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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>
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<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>FORM 20-F</B>
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<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(Mark One)</B>
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    <TD align="center"><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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<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>or</B>
</DIV>

<DIV align="center">
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    <TD width="7%">&nbsp;</TD>
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    <TD width="88%">&nbsp;</TD>
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<TR valign="top">
    <TD align="center"><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;25, 2005</B></TD>
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</TABLE>
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<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>or</B>
</DIV>

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    <TD width="88%">&nbsp;</TD>
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<TR valign="top">
    <TD align="center"><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><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><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: 10pt; margin-top: 18pt"><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="center"><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><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></B></TD>
</TR>
</TABLE>
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<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Commission file number 000-29103</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>


<DIV align="center">
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    <TD align="center" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>10 Ang Mo Kio Street 65</B></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>#05-17/20 Techpoint</B></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><B>Republic of Singapore</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>Singapore 569059</B></TD>
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<TR valign="bottom">
    <TD align="center" valign="top"><I>(Jurisdiction of incorporation or organization)</I>
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    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><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.<BR>
<B>None</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">Securities registered or to be registered pursuant to Section 12(g) of the Act.

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>Ordinary Shares, including Ordinary Shares<BR>
represented by American Depositary Shares (each representing ten Ordinary Shares)</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: 18pt"><B>1,976,292,025 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 well-known seasoned issuer, as defined in Rule
405 of the Securities Act.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">Yes &nbsp;&nbsp;&nbsp; <FONT face="Wingdings">&#254;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; No &nbsp;&nbsp;&nbsp; <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: 18pt">Yes &nbsp;&nbsp;&nbsp; <FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; No &nbsp;&nbsp;&nbsp; <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: 18pt">Yes &nbsp;&nbsp;&nbsp; <FONT face="Wingdings">&#254;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; No &nbsp;&nbsp;&nbsp; <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 non-accelerated filer. See definition of &#147;accelerated filer and large
accelerated filer&#148; in Rule&nbsp;12b-2 of the Securities Exchange Act of 1934. (Check one):
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">Large accelerated filer &nbsp;&nbsp;&nbsp; <FONT face="Wingdings">&#254;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accelerated filer &nbsp;&nbsp;&nbsp; <FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Non-accelerated filer &nbsp;&nbsp;&nbsp;<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 which financial statement item the registrant has elected to
follow.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">Item&nbsp;17
&nbsp;&nbsp;&nbsp;<FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Item&nbsp;18 &nbsp;&nbsp;&nbsp;<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;12b-2 of the Securities Exchange Act of 1934).
</DIV>

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


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">(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: 18pt">Yes &nbsp;&nbsp;&nbsp;<FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; No&nbsp;&nbsp;&nbsp; <FONT face="Wingdings">&#111;</FONT>
</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>
</DIV>

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    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>PAGE</B></TD>
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<TR valign="bottom">
    <TD align="left" valign="top"><A href="#101">ITEM 1.</A></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#101">IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><A href="#102">ITEM 2.</A></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#102">OFFER STATISTICS AND EXPECTED TIMETABLE</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><A href="#103">ITEM 3.</A></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#103">KEY INFORMATION</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><A href="#104">ITEM 4.</A></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#104">INFORMATION ON OUR COMPANY</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><A href="#105">ITEM 4A.</A></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#105">UNRESOLVED STAFF COMMENTS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><A href="#106">ITEM 5.</A></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#106">OPERATING AND FINANCIAL REVIEW AND PROSPECTS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><A href="#107">ITEM 6.</A></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#107">DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><A href="#108">ITEM 7.</A></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#108">MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><A href="#109">ITEM 8.</A></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#109">FINANCIAL INFORMATION</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><A href="#110">ITEM 9.</A></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#110">THE OFFER AND LISTING</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><A href="#111">ITEM 10.</A></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#111">ADDITIONAL INFORMATION</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><A href="#112">ITEM 11.</A></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#112">QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><A href="#113">ITEM 12.</A></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#113">DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><A href="#114">ITEM 13.</A></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#114">DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><A href="#115">ITEM 14.</A></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#115">MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><A href="#116">ITEM 15.</A></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#116">CONTROLS AND PROCEDURES</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><A href="#117">ITEM 16A.</A></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#117">AUDIT COMMITTEE FINANCIAL EXPERT</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><A href="#118">ITEM 16B.</A></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#118">CODE OF ETHICS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><A href="#119">ITEM 16C.</A></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#119">PRINCIPAL ACCOUNTANT FEES AND SERVICES</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><A href="#120">ITEM 16D.</A></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#120">EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEE</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><A href="#121">ITEM 16E.</A></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#121">ISSUER PURCHASES OF EQUITY SECURITIES</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><A href="#122">ITEM 17.</A></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#122">FINANCIAL STATEMENTS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><A href="#123">ITEM 18.</A></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#123">FINANCIAL STATEMENTS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><A href="#124">ITEM 19.</A></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#124">EXHIBITS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left"><A href="#125">SIGNATURES</A></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">96</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left"><A href="#126">INDEX TO FINANCIAL STATEMENTS</A></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-1</TD>
    <TD>&nbsp;</TD>
</TR>
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<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92695exv4w46.txt">EX-4.46 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.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92695exv4w48.txt">EX-4.48 Supplemental Subsidiary Guarantee Agreement dated as of Feburary 21, 2006, by and between STATS ChipPAC Ltd. and U.S. Bank National Association with respect to the 7.5% Senior Notes 2010</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92695exv4w49.txt">EX-4.49 Supplemental Subsidiary Guarantee Agreement, dated as of Feburary 21, 2006, by and between STATS ChipPAC Ltd. and U.S. Bank National Association with respect to 6 3/4% Senior Notes due 2011</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92695exv8w1.txt">EX-8.1 List of subsidiaries</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92695exv12w1.txt">EX-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</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92695exv12w2.txt">EX-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</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92695exv13w1.txt">EX-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</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92695exv13w2.txt">EX-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 2002</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92695exv15w1.txt">EX-15.1 Consent Pricewaterhouse Coopers, Singapore, independent registered public accounting firm</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92695exv15w2.txt">EX-15.2 Consent of KPMG, 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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<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, 2006 was S$1.62 per $1.00 for cable
transfers in Singapore dollars, KRW958.90 per $1.00 for cable transfers in South Korean Won,
RMB8.06 per $1.00 for cable transfers in Chinese Renminbi, MYR3.75 per $1.00 for cable transfers in
Malaysian Ringgit, NT$31.97 per $1.00 for cable transfers in New Taiwan dollars and &#165;116.88 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, 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 wholly-owned 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 years ended December&nbsp;31, 2004 and 2005 the financial results of ChipPAC
from August&nbsp;5, 2004. The term &#147;pro forma&#148; as used in this document
gives effect to the merger as if it had been consummated on January 1 of that particular year and
reflects ChipPAC&#146;s financial data for the 12&nbsp;months ended December&nbsp;31 for that particular year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since the beginning of fiscal 2005, we employed quarterly and fiscal year reporting periods
that end on the Sunday nearest to the calendar month end of that period. Our first three quarters
of 2005 ended on March&nbsp;27, 2005, June&nbsp;26, 2005 and September&nbsp;25, 2005, respectively, and our fourth
quarter and fiscal year 2005 ended on December&nbsp;25, 2005, the Sunday nearest to the calendar quarter
end of each period, while our quarterly periods in prior years ended on March&nbsp;31, June&nbsp;30,
September&nbsp;30 and December&nbsp;31, respectively. For ease of presentation, our first three quarters of
2005 and fourth quarter and fiscal year 2005 have been presented as ending on March&nbsp;31, June&nbsp;30,
September&nbsp;30, and December&nbsp;31, 2005, respectively, and unless otherwise specified or the context requires, references to &#147;2005&#148; refer to our fiscal year 2005.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>FORWARD-LOOKING 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 20-F are forward-looking 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 end-use
applications products such as communications equipment and personal computers (PCs); reliance on a
small group of principal customers; decisions by customers to discontinue outsourcing of test and
packaging services; continued success in technological innovations; availability of financing;
delays in acquiring or installing new
</DIV>

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

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



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">equipment; our substantial 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; limitations imposed
by our financing arrangements which may limit our ability to maintain and grow our business;
pricing pressures including declines in average selling prices; 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; inability to achieve
satisfactory internal controls to meet the requirements of Sarbanes Oxley Act of 2002; 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; unsuccessful acquisitions and investments in other companies and
businesses; 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 forward-looking statements set forth in this
annual report to reflect subsequent events or circumstances.
</DIV>
<DIV align="left">
<A name="101"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS</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="102"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE</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="103"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 3. KEY INFORMATION</B>
</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;31, 2004 and 2005 and for the fiscal years ended December&nbsp;31, 2003, 2004 and 2005,
are derived from our consolidated financial statements which have been audited by KPMG (for year
ended December&nbsp;31, 2003) and PricewaterhouseCoopers (PwC) (for years ended December&nbsp;31, 2004 and
2005), independent registered public accounting firms, and are included in &#147;Item&nbsp;18. Financial
Statements.&#148; The selected consolidated financial data as of December&nbsp;31, 2001, 2002 and 2003 and
for the fiscal years ended December&nbsp;31, 2001 and 2002 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 years ended December&nbsp;31, 2004 and 2005 the financial results of ChipPAC from August&nbsp;5, 2004. The financial results
prior to the year ended December&nbsp;31, 2004 reflect the financial results of STATS and do not include
the financial results of ChipPAC.
</DIV>

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

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<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 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>2001</B></TD>
    <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>
</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="10"><B>(In thousands, except per share data and ratios)</B></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"><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">$</TD>
    <TD align="right">145,866</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</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>
</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">(217,789</TD>
    <TD nowrap>)</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>
</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">(71,923</TD>
    <TD nowrap>)</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>
</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<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,065</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,693</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,475</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,965</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">135,771</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">15,160</TD>
    <TD>&nbsp;</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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Goodwill impairment<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></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">453,000</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:30px; text-indent:-15px">Equipment impairments<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,735</TD>
    <TD>&nbsp;</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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prepaid leases written off<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,145</TD>
    <TD>&nbsp;</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>
</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">&#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:30px; text-indent:-15px">Other general expenses (income), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">101</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">374</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(464</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(20</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" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79,206</TD>
    <TD>&nbsp;</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>
</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">Operating income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(151,129</TD>
    <TD nowrap>)</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>
</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <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 (expense), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,222</TD>
    <TD>&nbsp;</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>
</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>&nbsp;</TD>
    <TD align="right">775</TD>
    <TD>&nbsp;</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>
</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>&nbsp;</TD>
    <TD align="right">1,990</TD>
    <TD>&nbsp;</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>
</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>&nbsp;</TD>
    <TD align="right">7,987</TD>
    <TD>&nbsp;</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>
</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">(143,142</TD>
    <TD nowrap>)</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>
</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">8,810</TD>
    <TD>&nbsp;</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>
</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">(134,332</TD>
    <TD nowrap>)</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>
</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">313</TD>
    <TD>&nbsp;</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>
</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">(134,019</TD>
    <TD nowrap>)</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>
</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">$</TD>
    <TD align="right">(0.14</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</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">$</TD>
    <TD align="right">(0.01</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.14</TD>
    <TD nowrap>)</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>
</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">$</TD>
    <TD align="right">(1.36</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</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">$</TD>
    <TD align="right">(0.13</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1.36</TD>
    <TD nowrap>)</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>
</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">989,083</TD>
    <TD>&nbsp;</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>
</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">989,083</TD>
    <TD>&nbsp;</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>
</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">98,908</TD>
    <TD>&nbsp;</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>
</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">98,908</TD>
    <TD>&nbsp;</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>
</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>
    <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>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">$</TD>
    <TD align="right">115,214</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</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>
</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">109,447</TD>
    <TD>&nbsp;</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>
</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">576,578</TD>
    <TD>&nbsp;</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>
</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">2,564</TD>
    <TD>&nbsp;</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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Short-term borrowings and current installments of
long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,045</TD>
    <TD>&nbsp;</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>
</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">7,689</TD>
    <TD>&nbsp;</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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term debt, excluding current installments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,045</TD>
    <TD>&nbsp;</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>
</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">452,795</TD>
    <TD>&nbsp;</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>
</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">159,961</TD>
    <TD>&nbsp;</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>
</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">989,683</TD>
    <TD>&nbsp;</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>
</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>Includes stock-based compensation expenses of $1,024,000, $60,000, $97,000, $658,000
and $743,000 in 2001, 2002, 2003, 2004 and 2005, 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>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">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>The impairment charges were recognized in 2001 in accordance with SFAS No.&nbsp;121, &#147;Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of&#148; and in
2002 in accordance with SFAS No.&nbsp;144, &#147;Accounting for the Impairment or Disposal of Long-Lived
Assets.&#148;</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 recorded impairment charges of $3,145,000 in 2001 and $764,000 in 2002 to write off
prepaid leases for testers with no expectation of future use.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">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="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 and the results from operations of STATS and ChipPAC 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="2%" 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="2%" 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="2%" 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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>fluctuations in end-user 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 downturn beginning in the fourth quarter of 2000,
which continued through 2001 and 2002. 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 a
modest recovery in late 2002 and continued its recovery momentum throughout 2003 and the first half
of 2004. In late 2004 and early 2005, however, we experienced a softening of our business as our
customers corrected their excess inventory positions. Although the semiconductor industry
gradually improved in 2005 as customers consumed their inventory position and then replenished
their supply chain in anticipation of increased demand, there are no assurances that such
improvement will continue or that there will not be a 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 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 subsidiary, ASE Test Limited, 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>

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

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" 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="2%" 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="2%" 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: 6pt"><B><I>A decrease in demand for communications equipment, consumer and multi-applications, and personal
computers, would 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 multi-applications, and
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, and personal computers places significant pressure on
the prices of the components that are used in this equipment. If the average selling prices of
communications equipment, consumer and multi-applications, and 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: 6pt"><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
2005, our ten largest customers represented 69.7% of our net revenues. Our three largest
customers, Analog Devices, Inc., Freescale Semiconductor, Inc. and Intel Corporation, each
contributed in excess of 10% of our net revenues and in the aggregate contributed 32.1% of our net
revenues.
</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: 6pt"><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
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.
</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 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.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><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 write-down such equipment. STATS did not make any
write-downs in 2003. In 2003, ChipPAC wrote-down $11.7&nbsp;million of impaired assets. In 2004 and
2005, no write-down of assets was made.
</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: 6pt"><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 combined
capital expenditures were $392.0&nbsp;million in 2004 and $277.7&nbsp;million in 2005. In 2006, we expect
that our capital expenditures will be approximately $300.0&nbsp;million. To grow our business, we will
need to increase our packaging and test capacity as well as replace existing equipment from time to
time. 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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>limit the ability of our China subsidiaries to pay dividends or require us to seek
consents for the payment of dividends, upon which we rely in order to pay the interest on
the convertible notes;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" 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="2%" 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="2%" 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="2%" 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>
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</DIV>

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



</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: 6pt"><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: 6pt"><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 2005, we achieved an operating income of $26.6&nbsp;million, but suffered a net loss of $26.3
million. In 2004, we suffered an operating loss of $429.6&nbsp;million and a net loss of $467.7&nbsp;million.
STATS achieved operating income of $0.5&nbsp;million in 2003, but suffered net losses of $1.7&nbsp;million.
Similarly, ChipPAC achieved operating income of $0.4&nbsp;million in 2003, but suffered net losses of
$28.8&nbsp;million. 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 the semiconductor industry does not
continue to recover from the downturn.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><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, 2005, we had total
indebtedness of $821.7&nbsp;million, consisting of $365.0&nbsp;million of unsecured senior notes, $361.5
million of unsecured convertible notes (of which $161.5&nbsp;million were senior convertible notes and
$200.0&nbsp;million were subordinated convertible notes), $78.3&nbsp;million of senior secured debt
(including capital lease obligations) and $16.9&nbsp;million of unsecured short-term 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="2%" 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="2%" 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="2%" 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="2%" 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. For example, certain
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. We may be
required to refinance our debt in order to make such payments. If such an event were to occur, or
at maturity of each series of convertible notes, we cannot assure you that we will have sufficient
funds or would be able to arrange financing on terms that are acceptable to us or at all or to
obtain waivers of prohibitions from lenders
</DIV>

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

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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: 6pt"><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 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: 6pt"><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 a result of accounting for the merger in 2004 using the purchase accounting method, we
recorded goodwill and other intangible assets upon the merger of approximately $974.4&nbsp;million and
$147.2&nbsp;million, respectively. 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 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 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: 6pt"><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 wholly-owned 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 $19.5&nbsp;million based on the exchange rate as at January&nbsp;31, 2006) against ChipPAC
relating to withholding tax 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
on the transaction in question is required under the prevailing tax treaty. We have appealed this
assessment and believe that such assessment should be overturned. 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, 2005 is estimated to be KRW 31.6&nbsp;billion
(approximately $32.9&nbsp;million based on the exchange rate as at January&nbsp;31, 2006). 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: 6pt"><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 know-how through patents,
the use of confidentiality and non-disclosure agreements and limited access to and distribution of
proprietary information. As of January&nbsp;31, 2006, our Company and our various subsidiaries held a
total of approximately 448 issued patents and pending patent applications. Of these, we have
approximately 94 patents granted or allowed by the U.S. Patent and Trademark Office and
approximately 42 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,
</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">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.
</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: 6pt"><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>

<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="2%" 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="2%" 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="2%" 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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>develop non-infringing 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="2%" 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)&nbsp;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 between Tessera and
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. We may also, from time to time, receive from customers,
requests for indemnification against pending or threatened infringement claims brought against such
customers. However, we cannot assure you that the resolution of any future allegation or request
for indemnification will 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: 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>

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

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><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="2%" 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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" 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="2%" 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 markets addressed by end-users 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="2%" 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>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the short-term 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="2%" 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="2%" 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="2%" 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="2%" 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="2%" 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="2%" 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="2%" 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="2%" 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 cost-effective 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="2%" 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="2%" 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="2%" 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="2%" 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: 6pt"><B><I>If we are unable to 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 allows 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. In 2001, our capacity utilization declined substantially from prior levels, primarily
as a result of a decrease in demand for packaging and test services resulting from a downturn in
the overall semiconductor industry, particularly for communications applications. Due to the high
level of fixed costs, we suffered substantial gross loss in 2001 and 2002. While capacity
utilization increased in 2002, 2003, 2004 and 2005, no assurance can be given that capacity
utilization will continue to increase or be maintained or that it will not decline and adversely
affect our gross margin.
</DIV>

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

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" 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="2%" 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="2%" 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 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: 6pt"><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, 6.75% senior notes due 2011, zero coupon
convertible notes due 2008, 1.75% convertible notes due 2007, 8.0% convertible subordinated notes
due 2011 and 2.5% convertible subordinated notes due 2008 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="2%" 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="2%" 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="2%" 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="2%" 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="2%" 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="2%" 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="2%" 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="2%" 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="2%" 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;As a result of these limitations, we may encounter difficulties obtaining the required
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>

<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">&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 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.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><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>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><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
have requested, and may request, research and development services relating to the development of
packages and/or services. These customers generally do not, and may 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: 6pt"><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 domestic 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. For
example, in 1999 and early 2000, we incurred significant costs in expectation of strong demand in
the semiconductor market, but this demand did not fully materialize because of the market downturn
between late 2000 and early 2003. 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: 6pt"><B><I>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.</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 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.
</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"><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: 6pt"><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 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: 6pt"><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="2%" 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="2%" 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="2%" 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="2%" 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="2%" 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: 6pt"><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 by-products of, and waste
</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">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 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 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: 6pt"><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: 6pt"><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 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.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We are exposed to certain risks as a result of the significant ownership by Temasek Holdings
(Private) Limited, through its wholly-owned 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;Following a restructuring of the Temasek Holdings group of companies on December&nbsp;31, 2004,
Temasek Holdings acquired all of the shareholdings in Singapore Technologies Semiconductors Pte Ltd
(STSPL)&nbsp;held by Temasek Holdings&#146; wholly-owned subsidiary, Singapore Technologies Pte Ltd (STPL).
As of January&nbsp;31, 2006, Temasek Holdings, through its wholly-owned subsidiary, Singapore
Technologies Semiconductors Pte Ltd (STSPL), beneficially owned approximately 36.03% of our
outstanding ordinary shares. Temasek Holdings, wholly-owned by the Minister of Finance
(Incorporated) for Singapore, a statutory body constituted by the Minister for Finance
(Incorporation) Act (Cap. 183), owns 100% of the ordinary shares of STSPL. As a result, Temasek
Holdings will have 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="2%" 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="2%" 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="2%" 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="2%" 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>
<P align="center" style="font-size: 10pt">14
</DIV>

