrease) in cash and cash equivalents
(39,983
)
87
30,315
(9,122
)
17,016
—
(1,687
)
Effect of exchange rate changes on cash and cash
equivalents
—
—
—
—
(1,102
)
—
(1,102
)
Cash and cash equivalents at beginning of the year
184,824
548
1,976
18,987
21,174
—
227,509
Cash and cash equivalents at end of the year
$
144,841
$
635
$
32,291
$
9,865
$
37,088
$
—
$
224,720
F-47
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
CONDENSED CONSOLIDATING BALANCE SHEETS
As of December 31, 2006
STATS
Non-
STATS
ChipPAC
Guarantor
Guarantor
ChipPAC
ChipPAC
Korea
Subsidiaries
Subsidiaries
Eliminations
Consolidated
ASSETS
Current assets:
Cash and cash equivalents
$
69,057
$
177
$
22,503
$
55,608
$
24,112
$
—
$
171,457
Short-term
marketable securities
2,619
—
—
—
42,507
—
45,126
Accounts receivable, net
75,655
—
—
153,427
14,697
—
243,779
Amounts due from affiliates
480,580
152,734
14,973
93,602
25,833
(765,216
)
2,506
Other receivables
2,249
219
3,092
672
743
—
6,975
Inventories
36,996
—
41,871
6,514
26,233
—
111,614
Prepaid expenses and other current assets
6,805
1,158
6,600
1,473
2,328
—
18,364
Total current assets
673,961
154,288
89,039
311,296
136,453
(765,216
)
599,821
Long-term
marketable securities
15,358
—
—
—
—
—
15,358
Property, plant and equipment, net
332,786
4,261
285,582
237,688
332,523
(10
)
1,192,830
Investment in equity investee
10,292
—
—
—
—
—
10,292
Investment in subsidiaries
830,366
14,706
—
86,433
—
(931,505
)
—
Intangible assets
3,630
2,039
1,997
31,716
2,464
—
41,846
Goodwill
—
—
304,557
102,129
104,617
2,209
513,512
Long-term
restricted cash
—
—
629
—
352
—
981
Prepaid expenses and other
non-current
assets
22,256
258
25,956
319
34,851
—
83,640
Total assets
$
1,888,649
$
175,552
$
707,760
$
769,581
$
611,260
$
(1,694,522
)
$
2,458,280
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts and other payables
$
38,967
$
20
$
62,945
$
10,537
$
55,253
$
—
$
167,722
Payables related to property, plant
and equipment purchases
8,048
—
12,340
8,176
5,713
—
34,277
Accrued operating expenses
44,287
9,347
13,210
9,171
21,612
—
97,627
Income taxes payable
—
187
1,663
3,326
1,634
—
6,810
Short-term
borrowings
—
—
48
—
544
—
592
Amounts due to affiliates
18,117
1,252
75,398
633,912
36,582
(765,216
)
45
Current obligations under capital leases
—
3,680
—
—
—
3,680
Current installments of
long-term
debts
36,800
—
5,070
—
19,231
—
61,101
Total current liabilities
146,219
10,806
174,354
665,122
140,569
(765,216
)
371,854
Long-term
debts, excluding current
installments installments
496,280
150,000
9,000
—
42,243
—
697,523
Other
non-current
liabilities
—
—
68,518
9,694
6,595
—
84,807
Total liabilities
642,499
160,806
251,872
674,816
189,407
(765,216
)
1,154,184
Minority interest
—
—
—
—
—
57,946
57,946
Total shareholders' equity
1,246,150
14,746
455,888
94,765
421,853
(987,252
)
1,246,150
Total liabilities and shareholders' equity
$
1,888,649
$
175,552
$
707,760
$
769,581
$
611,260
$
(1,694,522
)
$
2,458,280
F-48
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the Year Ended December 31, 2006
STATS
Non-
STATS
ChipPAC
Guarantor
Guarantor
ChipPAC
ChipPAC
Korea
Subsidiaries
Subsidiaries
Eliminations
Consolidated
Net revenues
$
501,660
$
39,870
$
573,502
$
1,070,609
$
289,434
$
(858,142
)
$
1,616,933
Cost of revenues
(400,330
)
(75
)
(490,533
)
(950,922
)
(240,838
)
791,925
(1,290,773
)
Gross profit
101,330
39,795
82,969
119,687
48,596
(66,217
)
326,160
Operating expenses:
Selling, general and administrative
57,018
26,970
12,453
86,268
12,030
(55,273
)
139,466
Research and development
10,253
5,781
10,408
13,692
1,334
(11,022
)
30,446
Restructuring charges
1,938
—
—
—
—
—
1,938
Total operating expenses
69,209
32,751
22,861
99,960
13,364
(66,295
)
171,850
Operating income (loss)
32,121
7,044
60,108
19,727
35,232
78
154,310
Other income (expense), net:
Interest income
3,468
27
389
2,776
811
(2,070
)
5,401
Interest expense
(35,198
)
(7,145
)
(3,507
)
—
(2,036
)
2,070
(45,816
)
Foreign currency exchange gain (loss)
89
(1
)
(2,874
)
2,304
(1,142
)
46
(1,578
)
Equity gain from investment in equity
investee
152
—
—
—
—
—
152
Equity gain from investment in
subsidiaries
74,478
2,520
—
12,741
—
(89,739
)
—
Dividend income from subsidiary
2,903
—
—
—
—
(2,903
)
—
Other
non-operating
income (expense), net.