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



</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 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.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><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;In the past, a substantial portion of our financing, as well as certain amounts of our net
revenue, came from our affiliates, and we paid a management fee to STPL for certain services. We
have certain contractual and other business relationships and may engage in material transactions
with the Government of Singapore, companies within the Temasek Holdings group, including Chartered
Semiconductor Manufacturing Ltd. (Chartered), which is one of our customers. 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 Singapore-based provider of 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.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Investor confidence and the value of ADSs and ordinary shares may be adversely impacted if we or
our independent registered public accounting firm are unable to provide adequate attestation over
the adequacy of the internal control over our financial reporting as of December&nbsp;31, 2006 as
required by Section&nbsp;404 of the Sarbanes-Oxley Act of 2002.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are subject to the Securities and Exchange Commission&#146;s (SEC)&nbsp;reporting obligations. The
SEC, as directed by Section&nbsp;404 of the Sarbanes-Oxley Act of 2002, adopted rules requiring public
companies to include a report of management on the company&#146;s internal control over financial
reporting in its annual report on Form 10-K or Form 20-F, as the case may be, that contains an
assessment by management of the effectiveness of the company&#146;s internal control over financial
reporting. In addition, the company&#146;s independent registered public accounting firm must attest to
and report on management&#146;s assessment of the effectiveness of the company&#146;s internal control over
financial reporting. These requirements will first apply to our annual report on Form 20-F for the
fiscal year ending December&nbsp;31, 2006. Management may not conclude that our internal control over
our financial reporting is effective. Moreover, even if management does conclude that our internal
control over our financial reporting is effective, if our independent registered public accounting
firm is not satisfied with our internal control over our financial reporting or the level at which
our controls are documented, designed, operated or reviewed, or if the independent registered
public accounting firm interprets the requirements, rules or regulations differently from us, then
they may decline to attest to management&#146;s assessment or may issue a report that is qualified. Any
of these possible outcomes could result in an adverse reaction in the financial marketplace due to
a loss of investor confidence in the reliability of our financial statements, which ultimately
could negatively impact the market price of ADSs and ordinary shares.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><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="2%" 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="2%" 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="2%" 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="2%" 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>

</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">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" 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="2%" 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="2%" 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>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" 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="2%" 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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="2%" 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="2%" 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="2%" 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="2%" 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="2%" 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: 6pt"><B><I>If we are unable to take advantage of opportunities to market and sell STATS&#146; and ChipPAC&#146;s
products and services to the other&#146;s traditional customers, we 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;Prior to the merger, STATS and ChipPAC each maintained separate and distinct customer bases
and business partners specific to their respective businesses. As a result of the merger, we intend
to take advantage of the customer bases of the formerly separate businesses in order to promote and
sell the products and services of one company to the traditional customers and business partners of
the other company. In the event that the traditional customers and business partners of either
STATS or ChipPAC are not receptive to the products and services of the other, we may not realize
some of the expected benefits of the merger, and our business may be harmed.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><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 2005 and is effective through April&nbsp;30, 2006. The collective bargaining
agreement was renewed in 2005 and is effective through April&nbsp;30, 2007. As of January&nbsp;31, 2006,
approximately 63% 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>

<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: 6pt"><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
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.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><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="2%" 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="2%" 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="2%" 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="2%" 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="2%" 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="2%" 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="2%" 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: 6pt"><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;In December&nbsp;2005, we commenced construction of additional buildings next to our existing
facility in Qing Pu, Shanghai at an estimated cost of $53.4&nbsp;million. Upon completion, the new
facility will increase the total floor space at that location by approximately 500,000 square feet.
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="2%" 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="2%" 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="2%" 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="2%" 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>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">17
</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="2%" 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="2%" 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="2%" 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="2%" 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: 6pt"><B><I>Because a significant portion of Winstek&#146;s business and operations, our new 300
millimeter (mm)&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. 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 our 300mm wafer bumping and Winstek&#146;s 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: 6pt"><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, or 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 reappearance 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: 6pt"><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 November&nbsp;2005, we set up a new facility in Song Jiang, China to provide 200mm gold
bumping services as part of our strategy to service the high growth liquid crystal display (LCD)
driver semiconductor market. This operation is expected to complete setup and begin customer
qualification in early 2006. In October&nbsp;2005, we also set up 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. This operation is presently qualified and
in high volume production. In August&nbsp;2004, we completed our merger with ChipPAC. In 2003, we set
up a new manufacturing facility in Shanghai, China as a first step of our strategic plan to
establish a significant manufacturing presence in China to service its existing international
customers as well as engage the indigenous Chinese foundries and design houses. In 2001, we
acquired a majority interest in Winstek, to enhance our position in the Taiwanese market.
</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="2%" 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="2%" 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>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">18
</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="2%" 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="2%" 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="2%" 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="2%" 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: 6pt"><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="2%" 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="2%" 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="2%" 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="2%" 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="2%" 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="2%" 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="2%" 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="2%" 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>

<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"><B><I>Singapore law contains provisions that could discourage a take-over 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 Singapore Code on Take-overs
and Mergers (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 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 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.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><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: 6pt"><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 are not 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: 6pt"><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 (SGX-ST) is relatively small and more
volatile than stock exchanges in the United States and certain other European countries. As of
December&nbsp;31, 2005, there were 492 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$427.9&nbsp;billion. For the year ended December&nbsp;31, 2005, the annualized aggregate trading value on
the SGX-ST (including shares traded on the CLOB International trading system) was approximately
S$200.8&nbsp;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.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><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>

<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"><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 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="2%" 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="2%" 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="2%" 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 will not be able to exercise voting rights
attaching to the ADSs.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><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="font-size: 10pt; margin-top: 12pt"><B>ITEM 4. INFORMATION ON OUR COMPANY</B>
</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;We were 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
the SGX-ST (SGX-ST: STATSChP) and our ADSs are quoted on the Nasdaq National 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)&nbsp;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:
<I>www.statschippac.com </I>and 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)&nbsp;979-8000; Facsimile: 1 (510)&nbsp;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.
</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 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 &#147;Item&nbsp;10. Additional Information &#151; C. Material Contracts,&#148; and elsewhere in this
annual report.
</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;Our capital expenditure in 2003, 2004 and 2005 amounted to $231.9&nbsp;million, $270.8&nbsp;million and
$277.7&nbsp;million, respectively. Our capital expenditures are largely driven by the demand for our services, primarily to increase our packaging and testing capacity and to replace packaging and testing equipment from time-to-time. We expect our capital expenditure to be approximately $300.0&nbsp;million
in 2006, as our capital expenditure spending continues to be targeted at demand we see from our
customers and the expansion of our facilities in China.
</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, 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="2%" 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 and array 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 (RDL), integrated passive device
(IPD)&nbsp;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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" 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 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</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Pre-production and post-production 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,
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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</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. Our merger with ChipPAC, which significantly broadened our capabilities in both
packaging and test services, enabled us to take advantage of the customer bases of the formerly
separate businesses in order to promote and sell the products and services to an enlarged customer
base of the combined company.
</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 (through 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.
</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
</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">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>

<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 lower-technology aspects of the process and keeping advanced or
proprietary technology in-house.
</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 mid-1980s. 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 cost-effective access to backend state-of-the-art 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;Beginning in the fourth quarter of 2000, the industry experienced a downturn which continued
through 2001 and 2002. 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 a modest recovery in
late 2002 and continued its recovery momentum throughout 2003 and the first half of 2004. In late
2004, however, we experienced a softening of our business as our customers corrected their excess
inventory positions. In the first half of 2005, the semiconductor industry gradually improved as
customers consumed their excess inventory position. The industry strengthened further in the
second half of 2005 as customers replenished their supply chain in anticipation of broad based
end-market demand.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The industry outlook for 2006 based on published materials by recognized industry research
analysts and associations is averagely strong in the range of 7-10% growth. The SATS market is
expected to grow at a faster pace than the semiconductor industry as a whole, driven by strong
demand for NAND flash, LCD driver integrated circuit (IC), handset and PC related chip.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2001, our net revenues decreased 56.0% over 2000 to $145.9&nbsp;million, due to the 2001
downturn. Our net revenues increased 54.8% to $225.7&nbsp;million in 2002. 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 and 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. 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="2%" 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="2%" 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="2%" 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>

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<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. 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 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.
</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
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.
</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 200 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
fast-growing communications, computing and power markets. No single customer accounted for more
than 15% of our Company&#146;s net revenues for 2005. 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 high-quality 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, product-specific 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 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.
</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>


<P align="center" style="font-size: 10pt">24
</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>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. For the year ended December&nbsp;31,
2005, 72.2% of our net revenues were from packaging services and 27.8% of our net revenues were
from test and other services.
</DIV>

<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 historical data for the year ended
December&nbsp;31, 2004 includes the data for ChipPAC from August&nbsp;5, 2004 and our historical data for the
year ended December&nbsp;31, 2005 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="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="3" style="border-bottom: 1px solid #000000"><B>STATS</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>STATS ChipPAC</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Historical</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Historical</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Pro Forma</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Historical</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><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 31,</B></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 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>2003</B></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>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<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="right">&nbsp;</TD>
    <TD align="right">20.6</TD>
    <TD nowrap>%</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">47.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">50.2</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">26.9</TD>
    <TD>&nbsp;</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">21.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.0</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">52.5</TD>
    <TD>&nbsp;</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">31.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27.8</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>
    <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">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>
    <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>
    <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"><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 lead-frames
and substrates. Our two key types of packaging services, lead-frame and array, contributed
approximately 22.0% and 50.2%, respectively, of our net revenues for the year ended December&nbsp;31,
2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Leaded Packaging. </I>&#147;Leaded&#148; or &#147;lead-frame&#148; 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 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Standard Lead-frame Packages. </I>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.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&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="25%" style="font-size: 1pt">&nbsp;</TD>
    <TD width="1%" style="font-size: 1pt">&nbsp;</TD>
    <TD width="5%" style="font-size: 1pt">&nbsp;</TD>
    <TD width="1%" style="font-size: 1pt">&nbsp;</TD>
    <TD width="37%" style="font-size: 1pt">&nbsp;</TD>
    <TD width="1%" style="font-size: 1pt">&nbsp;</TD>
    <TD width="30%" style="font-size: 1pt">&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="left" 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 Leads</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">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Plastic Dual In-line Package
(PDIP)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">8-40
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Lead-frame package
of low pin count
with two-side leads
and
plated-through-hole
(PTH)&nbsp;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:15px; text-indent:-15px">Small Outline Integrated
Circuit (SOIC)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">8-32
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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
</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:15px; text-indent:-15px">Plastic Leaded Chip Carrier
(PLCC)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">20-84
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Traditional
lead-frame 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,
access equipment
and multimedia</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</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="25%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="37%">&nbsp;</TD>
    <TD width="1%">&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="left" 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 Leads</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">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Micro Small outline Package
(MSOP)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">8-10
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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 radio
frequency
(RF)/wireless
devices
</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:15px; text-indent:-15px">&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:15px; text-indent:-15px">Shrink Small Outline
Package (SSOP)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">36-56
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Traditional
lead-frame package
designed for logic,
analog and
mixed-signal
devices such as
Flash, SRAM, EPROM,
EEPROM and DRAM
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Personal computers,
mass storage and
multimedia</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&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:15px; text-indent:-15px">Thin Shrink Small Outline
Package (TSSOP)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">8-56
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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
</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:15px; text-indent:-15px">&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:15px; text-indent:-15px">Thin Small Outline Package
(TSOP)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">28-56
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Traditional
lead-frame package
with two-side
leads, and a SMT
designed for
memory,
RF/wireless, logic,
linear and
automotive devices
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Personal computers,
portable
electronics,
networking
equipment and
automotive
electronics</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&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:15px; text-indent:-15px">Thin Quad Flat Package
(TQFP)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">32-128
</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:15px; text-indent:-15px">&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:15px; text-indent:-15px">Low Quad Flat Package
(LQFP)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">32-208
</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:15px; text-indent:-15px">&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:15px; text-indent:-15px">Metric Quad Flat Package
(MQFP)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">44-240
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Traditional QFP
designed for
application-specific
integrated
circuits (ASICs),
field programmable
gate arrays (FPGAs)
and digital signal
processors (DSPs)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Access/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 Lead-frame Packages. </I>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.
</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 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="25%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="37%">&nbsp;</TD>
    <TD width="1%">&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="left" 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 Leads</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">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Quad Leadless Package (QLPp)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">8-68
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Lead-frame based near chip scale
</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:15px; text-indent:-15px">&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:15px; text-indent:-15px">Bumped Chip Carrier
(BCC)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">16-84
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Lead-frame based near chip scale
</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:15px; text-indent:-15px">&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:15px; text-indent:-15px">Lead-frame Chip Scale Packages
(LFCSPs)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">8-64
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Lead-frame based near chip scale
</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:15px; text-indent:-15px">&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:15px; text-indent:-15px">Exposed Pad Low Quad Flat
Package (LQFP-ep)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">48-216
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Thermally enhanced QFP with 30%<BR>
greater thermal dissipation than<BR>
MQFP
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Access/WAN/LAN equipment and
PC/graphics, HDD</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&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:15px; text-indent:-15px">Exposed Pad Thin Quad Flat
Package (TQFP-ep)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">32-100
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Thermally enhanced TQFP with 30%<BR>
greater thermal dissipation than<BR>
TQFP
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Access/WAN/LAN equipment,
PC/graphics, HDD, PDA, GPS
and mobile phone</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">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">
<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="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="37%">&nbsp;</TD>
    <TD width="1%">&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="left" 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 Leads</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">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Exposed Drop-in Heat Sink
Quad Flat Package (MQFP-ed)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>128-240
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Thermally enhanced QFP with 60%<BR>
greater thermal dissipation than<BR>
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:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>&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:15px; text-indent:-15px">Drop-in Heat Sink Quad
Flat Package (MQFP-d)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>64-208
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Thermally enhanced QFP with 30%<BR>
greater thermal dissipation than<BR>
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:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>&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:15px; text-indent:-15px">Exposed Pad Thin Shrink
Small Outline Package
(TSSOP-ep)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>16-38
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Thermally enhanced TSSOP with 30%<BR>
greater thermal dissipation than<BR>
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:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>&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:15px; text-indent:-15px">Stacked Die Quad Flat
Package (LQFP-SD)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>32-208
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Compact multiple die designed for<BR>
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:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>&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:15px; text-indent:-15px">Stacked Die Exposed Pad
Low Quad Flat Package
(LQFP-ep-SD)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>32-216
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Thermally enhanced LQFP-SD
designed for space constrained
applications with thickness of
1.4mm and greater thermal
dissipation than LQFP-SD
</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:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>&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:15px; text-indent:-15px">Stacked Die Exposed Pad
Thin Quad Flat Package
(TQFP-ep-SD)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>32-100
</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 LQFP-SD
</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>


<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 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 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.
</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 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.
</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,
hand-held 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="2%" 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="2%" 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="2%" 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="2%" 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="2%" 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="2%" 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>
<P align="center" style="font-size: 10pt">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="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 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.
</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 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.
</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="2%" 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 high-performance applications, like PC chipsets, graphic
controllers and DSPs. A BGA generally has greater than 100 pins.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Chip-Scale. </I>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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>System-in-Package. </I>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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Flip-Chip BGA. </I>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.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</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="25%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="37%">&nbsp;</TD>
    <TD width="1%">&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 of</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="left" 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>Balls</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">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Flip-Chip Low Profile Fine Pitch
BGA (fcLFBGA)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>49-144
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">CSP BGA with Flip- Chip/bump 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:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>&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:15px; text-indent:-15px">Flip-Chip BGA (fcBGA)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>225-1152
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BGA with Flip-Chip/bump 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:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>&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:15px; text-indent:-15px">Tape based Very Thin Fine Pitch
BGA (VFBGA-T)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>81-169
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Thin CSP BGA (&#060;1.0mm) characterized by flex-tape
substrate for high density circuits
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mobile phone, PDA and multimedia</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="25%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="37%">&nbsp;</TD>
    <TD width="1%">&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 of</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="left" 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>Balls</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">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Stacked Die Low Profile Fine
Pitch BGA (LFBGA-SD)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>72-409
</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:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>&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:15px; text-indent:-15px">Tape Enhanced Plastic base
BGA (TBGA)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>208-792
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BGA characterized by a flex- tape substrate mounted on
a copper heatspreader. This package has a high thermal
performance
</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:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>&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:15px; text-indent:-15px">Enhanced BGA (EBGA)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>159-1140
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">High pin count, thermally enhanced BGA suitable for
high power applications which utilize heat sinks for
thermal 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:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>&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:15px; text-indent:-15px">Low Profile Fine Pitch BGA (LFBGA)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>16-450
</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:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>&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:15px; text-indent:-15px">Plastic Ball Grid Array
(PBGA)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>169-1152
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Electrically enhanced BGA package designed for high
I/O 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:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>&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:15px; text-indent:-15px">Thin Fine Pitch BGA (TFBGA)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>41-280
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">CSP BGA characterized by a 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:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>&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:15px; text-indent:-15px">Exposed Drop-in Heat Spreader
Plastic BGA (PBGA-H)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>208-841
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Thermally Enhanced PBGA with 20% greater thermal
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:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>&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:15px; text-indent:-15px">Multi Chip Module Plastic BGA
(PBGA-MC)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>80-600
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BGA integrated with two or more multiple die within a
PBGA
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Access/LAN/PC/graphics and base
station equipment</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 lead-free 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 lead-free and &#147;green&#148; material options for our entire
package portfolio. These lead-free 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 lead-free solders, complying with current Joint Electron Device Engineering Council and Japan
Electronics &#038; 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&#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 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Wafer Process Services. </I>In 2003, we introduced Flex-On-Cap (FOC)&nbsp;wafer bumping services, with
and without redistribution layers (RDL)&nbsp;for 150mm and 200mm wafers 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. In 2005, we also
started to offer 300mm wafer bumping services.
</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 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 $322.0&nbsp;million in the year ended December&nbsp;31, 2005, compared to our test
revenue, pro forma for the merger, of $344.4&nbsp;million in the year ended December&nbsp;31, 2004. The
decrease of 6.5% reflected effects of the declining average selling prices and softening of the
industry in early 2005.
</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: 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 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</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 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&#146;s test program.
</DIV>

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

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Mixed-signal Testing. </I>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, WLAN 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 mixed-signal semiconductors
for computers and consumer components including audio devices, CD-ROM, 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 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.
</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 non-volatile memories.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Test-Related Services. </I>We offer a variety of other value-added test-related 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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Burn-in process support. </I>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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" 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="2%" 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="2%" 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>

</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="2%" 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 post-test
requirements.</TD>
</TR>

</TABLE>
</DIV>

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


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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&nbsp;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&#146; request, certain finished and piloted test programs are transferred to our facility
in Singapore for full production. As STATS ChipPAC Test Services, Inc. offers a similarly
configured and substantial range of tester platforms, handlers, probers, interface hardware and
manufacturing processes as our Singapore facility, this transfer is relatively 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 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.
</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, lead-frame or substrate for that device by simulating the semiconductor&#146;s
performance and end-use 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
quick-turn prototype services. By offering package design and prototype services, we can reduce our
customer&#146;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, Malaysia 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, 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&#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 check-plot 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>

<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 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.
</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;<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 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&#146; end-customers. 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. STATS and ChipPAC spent approximately $15.3&nbsp;million and $11.7
million in 2003, respectively, on research and development. Our expenditures for research and
development for 2004 and 2005 were $17.6&nbsp;million and $26.1&nbsp;million, respectively. As of January
31, 2006, we employed over 230 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 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.
</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
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 and routers as well as high-end PCs. 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 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 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.
</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>

<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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Land Grid Array (LGA);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>System-in-Package LFBGA (LFBGA-SiP);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>System-in-Package LGA (LGA-SiP);</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">32
</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 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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Flip-Chip BGA with Buildup Substrate and Heat Sink (fcBGA-H);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Lead free Flip-Chip 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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Wafer Level CSP (WLCSP);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Thin Quad Leadless Package (UQLPp);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Chip Scale Module Package (LFBGA-CSMP, fcLGA-CSMP, QLP-CSMP);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" 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 (LFBGA-H);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Redistributed wafer bumping (RDL);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" 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 (LFCSP-dr);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" 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="2%" 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="2%" 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="2%" 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 (QLPp-dr);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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):</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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Two-chip 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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Three-chip 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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Three-chip 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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Four-chip 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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Four-chip 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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Five-chip 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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Five-chip 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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Six-chip 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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Six-chip 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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Seven-chip 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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Lead-frame chip scale 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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Bumped Chip Carrier package family (BCC, BCC&#043;, BCC&#043;&#043;);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" 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; -SD2);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;Gigabit-Green-Gold-to-Gold&#148; flip chip 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="2%" 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 (PBG-H);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" 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 (PBGA-H-SiP);</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">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 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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Stacked Die System-in-Package PBGA (PBGA-SiP-SD);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Flip-Chip Multi Package Module family module (fcBGA-MP);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Flip-Chip BGA with High Lead bumping (fcBGA-Hi 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="2%" 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 (EBGA-MC);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Flip-Chip on lead-frame 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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Package-in-Package (PiP) stacking &#151; LFBGA-PiP;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Package-on-Package (PoP) &#151; LFBGA-PoP;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Stacked Die System-in-Package Multi Package Module &#151; TFLGA-SiP-SD2-MP;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Stacked Die System-in-Package LGA &#151; VFLGA-SiP-SD4;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" 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 &#150; TFBGA-BOC;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" 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; TFBGA-BOC-SD2;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" 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="2%" 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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Flip-Chip Quad Leadless Package (fcQLPp); 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="2%" 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 (TSOP-SD7).</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 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.
</DIV>

<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. Since the
beginning of 2003, each of STATS and ChipPAC has been seeking to diversify and broaden their
respective customer bases. STATS&#146; and ChipPAC&#146;s ten largest customers accounted for 78.8% and 79.1%
of STATS&#146; and ChipPAC&#146;s respective net revenues in 2003. In the year ended December&nbsp;31, 2004, pro
forma for the merger, our ten largest customers accounted for 67.0% of our net revenues. In the
year ended December&nbsp;31, 2005, our ten largest customers accounted for 69.7% of our net revenues.
In 2005, our three largest customers, Analog Devices, Inc., Freescale Semiconductor, Inc. and Intel
Corporation, each contributed in excess of 10% of our net revenues and in the aggregate contributed
32.1% of our net revenues. As a result of the merger, we expect that we will enjoy a
well-diversified and broad customer base. 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>

<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: 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 historical data for the year ended December&nbsp;31, 2004 includes the data for
ChipPAC from August&nbsp;5, 2004 and our historical data for the year ended December&nbsp;31, 2005 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="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="3" style="border-bottom: 1px solid #000000"><B>STATS</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>STATS ChipPAC</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Historical</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Historical</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Pro Forma</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Historical</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><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 31,</B></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 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>2003</B></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>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</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="right">&nbsp;</TD>
    <TD align="right">58.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">60.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">57.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">55.2</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">29.9</TD>
    <TD>&nbsp;</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">21.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Consumer, multi-applications and others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.8</TD>
    <TD>&nbsp;</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">21.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23.3</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>
    <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:30px; 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>
    <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>
    <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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our customers are located around the world, but are principally headquartered in the United
States of America. 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 historical data for the year ended December
31, 2004 includes the data for ChipPAC from August&nbsp;5, 2004 and our historical data for the year
ended December&nbsp;31, 2005 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="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="3" style="border-bottom: 1px solid #000000"><B>STATS</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>STATS ChipPAC</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Historical</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Historical</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Pro Forma</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Historical</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Year Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><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 31,</B></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 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>2003</B></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>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</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="right">&nbsp;</TD>
    <TD align="right">81.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">77.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">77.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">76.5</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">4.7</TD>
    <TD>&nbsp;</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">4.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.3</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">14.0</TD>
    <TD>&nbsp;</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">18.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.2</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>
    <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:30px; 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>
    <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>
    <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">&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 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.
</DIV>

<P align="center" style="font-size: 10pt">35
</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: 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 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 small quantities
of raw material inventory and we have relatively low levels of 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 end-user market applications in wireless
handset and PDA graphics, PC chipsets, wireless LAN, memory, storage and networking. We market our
leadership in advanced packaging, test technology, and 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 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.
</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 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 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.
</DIV>

<P align="center" style="font-size: 10pt">36
</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: 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 lead-frames or laminate
substrates, gold wire, molding compound, epoxy, tubes and trays. 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 discounts. 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.
</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. 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. We acquire our
packaging and test equipment on a purchase order basis, which exposes us to substantial risks. 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. 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
lead-frame 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, 2006, we operated an aggregate of 3,614 wire
bonders. We purchase mold systems from major international manufacturers, including Apic Yamada
Corporation, Asahi Engineering Co Ltd and Dai-Ichi Seiko Co Ltd.
</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., Agilent Technologies, Inc.
and LTX Corporation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of January&nbsp;31, 2006, we operated 945 testers, comprising 666 mixed-signal testers, 151
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 945
testers, 157 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>

<P align="center" style="font-size: 10pt">37
</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>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 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.
</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 late 2006. ISO 9000 is an
international standard on the requirements for production of 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).
</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 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.
</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="2%" 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="2%" 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="2%" 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="2%" 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="2%" 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="2%" 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="2%" 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="2%" 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>
<P align="center" style="font-size: 10pt">38
</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 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 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.
</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 know-how through patents,
the use of confidentiality and non-disclosure agreements and limited access to and distribution of
proprietary information. As of January&nbsp;31, 2006, our Company and our various subsidiaries held a
total of approximately 448 issued patents and pending patent applications. Of these, we have
approximately 94 patents granted or allowed by the U.S. Patent and Trademark Office and
approximately 42 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 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.
</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 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.
</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 dated December&nbsp;22, 1988 between Tessera and
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. Tessera has also sued Advanced Micro Devices, Inc., Spansion LLC, Advanced
Semiconductor Engineering, Inc., ChipMOS Technologies, Inc., ChipMOS U.S.A. Inc., Silicon Precision
Industries Co., Ltd. and ST Microelectronics N.V. in the same lawsuit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our primary registered trademarks and trade names are &#147;STATS&#148; and &#147;ChipPAC&#148;, and we have
commenced registration of our trade name &#147;STATSChipPAC&#148; after the merger of STATS and ChipPAC. 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="u92695u9269501.gif" alt="(CORPORATE STRUCTURE CHART)">
</DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%;  border-top: 1px solid #000000">&nbsp;</DIV>
</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="5%" style="font-size: 1pt">&nbsp;</TD>
    <TD width="1%" style="font-size: 1pt">&nbsp;</TD>
    <TD width="94%" style="font-size: 1pt">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" colspan="2">Notes:</TD>
    <TD nowrap align="left"><B>&nbsp;</B></TD>
</TR>
<TR style="font-size: 6pt" valign="top">
<TD colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 6pt" valign="top">
<TD colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD align="left">Incorporated in November 2005 in Song Jiang
district, Shanghai, China.</TD>
</TR>
<TR>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD align="left">Incorporated in September 2005 in Hsin Chu
district, Taiwan.</TD>
</TR>
<TR>
    <TD colspan="3">&nbsp;</TD>
</TR>


<TR style="font-size: 10pt" valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD align="left">STATS ChipPAC, Inc. (formerly ST Assembly
Test Services, Inc.) was merged into ChipPAC, Inc. effective as of
January 20, 2005, and the entity surviving the merger was renamed
STATS ChipPAC, Inc.</TD>
 </TR>
<TR style="font-size: 6pt" valign="top">

</TABLE>
</DIV>
<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 13 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; Supplies &#151; Equipment.&#148; Our utilization rates for equipment for the years ended December 31, 2003, 2004 and 2005 were 66%, 69% and 72%, 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="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="37%">&nbsp;</TD>
    <TD width="1%">&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" 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="left" style="border-bottom: 1px solid #000000"><B>Property/Location</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(1)</B></SUP></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">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Yishun, Singapore<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
</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, flip-chip 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 flip- chip,
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">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kuala Lumpur, Malaysia<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP>
</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<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP>
</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">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Hsin-Chu Hsien, Taiwan<SUP style="font-size: 85%; vertical-align: text-top">(5)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">220,000</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:15px; text-indent:-15px">Fremont, California,
United 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">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Milpitas, California,
United 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">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Pu Dong, Shanghai, China
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">20,736</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">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:15px; text-indent:-15px">San Diego, California,
United States<SUP style="font-size: 85%; vertical-align: text-top">(6)</SUP>
</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, CP testing, COG assembly
and COF assembly for LCD driver IC</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">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">Hsin-Chu 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
flip-chip assembly
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Eutectic/High-lead/Lead-free solder<BR>
bump for 300mm wafers</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


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

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



<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 long-term 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 long-term lease in 2044. In
December&nbsp;2005, we commenced construction of additional buildings next to our existing facility
in Qing Pu, Shanghai, at an estimated cost of $53.4&nbsp;million in order to increase floor space
for business expansion. Upon completion, the new facilities will increase the total floor
space by approximately 500,000 square feet. The construction is expected to be completed in
November&nbsp;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>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">
<A name="105"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 4A. UNRESOLVED STAFF COMMENTS</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="106"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS</B>
</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 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 &#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. dollars and have
been prepared in accordance with U.S. GAAP. Our first three quarters of 2005 ended on March&nbsp;27,
2005, June&nbsp;26, 2005 and September&nbsp;25, 2005, respectively, and our fourth quarter and fiscal year
2005 ended on December&nbsp;25, 2005, the Sunday nearest to the calendar quarter end of each period,
while our quarterly periods in prior years ended on March&nbsp;31, June&nbsp;30, September&nbsp;30 and December
31, respectively. For ease of presentation, our first three quarters of 2005 and fourth quarter and
fiscal year 2005 have been presented as ending on March&nbsp;31, June&nbsp;30, September&nbsp;30, and December&nbsp;31,
2005, respectively, and unless otherwise specified or the context requires, references to &#147;2005&#148;
refer to our fiscal year 2005.
</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 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.
</DIV>

<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 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&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 for the year ended December&nbsp;31, 2004 compared with the year ended December&nbsp;31,
2003 and for the year ended December&nbsp;31, 2005 compared with the year ended December&nbsp;31, 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 2003 and
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>

<P align="center" style="font-size: 10pt">42
</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>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. Beginning in the fourth quarter of 2000, the industry experienced a
downturn which continued through 2001 and 2002. 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 a modest recovery in late 2002 and continued its recovery momentum throughout 2003 and the
first half of 2004. In late 2004, however, we experienced a softening of our business as our
customers corrected their excess inventory positions. In the first half of 2005, the semiconductor
industry gradually improved as customers consumed their excess inventory position. The industry
strengthened further in the second half of 2005 as customers replenished their supply chain in
anticipation of broad based end-market demand. The industry outlook for 2006 based on published
materials by recognized industry research analysts and associations is averagely strong in the
range of 7-10% growth. The SATS market is expected to grow at a faster pace than the semiconductor
industry as a whole driven by strong demand for NAND flash, LCD driver IC, handset and PC related
chip. In 2001, our net revenues decreased 56.0% over 2000 to $145.9&nbsp;million, due to the 2001
downturn. Our net revenues increased 54.8% to $225.7&nbsp;million in 2002. In 2003, our net
revenues grew by 68.6% over 2002 to $380.7&nbsp;million. In 2004, our revenues grew further by 102.0% to
$769.1&nbsp;million and 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. 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 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. 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 expanded our test and packaging capabilities in 2000 and
significantly increased the number of testers and wire bonders. The expansion of our test and
packaging capabilities by the end of 2000 allowed a significant increase in our net revenues.
However, the capacity utilization of our facilities decreased significantly in 2001 as a result of
the downturn in the semiconductor industry. The semiconductor industry is still recovering from the
worst downturn in its history and our capacity utilization has improved year over year from 2001 to
2005. 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 a result of accounting for the merger using the purchase
accounting method, we recorded goodwill and other intangible assets in 2004 upon the merger with
ChipPAC amounting to $974.4&nbsp;million and $147.2&nbsp;million, respectively. In 2005, additional purchase
adjustments of $1.0&nbsp;million were made to goodwill. 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
</DIV>

<P align="center" style="font-size: 10pt">43
</DIV>

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



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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. In 2005, 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 performed an impairment review at the end of 2004 and recorded an impairment
charge of $453.0&nbsp;million to our results of operations for the year ended December&nbsp;31, 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="2%" 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 short-term
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="2%" 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;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: 12pt"><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, 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&#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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our sales arrangement include probe, packaging or test services sold on a standalone basis, as
well as multiple-element arrangements where probe, 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.
</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
</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">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 unrecovered 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 2003, we completed a review of the estimated useful lives of our packaging equipment. As a
result, effective from July&nbsp;1, 2003, the lives used to depreciate certain packaging equipment were
changed prospectively from five years to seven years. The change reflected longer actual service
periods being achieved and expected to be achieved from similar new equipment. The impact of this
change was a reduction to depreciation expense of $6.8&nbsp;million for the year ended December&nbsp;31,
2003.
</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 for the year ended December&nbsp;31, 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="2%" 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="2%" 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 re-use 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="2%" 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="2%" 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>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" 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>

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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>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 rates 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 2003, 2004 and 2005.
</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, risk-adjusted 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>

<P align="center" style="font-size: 10pt">46
</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 2005, 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 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.
</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 describes 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 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>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>
</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">20.6</TD>
    <TD nowrap>%</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>
</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">26.9</TD>
    <TD>&nbsp;</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>
</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">52.5</TD>
    <TD>&nbsp;</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>
</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="76%">&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 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>2003</B></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>
</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="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 valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</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">16.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.4</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">9.6</TD>
    <TD>&nbsp;</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>
</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">4.0</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">2.3</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">0.0</TD>
    <TD>&nbsp;</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>
</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">0.0</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">Others general expenses (income), net</DIV></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">0.0</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>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&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>
</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>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3.2</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.8</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 nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.6</TD>
    <TD nowrap>)</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="right">&nbsp;</TD>
    <TD align="right">(0.4</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(60.8</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.3</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, 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 3-D 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
</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">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.
</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 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
stock-based 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>

<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: 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
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&nbsp;million
(out of $200.0&nbsp;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&nbsp;million and $834.8&nbsp;million as of December&nbsp;31, 2005 and 2004,
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 was $0.5&nbsp;million in 2005, compared to net foreign currency
exchange loss of $1.1&nbsp;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.
</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 write-off 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 Taxes</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>Year Ended December&nbsp;31, 2004 Compared to Year Ended December&nbsp;31, 2003</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 $769.1&nbsp;million in 2004, an increase of 102.0% compared to $380.7&nbsp;million in
2003. The increase was mainly from ChipPAC&#146;s operations which were consolidated from August&nbsp;5, 2004
and an increase in unit shipments. Following our merger, revenue attributable to ChipPAC&#146;s
operations has had a relatively larger impact on our packaging revenues than on our test revenues.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our packaging revenue in 2004 increased 161.6% to $472.8&nbsp;million compared to 2003. Unit
volumes of our total packaging increased 244.9% in 2004 compared to 2003, and contributed to an
increase of $267.2&nbsp;million in our net revenues. Average selling prices for our services have
generally declined over product life cycles. Average selling prices per pin for packaging services
in 2004 increased 5.3% compared to 2003, primarily due to changes in product mix and contributed to
an increase of $24.9&nbsp;million in our net revenues. Test revenue in 2004 increased 47.9% to $295.7
million compared to 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2004, revenues from the communications market increased 108.2% over 2003, and contributed
60.1% of our net revenues in 2004 compared to 58.3% of our net revenues in 2003. The revenue from
the communications market remained relatively strong with continued demand for more complex, higher
functionality mobile phone and infrastructure products. Revenue from the personal computers market
increased 53.8% over 2003 and contributed 22.7% of our net revenues in 2004. We expect to continue
to be dependent on the communications and personal computers markets for substantially all of our
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 2004 was $125.6&nbsp;million, an increase of $72.9&nbsp;million compared to $52.7
million in 2003. Gross margin as a percentage of net revenues was 16.3% in 2004 compared to 13.8%
in 2003. In 2004, 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.
Overall equipment utilization was approximately 69% in 2004 compared to 66% in 2003. We continued
to experience pressure to reduce average selling prices in 2004. 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 2004 when compared to 2003.
</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 $85.0&nbsp;million in 2004 compared to $36.5
million in 2003, an increase of 132.9% compared to 2003. As a percentage of net revenues, selling,
general and administrative expenses were 11.0% in 2004, compared to 9.6% in 2003. The increase in
selling, general and administrative expenses was primarily due to the inclusion of merger and
integration expenses and ChipPAC expenses which amounted to $41.2&nbsp;million in 2004, inclusive of the
amortization of the intangible assets which amounted to $21.1&nbsp;million and stock-based compensation
expenses of $0.7&nbsp;million mainly resulting from the expensing of the unearned compensation on
unvested options recorded in the ChipPAC acquisition. Continued measures to control costs and
manage discretionary expenses in 2004, were partially offset by the additional headcount employed
in 2004.
</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 2004 were $17.6&nbsp;million compared to $15.3&nbsp;million in
2003, an increase of $2.3&nbsp;million. Research and development expenses had increased primarily due to
the inclusion of ChipPAC expenses which amounted to $6.1&nbsp;million, inclusive of the amortization of
the acquired intangible assets which amounted to $1.3&nbsp;million in 2004. However, expenses were
partially offset by a reduction in expenses due to higher government grant income, depreciation
savings from the change in equipment useful lives and continued cost control.
</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 valuation of goodwill. Based on the
valuation, we took a special, non-cash charge of $453.0&nbsp;million in our operating results in 2004.
This charge does not affect operating results of prior periods and will have no future cash impact.
The goodwill arose from the purchase accounting for the acquisition of ChipPAC. The majority of the
purchase price was derived from share values near the announcement date as required by U.S. GAAP
and resulted in $974.4&nbsp;million of goodwill. There was no goodwill impairment in 2003.
</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 $24.4&nbsp;million in 2004 compared to $9.2&nbsp;million in 2003. Net interest
expense consisted of interest income of $4.4&nbsp;million and interest expense of $28.8&nbsp;million in 2004
and interest income of $4.8&nbsp;million and interest expense of $14.0&nbsp;million in 2003. The decrease in
interest income in 2004 was primarily due to lower yields on the marketable debt 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.
Total outstanding interest-bearing debt was $834.8&nbsp;million and $371.7&nbsp;million as of December&nbsp;31,
2004 and 2003, 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 loss was $1.1&nbsp;million in 2004, compared to net foreign currency
exchange gain of $1.6&nbsp;million in 2003. 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.
</DIV>