195
(600
)
(2
)
219
296
—
108
Total other income (expense), net
46,087
(5,199
)
(5,994
)
18,040
(2,071
)
(92,596
)
(41,733
)
Income before income taxes
78,208
1,845
54,114
37,767
33,161
(92,518
)
112,577
Income tax expense
(1,400
)
(1,451
)
(19,624
)
(1,840
)
(1,444
)
—
(25,759
)
Income before minority interest
76,808
394
34,490
35,927
31,717
(92,518
)
86,818
Minority interest
—
—
—
—
—
(10,010
)
(10,010
)
Net income
$
76,808
$
394
$
34,490
$
35,927
$
31,717
$
(102,528
)
$
76,808
F-49
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the Year Ended December 31, 2006
STATS
Non-
ChipPAC
Guarantor
Guarantor
STATS ChipPAC
ChipPAC
Korea
Subsidiaries
Subsidiaries
Eliminations
Consolidated
Cash Flows From Operating Activities
Net income (loss)
$
76,808
$
394
$
34,490
$
35,927
$
31,717
$
(102,528
)
$
76,808
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization
86,748
1,698
53,207
75,173
49,570
(79
)
266,317
Amortization of leasing prepayments
7,386
—
—
—
—
—
7,386
Debt issuance cost amortization
2,262
109
—
—
—
—
2,371
Loss (gain) on sale of property, plant and equipment
852
—
(16
)
(58
)
473
—
1,251
Accretion of discount on convertible notes
6,618
—
—
—
—
—
6,618
Loss on redemption of convertible notes
—
500
—
—
—
—
500
Foreign currency exchange loss (gain)
(220
)
—
—
—
1,024
(46
)
758
Share-based
compensation
4,150
1,762
5,244
1,429
1,103
—
13,688
Deferred income taxes
1,400
1,300
19,515
(2,069
)
(293
)
—
19,853
Minority interest in income of subsidiary
—
—
—
—
—
10,010
10,010
Equity (income) loss from investment in subsidiaries
(74,479
)
(2,520
)
—
(12,741
)
—
89,740
—
Equity (income) loss from investment in equity investee
(152
)
—
—
—
—
—
(152
)
Gain on sale of marketable securities
—
—
—
—
(5
)
—
(5
)
Others
487
1
175
136
210
—
1,009
Changes in operating working capital:
Accounts receivable
15,170
—
—
(23,298
)
5,339
—
(2,789
)
Amounts due from affiliates
(120,238
)
49,490
(6,398
)
2,547
(12,221
)
91,124
4,304
Inventories
(11,631
)
—
(9,984
)
(1,893
)
(8,760
)
—
(32,268
)
Other receivables, prepaid expenses and other assets
6,358
220
(451
)
(518
)
1,746
—
7,355
Accounts payable, accrued operating expenses and other
payables
2,973
(1,366
)
10,070
1,781
31,316
—
44,774
Amounts due to affiliates
10,052
(630
)
(13,953
)
90,932
4,706
(91,124
)
(17
)
Net cash provided by operating activities
14,544
50,958
91,899
167,348
105,925
(2,903
)
427,771
Cash Flows From Investing Activities
Proceeds from sales of marketable securities
$
—
$
—
$
—
$
—
$
35,391
$
—
$
35,391
Proceeds from maturity of marketable securities
—
—
—
—
20,841
—
20,841
Purchases of marketable securities
—
—
—
—
(80,866
)
—
(80,866
)
Cash injection in subsidiaries
(7,517
)
—
—
(54,500
)
—
62,017
—
Investment in equity investee
(10,154
)
—
—
—
—
—
(10,154
)
Acquisition of intangible assets
(1,835
)
(698
)
(1,151
)
(2,314
)
(421
)
—
(6,419
)
Purchases of property, plant and equipment
(96,176
)
(219
)
(94,167
)
(71,989
)
(157,913
)
26,821
(393,643
)
Others, net
12,100
1
6,139
7,198
10,450
(26,821
)
9,067
Net cash used in investing activities
(103,582
)
(916
)
(89,179
)
(121,605
)
(172,518
)
62,017
(425,783
)
Cash Flows From Financing Activities
Repayment of
short-term
debts
$
—
$
—
$
(21,496
)
$
—
$
(20,794
)
$
—
$
(42,290
)
Repayment of
long-term
debts
—
—
(690
)
—
(26,937
)
—
(27,627
)
Proceeds from issuance of shares, net of expenses
13,254
—
—
—
62,017
(62,017
)
13,254
Repurchase and redemption of senior and convertible notes
—
(50,500
)
—
—
—
—
(50,500
)
Proceeds from bank borrowings
—
—
16,653
—
43,655
—
60,308
Decrease in restricted cash
—
—
116
—
1,511
—
1,627
Capital lease payments
—
—
(7,091
)
—
—
—
(7,091
)
Distribution to minority interest in subsidiary
—
—
—
—
(5,445
)
2,903
(2,542
)
Net cash provided by (used in) financing activities
13,254
(50,500
)
(12,508
)
—
54,007
(59,114
)
(54,861
)
Net increase (decrease) in cash and cash equivalents
(75,784
)
(458
)
(9,788
)
45,743
(12,586
)
—
(52,873
)
Effect of exchange rate changes on cash and cash
equivalents
—
—
—
—
(390
)
—
(390
)
Cash and cash equivalents at beginning of the year
144,841
635
32,291
9,865
37,088
—
224,720
Cash and cash equivalents at end of the year
$
69,057
$
177
$
22,503
$
55,608
$
24,112
$
—
$
171,457
F-50