<P align="center" style="font-size: 10pt">50
</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 Taxes</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
$7.9&nbsp;million in 2004 compared to $0.7&nbsp;million in 2003.
</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 revenue, for the eight fiscal quarters ended December&nbsp;31, 2005. 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</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>June</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>September</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>March</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>June</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>September</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December</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>31, 2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>30, 2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>30, 2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>30, 2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>31, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>30, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>30, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>31, 2005</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><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>
</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">$</TD>
    <TD align="right">132,328</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">138,995</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">231,951</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">265,847</TD>
    <TD>&nbsp;</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>
</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">(111,949</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(114,358</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(193,600</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(223,634</TD>
    <TD nowrap>)</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>
</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">20,379</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,637</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,351</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,213</TD>
    <TD>&nbsp;</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>
</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"><!-- 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>
    <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">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">10,252</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,648</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,286</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,778</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,285</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,766</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,041</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,679</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">3,086</TD>
    <TD>&nbsp;</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">5,781</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,867</TD>
    <TD>&nbsp;</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>
</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">&#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>
    <TD>&nbsp;</TD>
    <TD>&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">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">&#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">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&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">Other general expenses (income), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(37</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(511</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(39</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">(7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</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">13,301</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,040</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,078</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">493,718</TD>
    <TD>&nbsp;</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>
</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>&nbsp;</TD>
    <TD align="right">7,078</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,597</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,273</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(451,505</TD>
    <TD nowrap>)</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>
</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">(3,328</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,620</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,365</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,073</TD>
    <TD nowrap>)</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>
</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">1,026</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,299</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">(1,000</TD>
    <TD nowrap>)</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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other non-operating income
(expenses), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">81</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(435</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 nowrap align="left">&nbsp;</TD>
    <TD align="right">(144</TD>
    <TD nowrap>)</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>
</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 other income (expenses), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,221</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,354</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,652</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,217</TD>
    <TD nowrap>)</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>
</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"><!-- 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>
    <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">Income (loss)&nbsp;before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,857</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,243</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,379</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(461,722</TD>
    <TD nowrap>)</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>
</TR>
<TR valign="bottom">
    <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">(509</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(123</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 nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,549</TD>
    <TD nowrap>)</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>
</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">Income (loss)&nbsp;before minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,348</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,092</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(467,271</TD>
    <TD nowrap>)</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>
</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">(282</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(463</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,352</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,731</TD>
    <TD nowrap>)</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>
</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">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,066</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,657</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(7,444</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(469,002</TD>
    <TD nowrap>)</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>
</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">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"><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 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</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>June</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>September</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>March</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>June</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>September</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December</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>31, 2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>30, 2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>30, 2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>30, 2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>31, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>30, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>30, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>31, 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 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">(84.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(82.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(83.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(84.1</TD>
    <TD nowrap>)</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>
</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">15.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.9</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">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>
</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">7.7</TD>
    <TD>&nbsp;</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">12.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.1</TD>
    <TD>&nbsp;</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>
</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">2.3</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">2.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.2</TD>
    <TD>&nbsp;</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>
</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">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">170.4</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">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">0.0</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">0.3</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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other general expenses (income), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.5</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">0.0</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 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">10.1</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">14.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">185.7</TD>
    <TD>&nbsp;</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>
</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">5.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(169.8</TD>
    <TD nowrap>)</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>
</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">(2.5</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">(3.6</TD>
    <TD nowrap>)</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">(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>
</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">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</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">(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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other non-operating income (expenses), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.3</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">(0.1</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>&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>
</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 other income (expenses), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.9</TD>
    <TD nowrap>)</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>
</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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <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">Income (loss)&nbsp;before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(173.7</TD>
    <TD nowrap>)</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>
</TR>
<TR valign="bottom">
    <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">(0.4</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">(0.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.1</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">(0.5</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>
</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">Income (loss)&nbsp;before minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.7</TD>
    <TD>&nbsp;</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">(175.8</TD>
    <TD nowrap>)</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>
</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">(0.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.3</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>
    <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>
</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">Net income (loss)</DIV></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">3.4</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">(176.4</TD>
    <TD nowrap>)%</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>
</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: 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, cash equivalents and marketable
securities, which amounted to $260.2&nbsp;million as of December&nbsp;31, 2005. 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
$309.8&nbsp;million, of which $124.3&nbsp;million was utilized as of December&nbsp;31, 2005. 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 and to replace packaging and testing
equipment from time-to-time. We expect this to be approximately $300.0&nbsp;million in 2006, as our
capital expenditure spending continues to be targeted at demand that we see from our customers and
the expansion of our facilities in China. We spent $277.7&nbsp;million on capital expenditures in 2005,
compared to $270.8&nbsp;million in 2004.
</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,
as well as capital lease and debt service repayment obligations for 2006. 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: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Companies (Amendment) Act 2005 of Singapore (Companies Amendment Act), which became
effective on January&nbsp;30, 2006, introduced key amendments to the Companies Act, Chapter&nbsp;50 of
Singapore (Companies Act). 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, we are considering implementing a share repurchase program and amending our
employee share plans to, among other things, allow us the flexibility to deliver repurchased
ordinary shares held in treasury (instead of issuing new ordinary shares) to eligible plan
participants. If our Board of Directors determines that it would be in the best interest of our
Company and our shareholders to adopt a share repurchase program, we expect to seek shareholders&#146;
approval to adopt a share repurchase program within specified mandates relating to maximum
repurchase price and volume and timing and manner of repurchases at our next annual general meeting
of shareholders to
</DIV>

<P align="center" style="font-size: 10pt">52
</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">be held in April&nbsp;2006. Any such repurchases would be made in compliance with Rule&nbsp;10b-18 under
the Securities and Exchange Act of 1934, as amended (Exchange Act). 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: 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, 2005, our total debt outstanding consisted of $821.7&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, $50.0&nbsp;million of 8.0% convertible subordinated notes due 2011, $150.0
million of 2.5% convertible subordinated notes due 2008, and other long-term and short-term
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
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&nbsp;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.
</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>

<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 Oversea-Chinese 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;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>Off-Balance Sheet Arrangements</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other than the guarantee provided on our 2.5% convertible subordinated notes due 2008, 6.75%
senior notes due 2011 and 7.5% senior notes due 2010 (see Note 28: Condensed Consolidating
Financial Information), and the tax guarantee to the South Korean Tax Authorities as discussed
below, we have no performance guarantees. We also have no 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 $406.7&nbsp;million as of December&nbsp;31, 2005.
</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, and other agreements as
of December&nbsp;31, 2005, were as follows:
</DIV>

<P align="center" style="font-size: 10pt">53
</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="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<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></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">35,589</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">35,589</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<SUP style="font-size: 85%; vertical-align: text-top">(1)(2)</SUP></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">125,874</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">125,874</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.5% convertible subordinated notes due 2008</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">8% convertible subordinated notes due 2011</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">50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">6.75% senior notes due 2011</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">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" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">7.50% senior notes due 2010</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">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Capital lease obligations</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,771</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Long-term loans</DIV></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">41,041</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,921</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67,613</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Short-term loans</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">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</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 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 commitments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">42,633</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">356,184</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">157,921</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">265,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">821,738</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>
<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: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">$</TD>
    <TD align="right">13,795</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">19,878</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">17,156</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">61,819</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">112,648</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">4,640</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,282</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,282</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,204</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">875</TD>
    <TD>&nbsp;</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">1,625</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">147,373</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">147,373</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">121,822</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">121,822</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 off balance sheet commitments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">288,505</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,910</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,438</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,819</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">406,672</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">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total commitments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">331,138</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">386,094</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">184,359</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">326,819</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,288,410</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>

</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
Cross-Complaint against ChipPAC, Amkor and Sumitomo Bakelite, Ltd., the Japanese manufacturer of
the allegedly defective epoxy mold compound. On April&nbsp;14, 2005, we reached a resolution with
Seagate with respect to this litigation. As part of a broader settlement agreement among all
parties to this matter, we had agreed to pay a fee in consideration of a release from all claims
related to this litigation. The amount related to the settlement is being paid by our Company&#146;s
insurer.
</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. Due
to the inherent uncertainties of the lawsuit, we cannot accurately predict the ultimate outcome.
The final resolution of the lawsuit could result in significant liability 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;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 $16.7&nbsp;million based on the exchange rate as
of January&nbsp;31, 2006) 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 on the transactions in question. ChipPAC has appealed the assessment through
the NTS&#146;s Mutual Agreement Procedure (MAP)&nbsp;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
</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">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 $2.8&nbsp;million
based on the exchange rate as of January&nbsp;31, 2006) was made on January&nbsp;9, 2004, for the interest from October&nbsp;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. In the event that
we are not successful with the appeal, the maximum amount payable including potential interest and
local surtax estimated to be 31.6&nbsp;billion South Korean Won
(approximately $32.9&nbsp;million based on the exchange rate as of
January&nbsp;31, 2006). As of
December&nbsp;31, 2005, 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 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 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 (premium)&nbsp;on certain of our
outstanding 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 2005, non-cash related items included $281.9&nbsp;million
related to depreciation and amortization (including amortization of capitalized debt issuance costs
and leasing prepayments), $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, 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>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2004, cash provided by operations was $136.6&nbsp;million compared to $82.5&nbsp;million in 2003.
Cash provided and used by operations is calculated by adjusting our net income (loss)&nbsp;by non-cash
related items such as depreciation and amortization, accretion of discount (premium)&nbsp;on certain of
our outstanding 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, non-cash related items included $453.0&nbsp;million of
goodwill impairment charges, $216.3&nbsp;million related to depreciation and amortization, $11.4&nbsp;million
from the accretion of discount and premium, $0.1&nbsp;million from
gain on sale of assets, $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 inventories, other receivables, prepaid expenses
and other assets and decreases in accounts payable, accrued operating expenses and other payables.
Working capital source of cash included decrease in accounts receivable and amounts due from
affiliates.
</DIV>

<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 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: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2004, cash used in investing activities was $264.8&nbsp;million compared to $174.3&nbsp;million in
2003. The primary usage of cash in investing activities was related to the acquisition of property
and equipment of $287.6&nbsp;million in 2004 and $209.3&nbsp;million in 2003. The increase in capital
expenditure is directly related to our increase in revenues and forecasted demand from customers.
In 2004 and 2003, we invested in marketable securities which amounted to $160.9&nbsp;million and $43.9
million, respectively, and received proceeds from the sale or maturity of our marketable securities
of $177.2&nbsp;million and $83.3&nbsp;million, respectively. In 2004, we recorded $7.2&nbsp;million of net cash
acquired in the merger with ChipPAC.
</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>Cash Flows From Financing Activities</I></B>
</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 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
million, respectively, were provided by the issuance of new shares through the employee share
option scheme and the employee share purchase plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2004, cash provided by financing activities was $41.1&nbsp;million compared to cash provided by
financing activities of $234.7&nbsp;million in 2003. In 2004, $107.6&nbsp;million was borrowed and $81.0
million was repaid on our borrowings and debts as compared to $49.8&nbsp;million and $47.1&nbsp;million,
respectively, in 2003. In 2004, we raised $210.5&nbsp;million from the issue of our 6.75% senior notes
due 2011, net of expenses, and repurchased the $165.0&nbsp;million face value 12.75% ChipPAC senior
notes at an aggregate consideration of $175.5&nbsp;million and repurchased $16.5&nbsp;million aggregate
principal of our 1.75% convertible notes at an aggregate consideration of $18.1&nbsp;million. In 2003,
we raised $112.3&nbsp;million from the issue of a $115.0&nbsp;million zero coupon notes due 2008, net of
expenses. In addition, $7.2&nbsp;million and $12.9&nbsp;million of capital lease payments were made in 2004
and 2003, respectively. In 2004 and 2003, $2.0&nbsp;million and $117.5&nbsp;million, respectively, were
provided by the issuance of new shares.
</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 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&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 set-off against the income derived in the previous years. We received a partial
refund of taxes amounting to $4.6&nbsp;million in April&nbsp;2005. 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 2003, hedge accounting has not been applied as the contracts entered into do not qualify as
hedges under U.S. GAAP. Gains and losses on these contracts have been recorded as foreign currency
gains or losses. As of December&nbsp;31, 2003, we had no foreign currency forward contracts outstanding
or any other derivative financial instruments, except for a premium deposit of $10.0&nbsp;million
denominated in Singapore dollars. The premium deposit is entered with Citibank, whereby interest
earned on the deposit is at an enhanced rate of 3.95%. Upon its maturity on January&nbsp;26, 2004,
Citibank redeemed the principal and interest in U.S. dollars at the pre-determined strike price.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2004 and 2005, we 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 Malaysian Ringgit and to benefit from our expectations of future exchange rate
fluctuations. As of December&nbsp;31, 2005, our Company has a series of foreign currency forward
contract with total contract value of approximately $68.0&nbsp;million. In 2005, our Company
additionally entered into a series of gold forward contract with total contract value of
approximately $7.0&nbsp;million to hedge against fluctuations in gold prices. All forward contracts
qualify for hedge accounting as defined by SFAS No.&nbsp;133, &#147;Accounting for Derivative Instruments and
Hedging Activities.&#148;
</DIV>

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</DIV>

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<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 foreign currencies, like the Singapore dollar, the
South Korean Won, the Malaysian Ringgit, the Chinese Renminbi 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">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: 6pt"><B>Recent Accounting Pronouncements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In November&nbsp;2004, the FASB issued SFAS No.&nbsp;151, &#147;Inventory Costs, an amendment of ARB No.&nbsp;43,
Chapter&nbsp;4&#148; (SFAS 151), which requires certain abnormal expenditures to be recognized as expenses in
the current period. It also requires that the amount of fixed production overhead allocated to
inventory be based on the normal capacity of the production facilities. The standard is effective
for the fiscal year beginning January&nbsp;1, 2006. It is not expected that SFAS No.&nbsp;151 will have a
material effect on our consolidated financial statements.
</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; (SFAS 123) 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 fair-value based measurement method in
accounting for share-based payment transactions with employees and to record compensation expense
for all stock awards granted, and to awards modified, repurchased or cancelled after the required
effective date. In addition, we 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) will be effective for annual periods beginning after June&nbsp;15,
2005, which is our first quarter of fiscal 2006. We presently account for stock-based compensation
under the intrinsic method. See Note 1(v) of our audited consolidated financial statements for the
effect on reported net loss if we had accounted for our share options and employee share purchase
rights using the fair value recognition provisions of SFAS 123.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March&nbsp;2005, the SEC released SEC Staff Accounting Bulletin No.&nbsp;107, &#147;Share-Based Payment&#148;
(SAB 107). SAB 107 provides the SEC staff position regarding the application of SFAS 123(R). SAB
107 contains interpretive guidance related to the interaction between
<FONT style="white-space: nowrap;">SFAS&nbsp;123(R)</FONT> and certain SEC
rules and regulations, as well as provides the staff&#146;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. We are currently reviewing the
requirements of <FONT style="white-space: nowrap;">SFAS 123(R)</FONT> and SAB 107 and expect that the adoption of <FONT style="white-space: nowrap;">SFAS 123(R)</FONT> will have a
material impact on our consolidated results of operations and earnings per share.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In May&nbsp;2005, the FASB issued Statement No.&nbsp;154, &#147;Accounting Changes and Error Corrections&#148;
(SFAS 154). SFAS 154 requires retrospective application to prior periods&#146; financial statements of
changes in accounting principle. It also requires that the new accounting principle be applied to
the balances of assets and liabilities as of the beginning of the earliest period for which
retrospective application is practicable and that a corresponding adjustment be made to the opening
balance of retained earnings for that period rather than being reported in an income statement. The
statement will be effective for accounting changes and corrections of errors made in fiscal years
beginning after December&nbsp;15, 2005. We are currently evaluating the effect of the adoption of SFAS
154 on our consolidated financial position or results of operations but do not expect it to have a
material impact.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In September&nbsp;2005, the FASB ratified Emerging Issues Task Force Issue No.&nbsp;04-13, &#147;Accounting
for Purchases and Sales of Inventory with the Same Counterparty&#148; (EITF 04-13). EITF 04-13 discusses
whether inventory purchase and sales transactions with the same counterparty that are entered into
in contemplation of one another should be combined and treated as a nonmonetary exchange and
addresses (a)&nbsp;under what circumstances should two or more transactions with the same counterparty
(counterparties)&nbsp;be viewed as a single nonmonetary transaction within the scope of APB Opinion No.
29, &#147;Accounting for Nonmonetary Transactions&#148; (APB 29) and SFAS No.&nbsp;153, &#147;Exchanges of Nonmonetary
Assets, an Amendment of APB 29&#148; (SFAS 153) and (b)&nbsp;if nonmonetary transactions within the scope of
APB 29 and SFAS 153 involve inventory, are there any circumstances under which the transactions
</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">should be recognized at fair value. The pronouncement is effective for new inventory
arrangements entered into, or modifications or renewals of existing inventory arrangements
occurring in interim or annual reporting periods beginning after March&nbsp;15, 2006. We do not expect
that this pronouncement will have a material effect on our financial statements.
</DIV>
<DIV align="left">
<A name="107"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES</B>
</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, 2006) and position of each
director and member of senior management:
</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="35%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="56%">&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">
    <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<SUP style="font-size: 85%; vertical-align: text-top">(1)(2)(3)(4)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">72</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman of our Board of Directors</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Lim Ming Seong<SUP style="font-size: 85%; vertical-align: text-top">(5)</SUP>
</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">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">47</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">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Peter Seah Lim Huat<SUP style="font-size: 85%; vertical-align: text-top">(6)(7)</SUP>
</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">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Tay Siew Choon<SUP style="font-size: 85%; vertical-align: text-top">(8)(9)</SUP>
</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">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Steven H. Hamblin<SUP style="font-size: 85%; vertical-align: text-top">(1)(6)(9)(10)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">57</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">Richard J. Agnich<SUP style="font-size: 85%; vertical-align: text-top">(1)(7)(11)</SUP>
</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">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Robert W. Conn<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP>
</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">R. Douglas Norby<SUP style="font-size: 85%; vertical-align: text-top">(1)(10)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">70</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<SUP style="font-size: 85%; vertical-align: text-top">(1)(8)</SUP>
</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">
    <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">52</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Vice President, Chief Operating Officer</TD>
</TR>
<TR valign="bottom">
    <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">39</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Vice President, Chief Financial Officer</TD>
</TR>
<TR valign="bottom">
    <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">46</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Vice President, Chief Technology Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Jeffrey R. Osmun
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">42</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Vice President, Worldwide Sales and Marketing</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">43</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Vice President, Chief Information 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">40</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Vice President, Chief Strategy Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Dennis W. Daniels
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">51</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Vice President, Human Resources</TD>
</TR>
<TR valign="bottom">
    <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">48</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate 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 style="font-size: 3pt"><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 style="font-size: 3pt"><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 style="font-size: 3pt"><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.</TD>
</TR>

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

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>Chairman of the Budget Committee.</TD>
</TR>

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

<TR valign="top">
    <TD nowrap align="left">(8)</TD>
    <TD>&nbsp;</TD>
    <TD>Member of the Budget Committee.</TD>
</TR>

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

<TR valign="top">
    <TD nowrap align="left">(9)</TD>
    <TD>&nbsp;</TD>
    <TD>Member of the Executive Committee.</TD>
</TR>

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

<TR valign="top">
    <TD nowrap align="left">(10)</TD>
    <TD>&nbsp;</TD>
    <TD>Member of the Audit Committee.</TD>
</TR>

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

<TR valign="top">
    <TD nowrap align="left">(11)</TD>
    <TD>&nbsp;</TD>
    <TD>Chairman of the Audit Committee.</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 2005. The average attendance by
directors at Board meetings they were scheduled to attend was 93%.
</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>

<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;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 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
December&nbsp;31, 2004. Mr.&nbsp;Tay Siew Choon was an employee of STPL until March&nbsp;31, 2004 and immediately
thereafter became a Corporate Advisor of STPL until December&nbsp;31, 2004.
</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.
He was appointed Chairman of our Board of Directors in August&nbsp;2002 and re-appointed to our Board of
Directors in 2003, 2004 and 2005. Mr.&nbsp;Wofford was with Texas Instruments, Inc. for 33&nbsp;years before
leaving as Senior Vice-President to join Farr Company in 1991. He was the Chairman, CEO 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: 6pt">&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 became our Deputy Chairman in June&nbsp;1998 and was re-elected to our Board of
Directors in 2001. 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>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&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 was appointed our President and Chief Executive Officer on June&nbsp;26, 2002. He
was appointed to our Board of Directors on the same date. 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: 6pt">&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 was appointed to our Board of Directors in 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 the
Institute of Defence and Strategic 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: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Tay Siew Choon</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Tay Siew Choon was appointed to our Board of Directors in July&nbsp;2002. He is the Deputy
Chairman of Green Dot Capital Pte Ltd, a subsidiary of Temasek Holdings. He was the Chief
Operating Officer and managing director of STPL until April&nbsp;1, 2004 and
</DIV>

<P align="center" style="font-size: 10pt">59
</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 Corporate Advisor of STPL until December&nbsp;31, 2004. He is also the Chairman of SNP
Corporation Ltd and Co-Chairman of NexGen Financial Holdings Limited. He is also a board member of
Chartered, Straco Corporation Limited, Pan-United Corporation Ltd and SNP-Leefung Holdings Limited.
Mr.&nbsp;Tay graduated from Auckland University in 1970 with a Bachelor of Engineering in Electrical
Engineering under the Colombo Plan Scholarship and a Master of Science in System Engineering from
the former University of Singapore in 1974.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&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 was appointed to our Board of Directors in 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 Semiconductor
Manufacturing Ltd. He received his Bachelor of Science in Civil Engineering from the University of
Missouri, Columbia and his Master of Science in Industrial Administration from Carnegie-Mellon
University.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&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 was appointed to our Board of Directors in 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 co-founder 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: 6pt">&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 was appointed to our Board of Directors in 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 co-founded 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 nine
private companies: NEXX Systems, Inc., Pivotal Systems, Inc., PathScale, Inc., Nuelight Inc., 3Leaf
Networks, Inc., Ascendent Systems, Inc., Quorum Systems, Inc., Tarari Systems, Inc. and Novowave,
Inc. He is a member of one other public company board, Intersil Corporation, and serves on
Intersil&#146;s nominating and compensation committees. 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>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>R.&nbsp;Douglas Norby</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;R. Douglas Norby was appointed to our Board of Directors in 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., Jazz Semiconductor, Inc. and Neterion, Inc., and serves as the Chairman of
Alexion&#146;s, Jazz Semiconductor&#146;s and Neterion&#146;s audit committee. He received his B.A. in Economics
from Harvard University and M.B.A. from Harvard Business School.
</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: 6pt">&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 was appointed to our Board of Directors in 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 since November&nbsp;2004. 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. 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"><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 was appointed 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>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&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: 6pt">&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, before
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 chip scale 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: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Jeffrey R. Osmun</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Jeffrey R. Osmun was appointed Corporate Vice President, Worldwide Sales and Marketing.
Operations in September&nbsp;2002. Mr.&nbsp;Osmun joined us in September&nbsp;1999 as Director of Sales, U.S.
Central Region and was later appointed Vice President, North American Sales. Prior to that, he
served as National Sales Manager of Kyocera America Inc. and, before that, held the post of
Director of Development &#151; College of Engineering and Applied Sciences for Lehigh University. Mr.
Osmun received his Bachelor of Science in Mechanical Engineering from Lehigh University in 1985.
</DIV>

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

<P align="center" style="font-size: 10pt">61
</DIV>

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

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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: 6pt">&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: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Dennis W. Daniels</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Dennis W. Daniels was appointed Corporate Vice President, Human Resources in August&nbsp;2004.
Mr.&nbsp;Daniels was Vice President, Corporate Administration and Human Resources at ChipPAC prior to
the merger, a position he had held since November&nbsp;2003. Prior to joining ChipPAC, he held several
executive human resources positions at Solectron Corp, Chase Manhattan Mortgage Corp, PepsiCo and
Tenneco Oil Corp. Before that, Mr.&nbsp;Daniels was an officer in the United States Marine Corps. Mr.
Daniels holds a Bachelor of Science degree in Journalism from the University of Kansas and a
Master&#146;s degree in Public Administration from the University of Missouri.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&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 was appointed Corporate Vice President, 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.
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>

<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;In 2005, the aggregate amount of
compensation and bonus paid for all of our directors and senior management was approximately $4.7&nbsp;million.
In addition, a bonus in the amount of $360,799 was approved for
Mr.&nbsp;Tan Lay Koon and bonuses in the aggregate amount of $503,893 were approved for our
senior management (excluding Mr. Tan, our Executive Director) by our Employee Resources and Compensation
Committee with respect to services rendered in 2005 which will be paid 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="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>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>Directors</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Directors</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(1)</B></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Total</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(2)</B></SUP></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 align="left">$</TD>
    <TD align="right">110,840</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">110,840</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>&nbsp;</TD>
    <TD align="right">58,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58,000</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 align="left">$</TD>
    <TD align="right">1,079,518</TD>
    <TD><SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>1,097,518</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>&nbsp;</TD>
    <TD align="right">47,160</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,160</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tay Siew Choon</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,000</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>&nbsp;</TD>
    <TD align="right">70,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,000</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>&nbsp;</TD>
    <TD align="right">45,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <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>&nbsp;</TD>
    <TD align="right">35,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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>&nbsp;</TD>
    <TD align="right">41,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,000</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>&nbsp;</TD>
    <TD align="right">41,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">3,129,007</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">1,079,518</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">489,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,697,525</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 2006 for the payment of directors&#146;
fees of approximately $489,000 for the financial year ended December&nbsp;31, 2005.</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 stock 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 bonus in the amount of $601,332 paid in 2005 with respect to services rendered in 2004.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">62
</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;As of January&nbsp;31, 2006, we have ten directors on our Board. Our executive director does
not receive any directors&#146; fees. Our non-executive directors are paid directors&#146; 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&#146; fees for 2005 will be submitted for approval by our shareholders at our annual general
meeting to be held in April&nbsp;2006.
</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 have engaged an outside consultant to advise us on our overall compensation scheme. 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 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 required to be cancelled. As part of our re-evaluation of our
overall compensation scheme, we are considering implementing a share repurchase program and
amending our employee share plans to, among other things, allow us the flexibility to deliver
repurchased ordinary shares held in treasury (instead of issuing new ordinary shares) to eligible
plan participants. If our board of directors determines that it would be in the best interest of
our Company and our shareholders, we expect to seek 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 next annual general
meeting of shareholders to be held in April&nbsp;2006. Any such repurchases would be made in compliance
with Rule&nbsp;10b-18 under the Exchange Act. We also understand that Temasek Holdings has obtained a ruling from the
Securities Industry Council of Singapore that, subject to certain conditions, Temasek Holdings and its concert parties
will be exempted from making a general offer for our Company if Temasek Holdings&#146; interest in our Company&#146;s shares
increases by more than 1% in any six-month period solely as a result of the purchases by our Company of our Company&#146;s shares
under a share repurchase program.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We expect that the revised compensation scheme would continue to include a short term (annual)
incentive plan, as currently in place, to reward our senior executives and other eligible employees
for their performance and contributions. The short term incentive plan is and we anticipate that it
would continue to be funded by a pool of monies that we would set aside based on a predetermined
aggregate percentage of payroll. Payment in 2005 is, and we anticipate it will continue to be in
2006, dependant on the level of achievement against corporate financial targets as well as plant
and functional goals. We expect that each participant would continue to have 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 short term incentive plan, we anticipate that senior executives and other
designated employees would also be eligible to receive share options under our employee share
option plan. Grants under the employee share option plan would be determined by job level and individual performance and
vesting would be over a four-year period<B>.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We anticipate that the employee share option plan would be phased out over a one-year period
and replaced by long term incentives in the form of restricted shares. Therefore, we anticipate
that one-half of the share based compensation for 2006 would be granted pursuant to the employee share option plan
and the other half would be granted pursuant to the restricted share plan. Grants of restricted
shares would be based on our Company&#146;s performance against certain financial goals and vesting would be over a three-year period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Further, it is anticipated that Mr.&nbsp;Tan Lay Koon and a very limited group of the most senior
executives would be eligible to participate in an additional restricted share plan. Under the
proposed restricted share plan, fully vested shares would be granted based on grant targets for
each eligible participant based on our Company&#146;s achievement of certain financial &#147;stretch&#148;
goals. Finally, we expect that Mr.&nbsp;Tan Lay Koon and a very limited group of the most senior
executives would participate in a modified long term cash incentive plan based on measuring
Economic Value Added (EVA). EVA improvement year over year would fund 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).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to 2005, the group incentive EVA pool was 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 was 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 senior executive had his or her own notional EVA bank account. The bonus
earned each year was added to his or her notional EVA bank account, and payment was 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 is under review. It is
anticipated that this plan will be modified for 2006 as described above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not provide any post-retirement benefits, other than pursuant to the plans required or
permitted by local regulations and described below.
</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: 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 $4.0
million for 2003, $4.6&nbsp;million for 2004 and $4.8&nbsp;million for 2005.
</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 the year ended December&nbsp;31, 2005 were approximately $0.7&nbsp;million and $1.9&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 and $21,200 for such retirement payments for the period August&nbsp;5, 2004
to December&nbsp;31, 2004 and for the year ended December&nbsp;31, 2005, 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;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 the
year ended December&nbsp;31, 2005, the aggregate expenses under this plan were $1.2&nbsp;million and $1.8
million, respectively.
</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 contributes its pension obligations to Central Trust of China, as required by the
Labor Standards Law. 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. Winstek&#146;s total expenses under this plan were
$46,000 for 2003, $76,000 for 2004 and $55,000 for 2005.
</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 to which
we contribute up to 6% of eligible employee compensation at the rate of 50% of employee
contributions to the 401(k) plan. Our matching contributions under the 401(k) plan were $258,000,
$320,000 and $395,000 for the year ended December&nbsp;31, 2003, 2004 and 2005, 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">&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 lump-sum payment upon termination of their employment with STATS ChipPAC
Korea Ltd. (formerly ChipPAC Korea Company 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 period August&nbsp;5, 2004 to December&nbsp;31, 2004 and for the year ended December&nbsp;31, 2005
were approximately $1.8&nbsp;million and $6.3&nbsp;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 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 the
year ended December&nbsp;31, 2005 were approximately $0.7&nbsp;million and $2.1&nbsp;million, 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 ten
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. Accordingly, the appointments
of Mr.&nbsp;Peter Seah Lim Huat, Mr.&nbsp;Steven H. Hamblin and Mr.&nbsp;Richard J. Agnich will expire and we will
seek shareholders&#146; approval for their re-appointment at the next annual general meeting of
shareholders to be held in 2006. 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 re-election.
Directors who are aged 70 or older are eligible for re-election upon the approval of the
shareholders of our Company by way of an ordinary resolution passed at an annual general meeting
and, if re-elected, will hold office
</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">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 re-appointment at the next annual general meeting of shareholders to be held in 2006.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of January&nbsp;31, 2006, Temasek Holdings, through its wholly-owned subsidiary, Singapore
Technologies Semiconductors Pte Ltd (STSPL), beneficially owned approximately 36.03% of our
outstanding ordinary shares. Temasek Holdings, wholly-owned by the Minister of Finance
(Incorporated) for Singapore, a statutory body constituted by the Minister for Finance
(Incorporation) Act (Cap. 183), owns 100% of the ordinary shares of STSPL. As a result, Temasek
Holdings will have 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.
</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>

<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: 6pt"><I>(i)&nbsp;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 non-executive
directors and determined by our Board of Directors to be independent under the Nasdaq Marketplace Rules. Since 2004 and
currently, the members of the Audit Committee are Mr.&nbsp;Richard J. Agnich (Chairman), Mr.&nbsp;Steven H.
Hamblin and Mr.&nbsp;R. Douglas Norby. 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 four meetings in 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(ii)&nbsp;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;Steven H. Hamblin. In January&nbsp;2006, Mr.&nbsp;Seah
resigned as Chairman of the Executive Resource &#038; Compensation Committee and Mr.&nbsp;Wofford was
appointed Chairman. Also in January&nbsp;2006, Mr.&nbsp;Lim Ming Seong resigned as a member of the
Executive Resource &#038; Compensation Committee and Mr.&nbsp;Hamblin 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 long term sustainability of business and
long term shareholders&#146; return.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to July&nbsp;2005, the specific duties and responsibilities of the Executive Resource &#038;
Compensation Committee included 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="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Review and approve the compensation policies and incentive programs for key
management executives;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Consider, review and approve the entire specific remuneration package and service
contract terms for each key management executive, except that the compensation of the
Chief Executive Officer was further required to be approved by our Board; and</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">65
</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="6%" 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.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Nasdaq Marketplace Rule&nbsp;4350 (c)&nbsp;regarding director independence was required to be
implemented by foreign private issuers with effect from July&nbsp;31, 2005. Accordingly, in July&nbsp;2005,
our Board adopted a new charter for our Executive Resource &#038; Compensation Committee. From July&nbsp;31,
2005 to December&nbsp;31, 2005, because Mr.&nbsp;Seah and Mr.&nbsp;Lim do not qualify as independent directors
under the Nasdaq Marketplace Rules, any compensation decision with regard to our chief executive
officer or any other executive officers would have been determined by or recommended to the Board
for determination by a majority of our independent directors. Our chief executive officer would
have been required to recuse himself from all deliberations and voting in respect of his
compensation. During such period, the duties and responsibilities of the Executive Resource &#038;
Compensation Committee did not include any compensation decision with regard to our chief executive
officer or any other executive officer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January&nbsp;2006, our Board adopted a new charter for our Executive Resource &#038; Compensation
Committee which became effective on January&nbsp;16, 2006. Our Board has resolved, with effect from
January&nbsp;16, 2006, to rely 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 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:
</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="6%" 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.&nbsp;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="6%" 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 senior management executive. The Executive Resource &#038; Compensation
Committee also reviews and approves all our option plans, stock 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 long term sustainability of business and
long term shareholders&#146; return.
</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 included 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="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Review and approve our Company&#146;s policy for determining executive remuneration
including the remuneration policy with regard to key management executives;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" 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 make recommendations the board with respect to the entire
specific remuneration package and service contract terms for each key management
executive;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" 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="6%" 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 non-executive 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 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(iii)&nbsp;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), Mr.&nbsp;Tay Siew Choon
and Dr.&nbsp;Park Chong Sup. 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 2005.
</DIV>

<P align="center" style="font-size: 10pt">66
</DIV>

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

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(iv)&nbsp;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;Tay Siew
Choon and Mr.&nbsp;Steven H. Hamblin. 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 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(v)&nbsp;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. In 2005, the members of the
Nominating and Corporate Governance Committee were Mr.&nbsp;Charles R. Wofford (Chairman), Mr.&nbsp;Peter
Seah Lim Huat and Mr.&nbsp;Lim Ming Seong. In January&nbsp;2006, Mr.&nbsp;Lim Ming Seong resigned as a member of
the Nominating and Corporate Governance Committee and Mr.&nbsp;Richard J. Agnich was appointed as a
member.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Nasdaq Marketplace Rule&nbsp;4350 (c)&nbsp;regarding director independence was required to be
implemented by foreign private issuers with effect from July&nbsp;31, 2005. Accordingly, in July&nbsp;2005,
our Board adopted a new charter for our Nominating and Corporate Governance Committee. 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;From July&nbsp;31, 2005 to December&nbsp;31, 2005, because Mr.&nbsp;Seah and Mr.&nbsp;Lim do not qualify as
independent directors under the Nasdaq Marketplace Rules, any director nominees would have been
selected by or recommended to the Board for selection by a majority of our independent directors.
During such period, the duties and responsibilities of the Nominating and Corporate Governance
Committee did not include the selection of or recommendation to the Board for selection by a
majority of our independent directors, any director nominees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January&nbsp;2006, our Board adopted a new charter for our Nominating and Corporate Governance
Committee which became effective on January&nbsp;16, 2006. Our Board has resolved, with effect from
January&nbsp;16, 2006, to rely 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>

<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="6%" 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.
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="6%" 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="10%" 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="10%" 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="10%" 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="10%" 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="10%" 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 one meeting in 2005.
</DIV>

<P align="center" style="font-size: 10pt">67
</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. Employees</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2005, we employed 12, 782 full-time employees and 360 temporary employees
or contract employees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2005, approximately 1,488 of our employees at the Icheon, South Korea
facility are 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 2005 and is effective
through April&nbsp;30, 2006. 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>STATS</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>STATS ChipPAC</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>as of December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>as of 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>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>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Function</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">Direct and Indirect Labor (Manufacturing)</DIV></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">10,398</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,376</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Indirect Labor (Administration)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">279</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">653</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,535</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">129</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">231</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:30px; text-indent:-15px">Total<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,004</TD>
    <TD>&nbsp;</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">13,142</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"><B>Location</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">Singapore</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,461</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">3,896</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">China</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</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">3,540</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Malaysia</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">2,310</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,462</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">South Korea</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">2,031</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,424</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Taiwan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">376</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">443</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">562</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">145</TD>
    <TD>&nbsp;</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>
</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">6</TD>
    <TD>&nbsp;</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>
</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<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,004</TD>
    <TD>&nbsp;</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">13,142</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>The approximate 182% increase in headcount was the result of additional hires in 2004 to
support the increase in the volume of our operations and the addition of ChipPAC employees as
a result of the merger with ChipPAC.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>E.&nbsp;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 1,976,627,005 ordinary shares outstanding as of January&nbsp;31, 2006,
each of our directors and senior management officers has 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, 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="32%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="19%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="19%">&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 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">50,000</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 04/23/2006</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">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">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">
    <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>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">68
</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="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="37%">&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">&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" style="border-bottom: 1px solid #000000"><B>Exercisable Period</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<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" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">50,000</TD>
    <TD nowrap valign="top"> <SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.06</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">57,500</TD>
    <TD nowrap valign="top"> <SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.01</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">57,500</TD>
    <TD nowrap valign="top"> <SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0.925</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">10/31/2006 to 10/30/2010</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lim Ming Seong</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">200,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.592</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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 align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">70,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2.885</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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 align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">70,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.99</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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 align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">35,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.91</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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 align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">35,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.06</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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 align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">42,500</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.01</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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 align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">42,500</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0.925</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">10/31/2006 to 10/30/2010</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 align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">500,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">6.93</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">04/20/2001 to 04/19/2010</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">700,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2.826</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">10/19/2001 to 10/18/2010</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">449,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.592</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">04/24/2002 to 04/23/2011</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">325,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2.885</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">04/29/2003 to 04/28/2012</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2,000,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2.2</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">06/26/2003 to 06/25/2012</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">700,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.99</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">08/06/2004 to 08/05/2013</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="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">500,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.91</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">02/17/2005 to 02/16/2014</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">500,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.06</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">08/11/2005 to 08/10/2014</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">600,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.01</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">05/03/2006 to 05/02/2015</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">600,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0.925</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">10/31/2006 to 10/30/2015</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 align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">70,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.99</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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 align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">35,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.91</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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 align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">35,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.06</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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 align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">40,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.01</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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 align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">40,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0.925</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">10/31/2006 to 10/30/2010</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tay Siew Choon</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">70,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.99</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">08/06/2004 to 08/05/2013</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="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">35,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.91</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">02/17/2005 to 02/16/2014</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">35,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.06</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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 align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">37,500</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.01</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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 align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">37,500</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0.925</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">10/31/2006 to 10/30/2010</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 align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">50,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.592</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">04/24/2002 to 04/23/2006</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">70,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2.885</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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 align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">70,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.99</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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 align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">35,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.91</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">35,000</TD>
    <TD nowrap valign="top"> <SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.06</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">37,500</TD>
    <TD nowrap valign="top"> <SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.01</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">37,500</TD>
    <TD nowrap valign="top"> <SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0.925</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">10/31/2006 to 10/30/2010</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Richard J. Agnich</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">20,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.298</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">10/23/2002 to 10/22/2006</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="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">50,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2.885</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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 align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">50,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.99</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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 align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">25,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.91</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">25,000</TD>
    <TD nowrap valign="top"> <SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.06</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">42,500</TD>
    <TD nowrap valign="top"> <SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.01</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">42,500</TD>
    <TD nowrap valign="top"> <SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0.925</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">10/31/2006 to 10/30/2010</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" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">174,000</TD>
    <TD nowrap valign="top"><SUP style="font-size: 85%; vertical-align: text-top"> (2)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.88</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">130,500</TD>
    <TD nowrap valign="top"> <SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0.50</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">130,500</TD>
    <TD nowrap valign="top"> <SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.36</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">37,500</TD>
    <TD nowrap valign="top"> <SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.01</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">37,500</TD>
    <TD nowrap valign="top"> <SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0.925</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">10/31/2006 to 10/30/2010</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" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">174,000</TD>
    <TD nowrap valign="top"> <SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.88</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">130,500</TD>
    <TD nowrap valign="top"> <SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0.50</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">130,500</TD>
    <TD nowrap valign="top"> <SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.36</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">37,500</TD>
    <TD nowrap valign="top"> <SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.01</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">37,500</TD>
    <TD nowrap valign="top"> <SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0.925</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">10/31/2006 to 10/30/2010</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Park Chong Sup</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">130,500</TD>
    <TD nowrap valign="top"> <SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.57</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">10/20/2001 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" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43,500</TD>
    <TD nowrap valign="top"> <SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0.38</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">09/27/2002 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" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">130,500</TD>
    <TD nowrap valign="top"> <SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0.50</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">130,500</TD>
    <TD nowrap valign="top"> <SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.36</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">02/05/2005 to 08/04/2009</TD>
</TR>
<!-- End Table Body -->
<!-- Begin Table Body -->
<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" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">37,500</TD>
    <TD nowrap valign="top"> <SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.01</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">37,500</TD>
    <TD nowrap valign="top"> <SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0.925</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">10/31/2006 to 10/30/2010</TD>
</TR>
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">69
</DIV>

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


<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>


</TABLE>



<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;We have engaged an outside consultant to advise us on our overall compensation scheme.
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 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 required to be cancelled. As part of our re-evaluation of our
overall compensation scheme, we are considering implementing a share repurchase program and
amending our employee share plans to, among other things, allow us the flexibility to deliver
repurchased ordinary shares held in treasury (instead of issuing new ordinary shares) to eligible
plan participants. If our board of directors determines that it would be in the best interest of
our Company and our shareholders, we expect to seek shareholders&#146; approval to adopt a revised
compensation scheme, including a share repurchase program within specified mandates relating to
maximum repurchase price and volume and timing and manner of repurchases, at our next annual
general meeting of shareholders to be held in April&nbsp;2006. Any such repurchases would be made in
compliance with Rule&nbsp;10b-18 under the Exchange Act. See &#147; &#151; B. Compensation of Directors and
Senior Management&#148; for a discussion of anticipated changes to our compensation scheme.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We anticipate that the employee share option plan described below would be phased out over a
one-year period and replaced by long term incentives in the form of restricted shares. Therefore,
we anticipate that one-half of the share based compensation would be granted pursuant to the
employee share option plan and the other half would be granted pursuant to the restricted share
plan. Grants of restricted shares would be based on our Company&#146;s performance against two-year
financial goals and grant targets based on job level. Vesting would be over a three-year period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Further, it is anticipated that Mr.&nbsp;Tan Lay Koon and a very limited group of the most senior
executives would be eligible to participate in an additional restricted share plan. Under the
proposed restricted share plan, fully vested shares would be granted based on grant targets for
each eligible participant based on our Company&#146;s achievement of three-year financial &#147;stretch&#148;
goals.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Share Option Plan</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 collectively 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, 7.2&nbsp;million and 73.0&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 re-named the STATS ChipPAC Ltd. Share Option Plan (STATS
ChipPAC 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
</DIV>

<P align="center" style="font-size: 10pt">70
</DIV>

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



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 of 1986, as amended (Internal Revenue Code).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The aggregate number of ordinary shares that may be issued under the STATS ChipPAC option plan
may not exceed 245&nbsp;million shares (subject to anti-dilution adjustment pursuant to the STATS
ChipPAC option plan).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>STATS ChipPAC Ltd. Employee Share Purchase Plan 2004. </I>In connection with the merger,
effective August&nbsp;5, 2004, our shareholders approved the adoption of the STATS ChipPAC Ltd. Employee
Share Purchase Plan 2004 (ESPP). The purpose of the ESPP is 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 intended to qualify under Sections&nbsp;421 and 423 of the
Internal Revenue Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Participants in the ESPP may elect through payroll deductions or a lump sum contribution to
purchase our ordinary shares or ADSs at a fixed discount.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A maximum aggregate of 130.0&nbsp;million ordinary shares, whether issued in the form of ordinary
shares or ADSs, have been reserved for issuance under the ESPP.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of January&nbsp;31, 2006, options to purchase an aggregate of 123,569,105 ordinary shares were
outstanding, out of which 23,424,000 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;2006 to December&nbsp;2015.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2006, we expect to grant to our directors, officers and employees additional options under
the STATS ChipPAC option plan. The exercise price of such options will be equal to the fair market
value of the underlying ordinary shares on the date of the grant.
</DIV>
<DIV align="left">
<A name="108"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS</B>
</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;Prior to the consummation of our merger with ChipPAC in August&nbsp;2004, STSPL held approximately
59.18% of our outstanding shares. This was reduced to approximately 32.67% following the
consummation of the merger.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Following a restructuring of the Temasek Holdings group of companies on December&nbsp;31, 2004,
Temasek Holdings acquired all of the shareholdings in STSPL held by Temasek Holdings&#146; wholly-owned
subsidiary, STPL. As of January&nbsp;31, 2006, Temasek Holdings, through STSPL, beneficially owns
approximately 36.03% of our outstanding ordinary shares. Temasek Holdings, wholly-owned by the
Minister of Finance (Incorporated) for Singapore, a statutory body constituted by the Minister of
Finance (Incorporation) Act (Cap. 183), owns 100% of the ordinary shares of STSPL As a result,
Temasek Holdings will have significant influence over matters requiring the approval of our
shareholders.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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="3%" 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="3%" 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="3%" 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="3%" 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 January&nbsp;31, 2006 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
</DIV>

<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: 6pt">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="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 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>Number of Shares Beneficially Owned</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Percentage Beneficially Owned </B><SUP style="font-size: 85%; vertical-align: text-top"><B>(3)</B></SUP></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Temasek Holdings<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" colspan="3">712,228,050</TD>
    <TD>&nbsp;</TD>
    <TD align="center" colspan="3">36.03%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">FMR Corp.<SUP style="font-size: 85%; vertical-align: text-top">(2) </SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" colspan="3">291,832,700</TD>
    <TD>&nbsp;</TD>
    <TD align="center" colspan="3">14.76%</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>Temasek Holdings, wholly-owned by the Minister of Finance (Incorporated) for Singapore, a
statutory body constituted by the Minister of Finance (Incorporation) Act (Cap. 183), owns
100% of the ordinary shares of STSPL. Temasek Holdings is deemed to beneficially own our
ordinary shares, which are owned directly by STSPL. Includes 5.32% of shares lent to Deutsche
Bank AG, Singapore Branch, and Morgan Stanley Stanley &#038; Co. International Limited as of
January&nbsp;31, 2006 pursuant to a Global Master Securities Lending Agreement in connection with
the issue of convertible notes due 2008 by STATS 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>FMR Corp. wholly owns Fidelity Management &#038; Research Company. FMR Corp. is deemed to
beneficially own our ordinary shares, which are owned directly by Fidelity Management &#038;
Research Company. Members of the family of Edward C. Johnson, III, Chairman of FMR Corp., are
the predominant owners, directly or through trusts, of Series&nbsp;B shares of common stock of FMR
Corp., representing 49% of the voting power of FMR Corp.</TD>
</TR>

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

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Based on an aggregate 1,976,627,005 ordinary shares outstanding as of January&nbsp;31, 2006.</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 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. Should we adopt a share repurchase program, we understand that Temasek
Holdings has obtained a ruling from the Securities Industry Council of Singapore that, subject to
certain conditions, Temasek Holdings and its concert parties will be exempted from making a general
offer for our Company if Temasek Holdings&#146; interest in our Company&#146;s shares increases by more than 1% in
any six-month period solely as a result of the purchases by our Company of our Company&#146;s shares under a share
repurchase program. See &#147;Item 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 SGX-ST since January&nbsp;31, 2000 and our ADSs have
been traded on the Nasdaq 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, 2006, 482,769,710 of our ordinary shares, representing 24.42% of our
outstanding shares, were held by a total of 20 holders of record with addresses in the United
States. Because many of our ordinary shares and ADSs were held by brokers and other 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, 2006, the closing price of our ordinary shares on the SGX-ST was S$1.14 per
ordinary share and the closing price of our ADSs on Nasdaq was $7.00 per ADS.
</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 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the years ended December&nbsp;31, 2003 and 2004, we paid management fees of $1.1&nbsp;million for
each year 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. Prior to this
agreement, these services were subject to a management fee computed based on certain percentages of
capital employed, revenue, manpower and payroll. We believe that our arrangement with STPL
approximates the cost of providing these services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We participated in a cash management program managed by a bank for the former Singapore
Technologies Group. Under this program, cash balances are pooled with other companies in the former
Singapore Technologies Group. The daily cash surpluses or shortfalls of the companies within the
pool earn or bear interest at prevailing interest rates. This arrangement was terminated as of
November&nbsp;30, 2004. In the past, we had deposited excess funds with ST Treasury Services Ltd, a
wholly-owned subsidiary of
</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">Temasek Holdings but we have ceased to do so since October&nbsp;1, 2004. Our
insurance coverage is held under various insurance policies which are negotiated by our insurance
brokers along with those of other companies in the former Singapore Technologies Group. While this
enabled us to benefit from the group rates negotiated by our insurance brokers, these policies are
issued and billed directly to us and are further negotiated by us to tailor to our specific
insurance needs.
</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 Regulation&nbsp;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 $13.2&nbsp;million, $24.1&nbsp;million and $14.7&nbsp;million for 2003,
2004 and 2005, 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="font-size: 10pt; margin-top: 12pt"><B>ITEM 8. FINANCIAL INFORMATION</B>
</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>

<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;On July&nbsp;31, 2002, Seagate Technology L.L.C. 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 Cross-Complaint against ChipPAC,
Amkor and Sumitomo Bakelite, Ltd., the Japanese manufacturer of the allegedly defective epoxy mold
compound. On April&nbsp;14, 2005, we reached a resolution with Seagate with respect to this litigation.
As part of a broader settlement agreement among all parties to this matter, we have agreed to pay a
fee in consideration of a release from all claims related to this litigation. The amount being paid
by us as part of the settlement is being paid by our insurer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February&nbsp;2006, STATS ChipPAC Ltd., 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 dated December&nbsp;22, 1988, between Tessera and 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. Tessera has also sued Advanced Micro Devices, Inc., Spansion LLC, Advanced
Semiconductor Engineering, Inc., ChipMOS Technologies, Inc., ChipMOS U.S.A. Inc., Silicon Precision
Industries Co., Ltd. and ST Microelectronics N.V. in the same lawsuit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are not involved in any other legal 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
</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">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">74
</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="font-size: 10pt; margin-top: 12pt"><B>ITEM 9. THE OFFER AND LISTING</B>
</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="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="7"><B>Price per Ordinary Share</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">&nbsp;</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>Price per ADS on Nasdaq</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" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Annual for 2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.60</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <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" style="background: #cceeff">
    <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">
    <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" style="background: #cceeff">
    <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"><!-- 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">
    <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 ending March&nbsp;31, 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">1.64</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">9.51</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; quarter ending June&nbsp;30, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.38</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; quarter ending September&nbsp;30, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.43</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">7.84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.50</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; quarter ending December&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.12</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">6.61</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.40</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; quarter ending March&nbsp;31, 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 ending June&nbsp;30, 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 ending September&nbsp;30, 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">6.10</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; quarter ending December&nbsp;31, 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"><!-- 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">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;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">1.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">September&nbsp;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">1.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.10</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">October&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.06</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">6.25</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">November&nbsp;2005</DIV></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">0.94</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">5.50</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">December&nbsp;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">1.04</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">6.27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.17</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">7.50</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">February&nbsp;2006 (up to February&nbsp;21, 2006)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.50</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<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 SGX-ST (SGX-ST: STATSChP) and our ADSs are quoted on Nasdaq
(NASDAQ: 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>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>F.&nbsp;Expenses of the Issue</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">75
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="111"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 10. ADDITIONAL INFORMATION</B>
</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
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.&nbsp;5, Yishun Street 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 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.
</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, which 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>

<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: 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. We may, subject to and in accordance with the Companies Act 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 any remaining approved but un-issued 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, among others, new ordinary
shares may not be issued to transfer a controlling interest in our Company without the prior
approval in a general meeting of our shareholders. Our shareholders are not entitled to pre-emptive
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 (CDP), 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&#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 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 together with the amount of the proper duty
chargeable, if any, 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 the total voting rights of all shareholders 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 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>

<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" 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
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 and each proxy
shall have one vote, 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 or 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.
</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 are paid pro rata among the shareholders in proportion
to the amount paid up on each shareholder&#146;s ordinary shares, unless the rights attaching any
ordinary shares or the terms of issue thereof provide otherwise. 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.
</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, 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.
</DIV>

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


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

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Parties acting in concert&#148; 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 and its related and associated companies and companies whose associated
companies include any of these companies; a company and 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 our Company may be
imminent; partners; and an individual
</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">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 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</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 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.
</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 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 pursuant to a long-term
operating lease from the Housing and Development Board, a statutory board of the Government of
Singapore. The lease is for a 30-year 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
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. and which Motorola, Inc. assigned to Freescale Semiconductor, Inc. in 2004). The agreement expires on December
31, 2010. Under this agreement, we are required to pay Freescale Semiconductor, Inc. a royalty
based upon a 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>


<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June&nbsp;2003, we executed a Strategic Assistance Loan Agreement with Simmtech, pursuant to
which we granted an interest-free 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 pursuant to a
Yangdo Tambo Agreement dated June&nbsp;20, 2003, all its rights and interests in certain movable
property to be released and re-transferred upon the repayment of the loan. 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 interest-free 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, except
that the last installment is 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 non-standing member of 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 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&#146;s request, we discharged the pledge of 0.7&nbsp;million shares on January
27, 2005 in consideration of the value of the 2.4&nbsp;million shares pledged to us under the December
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 UD$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 January&nbsp;2004, in order to enhance our yields on our cash deposits, we entered into a bond
transaction and an asset swap transaction with Deutsche Bank AG, London Branch. In exchange for the
purchase of certain bonds from the Bank at a bond purchase price of $96,116,000, the Bank agreed to
make four payments of $25,000,000 each spread out over the years 2004 to 2007, to us in respect of
the bonds. In consideration for such payments, we agreed to pledge the Bonds in favor of the Bank
and enter into an International Swaps and Derivatives Association (ISDA)&nbsp;Agreement (ISDA Agreement)
with the Bank. We liquidated the bonds and terminated the ISDA Agreement in August&nbsp;2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February&nbsp;10, 2004, we signed an Agreement and Plan of Merger and Reorganization with
ChipPAC, pursuant to which a newly formed, wholly-owned subsidiary of ours merged with ChipPAC and
ChipPAC became our wholly-owned subsidiary. Pursuant to the merger, each share of Class&nbsp;A common
stock, par value US$0.01 per share, of ChipPAC was converted into the right to receive 0.87 of our
ADSs. STPL has entered into a voting agreement pursuant to which it agreed to vote approximately
59% of STATS outstanding capital stock beneficially owned by STPL in favor of the issuance of our
ADSs in connection with the merger and certain other related
matters. In addition, certain of ChipPAC&#146;s stockholders who owned approximately 18% of
ChipPAC&#146;s Class&nbsp;A common stock entered into a voting agreement pursuant to which they agreed to
vote in favor of the merger. The merger with ChipPAC was completed on August&nbsp;5, 2004.
</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">&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
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&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 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 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 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 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&nbsp;15, 2011, with interest at the rate of 6.75% per
annum payable semi-annually 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 &#147;make-whole&#148;
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 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&nbsp;19, 2010,
with interest at the rate of 7.5% per annum payable semi-annually 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 &#147;make-whole&#148; 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: 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>

<P align="center" style="font-size: 10pt">82
</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>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 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.
</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. 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.
</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="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</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(1)</B></SUP></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">Year Ended December&nbsp;31,</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">2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.80</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">1.85</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">
    <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" style="background: #cceeff">
    <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">
    <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">1.66</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>
    <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">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;2005</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">1.65</TD>
    <TD>&nbsp;</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">1.68</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">September&nbsp;2005</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">1.67</TD>
    <TD>&nbsp;</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">1.68</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">October&nbsp;2005</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">1.68</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">1.70</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">November&nbsp;2005</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">1.69</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">1.69</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">December&nbsp;2005</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">1.66</TD>
    <TD>&nbsp;</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">1.66</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">January&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">1.62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.62</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">February&nbsp;2006 (up to February&nbsp;21)</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">1.62</TD>
    <TD>&nbsp;</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">1.63</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>

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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>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;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.
</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, non-resident taxpayers who
derive certain types of income from Singapore are subject to a withholding tax on that income at a
rate of 22% for the year of assessment 2004 and a rate of 20% with effect from the year of
assessment 2005, 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
non-resident 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 Tax-Exempt 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 one-tier corporate tax system (see &#147;New
One-Tier 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
rate of 22% for the year of assessment 2004 and 20% with effect from the year of assessment 2005
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 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.
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>New One-tier Corporate Tax System</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A new one-tier 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, 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.
</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 five-year 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 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&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>Capital Gains on Disposal of Ordinary Shares and ADSs</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: 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>

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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>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 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&#146;s death.
</DIV>

<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. Holders (as defined below) that have the
U.S. 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. Holder&#146;s special
circumstances or to U.S. Holders that may be subject to special tax rules. You are a &#147;U.S. Holder&#148;
if you are a beneficial owner of ordinary shares or ADSs and you are, for U.S. 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. federal income
taxation regardless of its source; or (iv)&nbsp;a trust that (a)&nbsp;is subject to the supervision of a
court within the United States and the control of one or more U.S. persons or (b)&nbsp;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 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.
</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.
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, dividends paid to non-corporate U.S. 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 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. 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&#146;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&#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. 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.
</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">&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 Section 904(g) of the Internal Revenue Code, 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 are paid by our
Company and deemed to have been distributed to and paid by our shareholders. A U.S. Holder will not
be subject to United States federal income tax on such amounts, and the holder will 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. 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 long-term capital gain or loss if the U.S. Holder&#146;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 a maximum rate of tax of 15%. 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. 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. 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 &#147;excess distribution&#148;
received. Such U.S. 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, a U.S. Holder of
ordinary shares or ADSs may make a &#147;qualified electing fund&#148; or &#147;mark-to-market&#148; 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. 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.
</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. Holder&#146;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.
</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: 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 Ang Mo Kio Street 65, #05-17/20 Techpoint, Singapore 569059, Republic of Singapore and registered office at No.&nbsp;5, Yishun Street 23, Singapore
768442, Republic of Singapore.
</DIV>

<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="font-size: 10pt; margin-top: 12pt"><B>ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</B>
</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. 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><I>Investment and Interest Rates</I></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 its
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 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&nbsp;31, 2005, our long-term 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 $50.0&nbsp;million and $150.0&nbsp;million
subordinated convertible notes due June&nbsp;15, 2011 and June&nbsp;1, 2008, respectively, and the $215.0
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 2011 and 2008, and senior notes
due 2011 and 2010 bear interest of 8.0%, 2.5%, 6.75% and 7.5% per annum, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Currency Exchange Rates</I></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 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.
</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 31, 2005, we have a series of foreign currency forward contracts with total contract value of approximately $68.0 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.
</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;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(l), 4, 15 and 17, and 26 to our audited
consolidated financial statements, respectively.
</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">&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="font-size: 10pt; margin-top: 12pt"><B>ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES</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="114"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES</B>
</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="font-size: 10pt; margin-top: 12pt"><B>ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS</B>
</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="font-size: 10pt; margin-top: 12pt"><B>ITEM 15. CONTROLS AND PROCEDURES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Evaluation of disclosure controls and procedures</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on our chief executive officer&#146;s and chief financial officer&#146;s evaluation of our
disclosure controls and procedures (as defined in Rules&nbsp;13a-15 (e)&nbsp;and 15d-15 (e)&nbsp;under the
Exchange Act) as of the end of the period covered by this Form 20-F, they have concluded that our
disclosure controls and procedures are designed to ensure that information required to be disclosed
by us in the reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the SEC&#146;s rules and forms and are
operating in an effective manner.
</DIV>

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


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There were no adverse changes in our internal controls over financial reporting that occurred
during the period covered by this annual report that has materially affected, or is likely to
materially affect, our internal control over financial reporting.
</DIV>
<DIV align="left">
<A name="117"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT</B>
</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
qualify as &#147;audit committee financial experts&#148; as defined in Item&nbsp;16A of Form 20-F. 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="font-size: 10pt; margin-top: 12pt"><B>ITEM 16B. CODE OF ETHICS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have adopted a code of ethics that applies to all of our officers, directors and employees
and to all officers, directors and employees of our subsidiaries. The text of our Code of Business
Conduct and Ethics is posted on our internet website at <I>http://www.statschippac.com.</I>
</DIV>
<DIV align="left">
<A name="119"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;KPMG served as our independent registered public accounting firm for the financial year ended
December&nbsp;31, 2003, for which audited financial statements appear in this annual report on Form
20-F. 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 2004 and 2005.
</DIV>

<P align="center" style="font-size: 10pt">89
</DIV>

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<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="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>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>
</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">$</TD>
    <TD align="right">918</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">849</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Audit-Related Fees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">160</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33</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">42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">124</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">35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">229</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">$</TD>
    <TD align="right">1,155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,235</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 annual audit services engagement 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Audit-Related 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 2004 and 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Audit Committee Pre-approval Process</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 <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 KPMG and 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="font-size: 10pt; margin-top: 12pt"><B>ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEE</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="121"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 16E. ISSUER PURCHASES OF EQUITY SECURITIES</B>
</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, 2005.
</DIV>
<DIV align="left">
<A name="122"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 17. FINANCIAL STATEMENTS</B>
</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>
<DIV align="left">
<A name="123"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 18. FINANCIAL STATEMENTS</B>
</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>

<P align="center" style="font-size: 10pt">90
</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;Reports of Independent Registered Public Accounting Firms
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated Balance Sheets as at December&nbsp;31, 2004 and 2005
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated Statements of Operations and Comprehensive Loss for the years ended December&nbsp;31,
2003, 2004 and 2005
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated Statements of Shareholders&#146; Equity for the years ended December&nbsp;31, 2003, 2004
and 2005
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated Statements of Cash Flows for the years ended December&nbsp;31, 2003, 2004 and 2005
</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="font-size: 10pt; margin-top: 12pt"><B>ITEM 19. EXHIBITS</B>
</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 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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">1.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Memorandum and Articles of Association of STATS ChipPAC Ltd. &#151; incorporated by reference to
Exhibit&nbsp;3.2 to Form F-4 (File No.&nbsp;333-114232)of STATS ChipPAC Ltd., as filed with the
Securities and Exchange Commission on April&nbsp;6, 2004</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">2.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Form of specimen certificate representing STATS ChipPAC Ltd.&#146;s ordinary shares &#151;
incorporated by reference to Exhibit&nbsp;4.1 of Amendment No.&nbsp;1 to Form F-1 (File No.
333-93661) of ST Assembly Test Services Ltd filed with the Securities and Exchange
Commission on January&nbsp;3, 2000</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">2.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Deposit Agreement dated February&nbsp;8, 2000 among ST Assembly Test Services Ltd, Citibank,
N.A., as depositary, and the holders from time to time of ADRs issued thereunder (including
the form of ADR) &#151; incorporated by reference to Exhibit&nbsp;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&nbsp;30, 2001</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Lease Agreement dated November&nbsp;18, 1996 by and between the Housing and Development Board
and ST Assembly Test Services Ltd &#151; incorporated by reference to Exhibit&nbsp;10.4 of Amendment
No.&nbsp;1 to Form F-1 (File No.&nbsp;333-93661) of ST Assembly Test Services Ltd filed with the
Securities and Exchange Commission on January&nbsp;3, 2000</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Program Agreement dated January&nbsp;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 &#151; incorporated by reference to Exhibit&nbsp;4.6 of Form
20-F (File No.&nbsp;333-75080) of ST Assembly Test Services Ltd filed with the Securities and
Exchange Commission on February&nbsp;28, 2002</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Trust Deed dated January&nbsp;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&#151; incorporated by reference to Exhibit&nbsp;4.7 of Form 20-F (File No.&nbsp;333-75080) of ST
Assembly Test Services Ltd filed with the Securities and Exchange Commission on February
28, 2002</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Agency Agreement dated January&nbsp;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 Program &#151; incorporated by
reference to Exhibit&nbsp;4.8 of Form 20-F (File No.&nbsp;333-75080) of ST Assembly Test Services Ltd
filed with the Securities and Exchange Commission on February&nbsp;28, 2002</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Indenture dated March&nbsp;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 &#151; incorporated by reference to
Exhibit&nbsp;4.10 of Form 20-F (File No.&nbsp;333-75080) of ST Assembly Test Services Ltd filed with
the Securities and Exchange Commission on March&nbsp;31, 2003</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.6</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>US$168 Million Reg S Global Note issued by ST Assembly Test Services Ltd in relation to the
1.75% Convertible Notes Due 2007 &#151; incorporated by reference to Exhibit&nbsp;4.11 of Form 20-F
(File No.&nbsp;333-75080) of ST Assembly Test Services Ltd filed with the Securities and
Exchange Commission on March&nbsp;31, 2003
</TD>
</TR>
</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">91
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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="3%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.7</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>US$25 Million Reg S Global Note issued by ST Assembly Test Services Ltd in relation to the
1.75% Convertible Notes Due 2007 &#151; incorporated by reference to Exhibit&nbsp;4.12 of Form 20-F
(File No.&nbsp;333-75080) of ST Assembly Test Services Ltd filed with the Securities and
Exchange Commission on March&nbsp;31, 2003</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.8</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>US$7 Million Restricted Global Note issued by ST Assembly Test Services Ltd in relation to
the 1.75% Convertible Notes Due 2007 &#151; incorporated by reference to Exhibit&nbsp;4.13 of Form
20-F (File No.&nbsp;333-75080) of ST Assembly Test Services Ltd filed with the Securities and
Exchange Commission on March&nbsp;31, 2003</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.9</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>ChipPAC, Inc. Employee Retention and Severance Plan &#151; incorporated by reference to Exhibit
10.41 to the annual report on Form 10-K (File No.&nbsp;000-31173) 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>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.10</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Separation Agreement, dated as of February&nbsp;10, 2004, among ST Assembly Test Services Ltd,
ChipPAC, Inc. and Dennis P. McKenna &#151; incorporated by reference to Exhibit&nbsp;10.33 to the
annual report on Form 10-K (File No.&nbsp;000-31173) 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>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.11</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Amendment Agreement dated April&nbsp;22, 2003 renewing the Immunity Agreement dated October&nbsp;18,
1996 by and between Motorola Inc. and ST Assembly Test Services Ltd &#151; incorporated by
reference to Exhibit&nbsp;4.12 of Form 20-F (File No.&nbsp;333-75080) of ST Assembly Test Services
Ltd filed with the Securities and Exchange Commission on March&nbsp;19, 2004</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.12</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Securities Pledge Agreement dated January&nbsp;16, 2004 by and between ST Assembly Test Services
Ltd as Pledgor and Deutsche Bank AG, London Branch as Pledgee &#151; incorporated by reference
to Exhibit&nbsp;4.13 of Form 20-F (File No.&nbsp;333-75080) of ST Assembly Test Services Ltd filed
with the Securities and Exchange Commission on March&nbsp;19, 2004</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.13</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Confirmation Letter Agreement dated January&nbsp;8, 2004 by and between ST Assembly Test
Services Ltd and Deutsche Bank AG, London Branch &#151; incorporated by reference to Exhibit
4.14 of Form 20-F (File No.&nbsp;333-75080) of ST Assembly Test Services Ltd filed with the
Securities and Exchange Commission on March&nbsp;19, 2004</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.14</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Agreement and Plan of Merger and Reorganization dated February&nbsp;10, 2004 by and between ST
Assembly Test Services Ltd, ChipPAC, Inc. and Camelot Merger, Inc. &#151; incorporated by
reference to Exhibit&nbsp;4.15 of Form 20-F (File No.&nbsp;333-75080) of ST Assembly Test Services
Ltd filed with the Securities and Exchange Commission on March&nbsp;19, 2004</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.15</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Strategic Assistance Loan Agreement dated June&nbsp;20, 2003 by and between ST Assembly Test
Services Ltd and Simmtech Co Ltd &#151; incorporated by reference to Exhibit&nbsp;4.16 of Form 20-F
(File No.&nbsp;333-75080) of ST Assembly Test Services Ltd filed with the Securities and
Exchange Commission on March&nbsp;19, 2004</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.16</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Yangdo Tambo Agreement dated June&nbsp;20, 2003 by and between ST Assembly Test Services Ltd
and Simmtech Co. Ltd &#151; incorporated by reference to Exhibit&nbsp;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&nbsp;19, 2004</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.17</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Pledge Agreement dated June&nbsp;20, 2003 by and between ST Assembly Test Services Ltd and
Simmtech Co. Ltd &#151; incorporated by reference to Exhibit&nbsp;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&nbsp;19, 2004</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.18</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Loan Agreement dated December&nbsp;26, 2003 by and between ST Assembly Test Services Ltd and
Simmtech Co. Ltd and Se-Ho Chun &#151; incorporated by reference to Exhibit&nbsp;4.19 of Form 20-F
(File No.&nbsp;333-75080) of ST Assembly Test Services Ltd filed with the Securities and
Exchange Commission on March&nbsp;19, 2004</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.19</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Yangdo Tambo Agreement dated December&nbsp;26, 2003 by and between ST Assembly Test Services Ltd
and Simmtech Co. Ltd &#151; incorporated by reference to Exhibit&nbsp;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&nbsp;19, 2004
</TD>
</TR>
</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">92
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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="3%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.20</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Share Pledge Agreement dated December&nbsp;26, 2003 by and between ST Assembly Test Services Ltd
and Se-Ho Chun &#151; incorporated by reference to Exhibit&nbsp;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&nbsp;19, 2004</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.21</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Factory Kun Mortgage Agreement dated December&nbsp;26, 2003 by and between ST Assembly Test
Services Ltd and Simmtech Co. Ltd &#151; incorporated by reference to Exhibit&nbsp;4.22 of Form 20-F
(File No.&nbsp;333-75080) of ST Assembly Test Services Ltd filed with the Securities and
Exchange Commission on March&nbsp;19, 2004</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.22</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Base Capacity and Continuing Support Agreement dated December&nbsp;26, 2003 by and between ST
Assembly Test Services Ltd and Simmtech Co. Ltd &#151; incorporated by reference to Exhibit&nbsp;4.23
of Form 20-F (File No.&nbsp;333-75080) of ST Assembly Test Services Ltd filed with the
Securities and Exchange Commission on March&nbsp;19, 2004</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.23</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Indenture dated November&nbsp;7, 2003 by and between ST 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 Form 20-F (File No.&nbsp;333-75080) of ST Assembly
Test Services Ltd filed with the Securities and Exchange Commission on March&nbsp;19, 2004</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.24</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>US$115 Million Reg S Global Note issued by ST Assembly Test Services Ltd under the
Indenture relating to the zero-rate Convertible Notes Due 2008 &#151; incorporated by reference
to Exhibit&nbsp;4.25 of Form 20-F (File No.&nbsp;333-75080) of ST Assembly Test Services Ltd filed
with the Securities and Exchange Commission on March&nbsp;19, 2004</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.25</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Purchase Agreement, dated as of May&nbsp;22, 2003, by and between ChipPAC, Inc. and Lehman
Brothers Inc. &#151; incorporated by reference to Exhibit&nbsp;4.5 of Form S-3 (File No.&nbsp;333-108236)
of ChipPAC, Inc. filed with the Securities and Exchange Commission on August&nbsp;26, 2003</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.26</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Registration Rights Agreement, dated March&nbsp;28, 2003, by and between ChipPAC, Inc. and
Lehman brothers Inc. &#151; incorporated by reference to Exhibit&nbsp;10.39 of Form 10-Q (File No.
000-31173) of ChipPAC, Inc. filed with the Securities and Exchange Commission on August&nbsp;8,
2003 for the period ended June&nbsp;30, 2003</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.27</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Indenture, dated as of May&nbsp;28, 2003, by and between ChipPAC, Inc. and U.S. Bank National
Association, as trustee incorporated by reference to Exhibit&nbsp;10.40 of Form 10-Q (File No.
000-31173) of ChipPAC, Inc. filed with the Securities and Exchange Commission on August&nbsp;8,
2003 for the period ended June&nbsp;30, 2003</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.28</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Employment Agreement, dated as of February&nbsp;26, 2004, among ST Assembly Test Services Ltd,
ChipPAC, Inc. and Dennis Daniels &#151; incorporated by reference to Exhibit&nbsp;4.7 of Form F-4
(File No.&nbsp;333-114232) of STATS ChipPAC Ltd., as filed with the Securities and Exchange
Commission on April&nbsp;6, 2004</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.29</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Employment Agreement, dated as of March&nbsp;17, 2004, among ST Assembly Test Services Ltd,
ChipPAC, Inc. and Michael G. Potter &#151; incorporated by reference to Exhibit&nbsp;4.8 of Form F-4
(File No.&nbsp;333-114232) of STATS ChipPAC Ltd., as filed with the Securities and Exchange
Commission on April&nbsp;6, 2004</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.30</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Retention Agreement, entered into on April&nbsp;18, 2004, among ST Assembly Test Services Ltd,
ChipPAC, Inc. and Robert Krakauer &#151; incorporated by reference to Exhibit&nbsp;10.42 to the
Quarterly Report on Form 10-Q (File No.&nbsp;000-31173) of ChipPAC, Inc. for the three months
ended March&nbsp;31, 2004, as filed with the Securities and Exchange Commission on May&nbsp;10, 2004</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.31</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Retention Agreement, dated as of May&nbsp;11, 2004, between ChipPAC, Inc. and Patricia McCall &#151;
incorporated by reference to Exhibit&nbsp;10.44 to the Quarterly Report on Form 10-Q (File No.
000-31173) of ChipPAC, Inc. for the three months ended June&nbsp;30, 3002, as filed with the
Securities and Exchange Commission on July&nbsp;30, 2004</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.32</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>First Supplemental Indenture among ChipPAC Inc., as Company, ST Assembly Test Services Ltd,
as Parent, and U.S. Bank National Association, as Trustee, dated August&nbsp;4, 2004 &#151;
incorporated by reference to Exhibit&nbsp;4.2 of Form F-3 (File No.&nbsp;333-119705) of STATS
ChipPAC, Inc. filed with the Securities and Exchange Commission on October&nbsp;13, 2004</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.33</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>STATS ChipPAC Ltd. Substitute Share Purchase and Option Plan &#151; incorporated by reference to
Exhibit&nbsp;4.4 to Form S-8 POS (File No.&nbsp;333-114232) of STATS ChipPAC Ltd. of August&nbsp;25, 2004
</TD>
</TR>
</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">93
</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="3%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.34</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>STATS ChipPAC Ltd. Substitute Equity Incentive Plan &#151; incorporated by reference to Exhibit
4.5 to Form S-8 POS (File No.&nbsp;333-114232) of STATS ChipPAC Ltd. of August&nbsp;25, 2004</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.35</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>STATS ChipPAC Ltd. Share Option Plan &#151; incorporated by reference to Exhibit&nbsp;4.3 to Form S-8
(File No.&nbsp;333-118555) of STATS ChipPAC Ltd. of August&nbsp;25, 2004</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.36</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>STATS ChipPAC Ltd. Employee Share Purchase Plan 2004 &#151; incorporated by reference to Exhibit
4.4 to Form S-8 (File No.&nbsp;333-118555) of STATS ChipPAC Ltd. of August&nbsp;25, 2004</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.37</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Indenture, dated November&nbsp;18, 2004, by and between STATS ChipPAC Ltd. and U.S. Bank
National Association &#151; incorporated by reference to Exhibit&nbsp;4.40 to the annual report on
Form 20-F (File No.&nbsp;333-75080) for fiscal year ended December&nbsp;31, 2004 of STATS ChipPAC
Ltd., as filed with the Securities and Exchange Commission on March&nbsp;18, 2005 (Form 20-F
FY2004)</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.38</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Purchase Agreement, dated as of November&nbsp;5, 2004 by and between STATS ChipPAC Ltd, Deutsche
Bank AG, Singapore Branch and Lehman Brothers International (Europe) &#151; incorporated by
reference to Exhibit&nbsp;4.41 to the Form 20-F FY2004</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.39</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Registration Rights Agreement, dated November&nbsp;18, 2004, by and between STATS ChipPAC Ltd.
and STATS ChipPAC, Inc., STATS ChipPAC Test Services, Inc., STATS Holdings Limited,
ChipPAC, Inc., ChipPAC International Company Limited, ChipPAC Luxembourg S.a.R.L., ChipPAC
Liquidity Management Hungary Limited Liability Company, STATS ChipPAC (Barbados) Ltd.,
STATS ChipPAC (BVI)&nbsp;Limited, STATS ChipPAC Malaysia Sdn. Bhd., and STATS ChipPAC Korea Ltd.
(collectively, referred to as the Subsidiary Guarantors) and Deutsche Bank AG, Singapore
Branch and Lehman Brothers International (Europe) &#151; incorporated by reference to Exhibit
4.42 to the Form 20-F FY2004</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.40</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Subsidiary Guarantee Agreement, dated November&nbsp;18, 2004, by and between STATS ChipPAC Ltd.,
the Subsidiary Guarantors party thereto and U.S. Bank National Association, as Trustee &#151;
incorporated by reference to Exhibit&nbsp;4.43 to the Form 20-F FY2004</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.41</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Second Supplemental Indenture among ChipPAC International Company Limited, as Issuer,
ChipPAC, Inc., as Guarantor, and U.S. Bank National Association as Trustee, dated October
7, 2004 &#151; incorporated by reference to Exhibit&nbsp;4.44 to the Form 20-F FY2004</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.42</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Second Supplemental Indenture among ChipPAC Inc., as Company, STATS ChipPAC Ltd., as
Parent, and U.S. Bank National Association, as Trustee, dated October&nbsp;11, 2004 &#151;
incorporated by reference to Exhibit&nbsp;4.45 to the Form 20-F FY2004</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.43</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Third Supplemental Indenture among ChipPAC Inc., as Company, STATS ChipPAC Ltd., as Parent,
and U.S. Bank National Association, as Trustee, dated November&nbsp;2, 2004 &#151; incorporated by
reference to Exhibit&nbsp;4.46 to the Form 20-F FY2004</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.44</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Indenture dated as of July&nbsp;19, 2005 by and between STATS ChipPAC Ltd. and U.S. Bank
National Association relating to the 7.5% Senior Notes Due 2010 &#151; incorporated by reference
to Exhibit&nbsp;4.1 to Form 6-K (File No.&nbsp;333-75080) of STATS ChipPAC Ltd., as filed with the
Securities and Exchange Commission on August&nbsp;25, 2005</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.45</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Registration Rights Agreement dated as of July&nbsp;19, 2005 by and among STATS ChipPAC Ltd. and
STATS ChipPAC, Inc., STATS ChipPAC Test Services, Inc., STATS Holdings Limited, ChipPAC,
Inc., ChipPAC International Company Limited, ChipPAC Luxembourg S.a.R.L., ChipPAC Liquidity
Management Hungary Limited Liability Company, STATS ChipPAC (Barbados) Ltd., STATS ChipPAC
(BVI)&nbsp;Limited and STATS ChipPAC Malaysia Sdn. Bhd. (collectively referred to as the 2005
Subsidiary Guarantors) and Credit Suisse First Boston (Singapore) Limited and Deutsche Bank
AG, Singapore Branch &#151; incorporated by reference to Exhibit&nbsp;4.2 to Form 6-K (File No.
333-75080) of STATS ChipPAC Ltd., as filed with the Securities and Exchange Commission on
August&nbsp;25, 2005
</TD>
</TR>
</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">94
</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="3%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.46</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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.</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.47</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Subsidiary Guarantee Agreement dated as of July&nbsp;19, 2005, by and between STATS ChipPAC
Ltd., the Subsidiary Guarantors party thereto and U.S. Bank National Association, as
Trustee&#151; incorporated by reference to Exhibit&nbsp;4.3 to Form 6-K (File No.&nbsp;333-75080) of STATS
ChipPAC Ltd., as filed with the Securities and Exchange Commission on August&nbsp;25, 2005</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.48</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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. Bank National
Association, as Trustee with respect to the 7.5% Senior Notes due 2010</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">4.49</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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. Bank National
Association, as Trustee with respect to the 6<FONT style="font-size: 70%"><SUP>3</SUP></FONT>/<FONT style="font-size: 60%">4</FONT>% Senior Notes due 2011</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">8.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>List of subsidiaries</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">12.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Certification by the Chief Executive Officer pursuant to 17 CFR 240. 15d-14(a), as adopted
pursuant to Section&nbsp;302 of the Sarbanes-Oxley Act of 2002</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">12.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Certification by the Chief Financial Officer pursuant to 17 CFR 240. 15D-14(a), as adopted
pursuant to Section&nbsp;302 of the Sarbanes-Oxley Act of 2002</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">13.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section&nbsp;1350, as adopted
pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">13.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section&nbsp;1350, as adopted
pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">15.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Consent of Pricewaterhouse Coopers, Singapore, independent registered public accounting firm</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%" style="background: transparent">&nbsp;</TD>
    <TD width="8%" nowrap align="left">15.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Consent of KPMG, independent registered public accounting firm</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">95
</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 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 20-F
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: February&nbsp;28, 2006
</DIV>


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&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"><FONT style="font-variant: SMALL-CAPS">STATS CHIPPAC LTD.</FONT><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">/s/Tan Lay Koon
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">Name:&nbsp;&nbsp;</TD>
    <TD colspan="2" align="left">Tan Lay Koon&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">Title:&nbsp;&nbsp;</TD>
    <TD colspan="3" align="left">President and Chief Executive Officer&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">/s/Michael G. Potter
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">Name:&nbsp;&nbsp;</TD>
    <TD colspan="2" align="left">Michael G. Potter&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">Title:&nbsp;&nbsp;</TD>
    <TD colspan="3" align="left">Corporate Vice President,
Chief Financial Officer&nbsp;</TD>

</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt">96
</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="126"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>INDEX TO FINANCIAL STATEMENTS</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="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><DIV style="margin-left:15px; text-indent:-15px"><B>FINANCIAL STATEMENTS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR><TD align="left" valign="top">&nbsp;</TD></TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#300">Reports of Independent Registered Public Accounting Firms</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">F-2</TD>
</TR>
<TR><TD align="left" valign="top">&nbsp;</TD></TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#301">Consolidated Balance Sheets</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">F-4</TD>
</TR>
<TR><TD align="left" valign="top">&nbsp;</TD></TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#302">Consolidated Statements of Operations</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">F-5</TD>
</TR>
<TR><TD align="left" valign="top">&nbsp;</TD></TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#303">Consolidated Statements of Comprehensive Loss</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">F-6</TD>
</TR>
<TR><TD align="left" valign="top">&nbsp;</TD></TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#304">Consolidated Statements of Shareholders&#146; Equity</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">F-7</TD>
</TR>
<TR><TD align="left" valign="top">&nbsp;</TD></TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#305">Consolidated Statements of Cash Flows</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">F-8</TD>
</TR>
<TR><TD align="left" valign="top">&nbsp;</TD></TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#306">Notes to the Consolidated Financial Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">F-9</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

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


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

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



<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: 12pt">The Board of Directors and Shareholders<BR>
STATS ChipPAC Ltd.:
</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 loss, 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, 2005 and 2004, and the results of their operations and their cash
flows for each of the two years in the period ended December&nbsp;31, 2005, 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
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: 12pt">PricewaterhouseCoopers
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Singapore<BR>
February&nbsp;28, 2006
</DIV>


<P align="center" style="font-size: 10pt">F-2
</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>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Board of Directors and Shareholders<BR>
ST Assembly Test Services Ltd:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have audited the accompanying consolidated statements of operations, comprehensive loss,
shareholders&#146; equity and cash flows of ST Assembly Test Services Ltd and subsidiaries for the year
ended December&nbsp;31, 2003. These consolidated financial statements are the responsibility of the
Company&#146;s management. Our responsibility is to express an opinion on these consolidated financial
statements based on our audit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We conducted our audit 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provide a reasonable basis for our opinion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the consolidated results of operations and cash flows of ST Assembly Test
Services Ltd and subsidiaries for the year ended December&nbsp;31, 2003, in conformity with U.S.
generally accepted accounting principles.
</DIV>


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


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Singapore<BR>
February&nbsp;6, 2004
</DIV>


<P align="center" style="font-size: 10pt">F-3
</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="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; margin-top: 0pt"><B>AS OF DECEMBER 31</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 0pt"><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="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" style="border-bottom: 1px solid #000000"><B>Note</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>
</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>
</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>
</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>&nbsp;</TD>
    <TD align="right">3</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>
</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">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,060</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">5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">149,650</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">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,623</TD>
    <TD>&nbsp;</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">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,813</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">7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54,690</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">Prepaid expenses and other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,836</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,727</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">492,181</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">607,714</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,803</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">9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,035,803</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,107,031</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">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">125,830</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">11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">523,598</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">Prepaid expenses and other non-current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,169</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65,429</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</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 assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,271,702</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</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>&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>
</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"><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>
</TR>
<TR valign="bottom">
    <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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts and other payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">68,573</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">136,058</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51,638</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79,425</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,899</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">96,932</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income taxes payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,038</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,235</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Short-term borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,874</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,891</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>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">137</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">16</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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current installments of long-term debts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">154,407</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>&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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">368,153</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">357,345</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <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">16</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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term debts, excluding current installments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other non-current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,362</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>&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>
</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,071,461</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,203,061</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,891</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,669</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Share 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">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ordinary shares &#151; par value S$0.25, Authorized 3,200,000,000
shares<BR>
Issued ordinary shares &#151; 1,944,330,450 in 2004 and
1,976,292,025 in 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</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">303,052</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additional paid-in capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,507,612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,517,118</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>&nbsp;</TD>
    <TD align="right">22</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">(8,572</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(643,635</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(669,946</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</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>&nbsp;</TD>
    <TD>&nbsp;</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>
</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</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">Commitments and contingencies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">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>
    <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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,271,702</TD>
    <TD>&nbsp;</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>&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>
</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; margin-top: 0pt"><B>FOR THE YEARS ENDED DECEMBER 31</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 0pt"><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="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>
</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>Note</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>
</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 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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</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>
</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</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>&nbsp;</TD>
    <TD>&nbsp;</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>
</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</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>
</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,475</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,965</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">135,771</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>&nbsp;</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>
</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>&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">&#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:30px; text-indent:-15px">Goodwill impairment</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">&#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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other general expenses (income), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">374</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(464</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(20</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</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>&nbsp;</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>
</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</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>&nbsp;</TD>
    <TD>&nbsp;</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>
</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</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>
</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,785</TD>
    <TD>&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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13,994</TD>
    <TD nowrap>)</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>
</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</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>
</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>&nbsp;</TD>
    <TD align="right">25</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>
</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</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>&nbsp;</TD>
    <TD>&nbsp;</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 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>
</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</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>
</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>&nbsp;</TD>
    <TD align="right">14</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>
</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</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">Loss before minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</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>
</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>&nbsp;</TD>
    <TD>&nbsp;</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>
</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</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 loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</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>
</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>&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">Basic and diluted net loss per ordinary share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</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">$</TD>
    <TD align="right">(0.01</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic and diluted net loss per ADS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</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>
</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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; basic and diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; basic and diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</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>
</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 LOSS</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 0pt"><B>FOR THE YEARS ENDED DECEMBER 31</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 0pt"><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="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>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<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">$</TD>
    <TD align="right">(1,716</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other comprehensive 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 gain (loss)&nbsp;on
available-for-sale marketable
securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,687</TD>
    <TD>&nbsp;</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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Realized (gain)&nbsp;loss on
available-for-sale marketable
securities included in net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,040</TD>
    <TD nowrap>)</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>
</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">&#151;</TD>
    <TD>&nbsp;</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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Realized gain on hedging instruments
included in net loss</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">(168</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,143</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">698</TD>
    <TD>&nbsp;</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>
</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 loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,371</TD>
    <TD nowrap>)</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>
</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; margin-top: 0pt"><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>Paid-in</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 nowrap align="center" colspan="2">&nbsp;</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>
    <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>(In thousands)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>$</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">Balances at January&nbsp;1, 2003</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">160,295</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">389,679</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,266</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(174,196</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">366,512</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">84,505</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,139</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99,579</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">111,718</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock compensation</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">97</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</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</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">(1,716</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,716</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">(655</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">(655</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;31, 2003</DIV></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">172,434</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">489,355</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,921</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(175,912</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">475,956</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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <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">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">
    <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" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock compensation</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">
    <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" style="background: #cceeff">
    <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">
    <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" style="background: #cceeff">
    <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"><!-- 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>
</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">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" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock compensation</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">
    <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" style="background: #cceeff">
    <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">
    <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" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balances at December&nbsp;31, 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 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; margin-top: 0pt"><B>FOR THE YEARS ENDED DECEMBER 31</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 0pt"><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="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>
</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 loss</DIV></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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjustments to reconcile net loss 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">120,610</TD>
    <TD>&nbsp;</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>
</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">453,000</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">11,732</TD>
    <TD>&nbsp;</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>
</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">1,155</TD>
    <TD>&nbsp;</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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loss (gain)&nbsp;on sale of property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100</TD>
    <TD>&nbsp;</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>
</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">7,366</TD>
    <TD>&nbsp;</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>
</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">&#151;</TD>
    <TD>&nbsp;</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>
</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">(3,367</TD>
    <TD nowrap>)</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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,246</TD>
    <TD nowrap>)</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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">1,539</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">6,440</TD>
    <TD>&nbsp;</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 nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,040</TD>
    <TD nowrap>)</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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(54</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,029</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,278</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 nowrap align="left">&nbsp;</TD>
    <TD align="right">(30,277</TD>
    <TD nowrap>)</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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amounts due from affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,932</TD>
    <TD nowrap>)</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>
</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">(10,095</TD>
    <TD nowrap>)</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>
</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">(16,783</TD>
    <TD nowrap>)</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>
</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>&nbsp;</TD>
    <TD align="right">11,769</TD>
    <TD>&nbsp;</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>
</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">(213</TD>
    <TD nowrap>)</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>
</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">82,548</TD>
    <TD>&nbsp;</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>
</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">77,566</TD>
    <TD>&nbsp;</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>
</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">5,753</TD>
    <TD>&nbsp;</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>
</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">(43,850</TD>
    <TD nowrap>)</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>
</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">(1,428</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,853</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">(467</TD>
    <TD nowrap>)</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>
</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">(209,326</TD>
    <TD nowrap>)</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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,946</TD>
    <TD nowrap>)</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>
</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 used in investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(174,270</TD>
    <TD nowrap>)</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>
</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"><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">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Repayment of
short-term debts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(27,419</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Repayment of long-term debts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(19,713</TD>
    <TD nowrap>)</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>
</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">117,477</TD>
    <TD>&nbsp;</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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">112,345</TD>
    <TD>&nbsp;</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>
</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">(193,647</TD>
    <TD nowrap>)</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">49,839</TD>
    <TD>&nbsp;</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>
</TR>
<TR valign="bottom">
    <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">8,223</TD>
    <TD>&nbsp;</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>
</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">6,784</TD>
    <TD>&nbsp;</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">(12,862</TD>
    <TD nowrap>)</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>
</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">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>
</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">234,674</TD>
    <TD>&nbsp;</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>
</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 increase in cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">142,952</TD>
    <TD>&nbsp;</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>
</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">2,550</TD>
    <TD>&nbsp;</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>
</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">167,661</TD>
    <TD>&nbsp;</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>
</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">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>
</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">$</TD>
    <TD align="right">5,580</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">21,974</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">40,738</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income taxes paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">669</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,023</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">185</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-cash items</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 align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,066,994</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equipment acquired under capital leases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,663</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">4,150</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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<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="306"></A>
</DIV>
<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS<BR>
In thousands of U.S. Dollars (except per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>1. Background and Summary of Significant Accounting Policies</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(a)&nbsp;Business and Organization</I>
</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
subsidiaries (collectively 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 wholly-owned 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, a subsidiary, STATS ChipPAC, Inc. (formerly known as ST Assembly Test Services, Inc.) was
merged into ChipPAC. The surviving entity was renamed STATS ChipPAC, Inc.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In 2004, the Company&#146;s Taiwan subsidiary, Winstek Semiconductor Corporation (&#147;Winstek&#148;), issued new
shares to its employees as employee stock bonus and resulted in the dilution of the Company&#146;s
interest in Winstek from 55.0% to 54.5%. The Company recognized the loss of $62 on the dilution of
interest within shareholders&#146; equity. In 2005, Winstek issued 10,555,556 shares of its capital
stock, par value NT$10, 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 the
gain of $61 on the resulting dilution of interest within shareholders&#146; equity. The Company owned
approximately 52% of Winstek as of December&nbsp;31, 2005.
</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 wholly-owned subsidiary,
Singapore Technologies Semiconductors Pte Ltd (&#147;STSPL&#148;), beneficially owned approximately 36% of
the Company as of December&nbsp;31, 2005. Temasek Holdings, wholly-owned by the Minister of Finance
(Incorporated) for Singapore, a statutory body constituted by the Minister for Finance
(Incorporation) Act (Cap. 183), owns 100% of the ordinary shares of STSPL.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(b)&nbsp;Fiscal Year</I></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Since the beginning of fiscal 2005, the Company employed fiscal year and fiscal quarter reporting
periods. STATS ChipPAC&#146;s 52-53&nbsp;week fiscal year ends on the Sunday nearest to December&nbsp;31. STATS
ChipPAC&#146;s fiscal quarters end on a Sunday and are generally thirteen weeks in length. For
presentation purposes, the fiscal years have been presented as ending on December&nbsp;31. 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: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(c)&nbsp;Accounting Principles</I>
</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: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(d)&nbsp;Principles of Consolidation</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>




<P align="center" style="font-size: 10pt">F-9
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(e)&nbsp;Issuances of Stock by Subsidiaries</I>
</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 additional paid-in capital as a component of shareholders&#146; equity.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(f)&nbsp;Use of Estimates</I>
</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. Actual results could differ from these estimates.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(g)&nbsp;Reclassifications</I>
</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: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(h)&nbsp;Foreign Currency Transactions</I>
</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: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(i)&nbsp;Certain Risks and Concentrations</I>
</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, time-to-market, 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 32%, 21% and 12% of revenues for the
years ended December&nbsp;31, 2003, 2004 and 2005, respectively. The Company&#146;s five largest customers
collectively accounted for approximately 66%, 56% and 49% of revenues for the years ended December&nbsp;31, 2003, 2004 and 2005,
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
</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">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>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Cash and cash equivalents are deposited with banks primarily in Singapore, South Korea, China,
Malaysia, British Virgin Islands, Taiwan and the United States of America. Deposits in these banks
may exceed the amount of insurance provided on such deposits, if any. The Company has not
experienced any losses to date on its bank cash deposits. Prior to December&nbsp;2004, the Company also
participates in a pooled cash management arrangement and places short-term advances with affiliates
of Temasek Holdings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">South Korean, Chinese and Malaysian foreign currency exchange regulations 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. As of December&nbsp;31, 2005, there were no restrictions on foreign funds flow.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(j)&nbsp;Cash and Cash Equivalents</I>
</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, 2005.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(k)&nbsp;Derivative Instruments and Hedging Activities</I>
</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">In 2004 and 2005, the Company entered into foreign currency forward contracts to protect the
Company from fluctuations in exchange rates. At December&nbsp;31, 2005, the Company has a series of
foreign currency forward contracts with total contract value of approximately $68,000. In 2005, the
Company entered into a series of gold forward contracts with total contract value of approximately
$7,000 to hedge against fluctuations in gold prices. At December&nbsp;31, 2005, the Company had realized
and unrealized gain of $3,143 and $133, respectively, on its foreign currency and gold forward
contracts. At December&nbsp;31, 2004, the Company had realized and unrealized gain of $168 and $3,953,
respectively, on its foreign currency forward contracts. In 2003, hedge accounting has not been
applied as the foreign currency forward contracts entered into do not qualify as hedges. Gains and
losses on these contracts have been recorded as foreign currency gains or losses.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(l)&nbsp;Marketable Securities</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Marketable securities at December&nbsp;31, 2004 and 2005 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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, 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.
</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: 6pt"><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">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.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(m)&nbsp;Inventories</I>
</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: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(n)&nbsp;Business Combination</I>
</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 of 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: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(o)&nbsp;Goodwill</I>
</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 one 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 long-term plans. In estimating fair values of its reporting units, the
Company also use analyst estimates as well as comparable market analyses.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(p)&nbsp;Intangible Assets</I>
</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 costs 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, determined by independent appraisals.
</DIV>


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

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




<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><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">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="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&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 colspan="3" align="center">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 colspan="3" align="center">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 colspan="3" align="center">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>&nbsp;</TD>
    <TD nowrap align="right">3 to 5 years</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>(q)&nbsp;Property, Plant and Equipment</I>
</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 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="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&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>&nbsp;</TD>
    <TD nowrap align="right">50 to 99 years</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>&nbsp;</TD>
    <TD nowrap align="right">3 to 25 years</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">2 to 8 years</TD>
    <TD>&nbsp;</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 straight-line over the estimated useful life of the assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company adopted SFAS No.&nbsp;143, &#147;Accounting For Asset Retirement Obligations,&#148; (&#147;SFAS 143&#148;) on
January&nbsp;1, 2003, which addresses financial accounting and reporting for obligations associated with
the retirement of tangible long-lived assets and associated asset retirement costs. This statement
applies to legal obligations associated with the retirement of long-lived assets that result from
acquisition, construction, development and (or)&nbsp;normal use of asset.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(r)&nbsp;Long-Lived Assets</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>

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


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(s)&nbsp;Comprehensive Loss</I>
</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 loss and its components in a full set of financial statements.
Comprehensive loss consists of net loss, foreign currency translation adjustments and unrealized
gain (loss)&nbsp;on available-for-sale marketable securities and hedging instruments, and is presented
in the consolidated statements of comprehensive loss.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(t)&nbsp;Revenue Recognition</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Revenue is derived primarily from wafer probe, 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>


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

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




<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><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">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, packaging or test services sold on a standalone
basis, as well as multiple-element arrangements where probe, 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.
</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="10"><B>For the 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="10" style="border-bottom: 1px solid #000000"><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>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>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>%</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">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>&nbsp;</TD>
    <TD align="right">20.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50.2</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">26.9</TD>
    <TD>&nbsp;</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>
</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">52.5</TD>
    <TD>&nbsp;</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>
</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">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100.0</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: 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">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 credit-worthiness and current economic
trends.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(u)&nbsp;Grants</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>

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


<P align="center" style="font-size: 10pt">F-14
</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: 6pt"><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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(v)&nbsp;Stock-Based
Employee Compensation</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">At December&nbsp;31, 2005, the Company has two stock-based employee compensation plans, which are more
fully described in Note 23. The Company measures stock-based employee compensation expense for
financial statement purposes in accordance with the intrinsic method of APB Opinion No.&nbsp;25,
&#147;Accounting for Stock Issued to Employees&#148; (&#147;APB 25&#148;), and its related interpretations, and
includes pro forma information in accordance with SFAS No.&nbsp;123, &#147;Accounting for Stock-Based
Compensation,&#148; (&#147;SFAS 123&#148;) as amended by SFAS No.&nbsp;148, &#147;Accounting for Stock-Based Compensation &#151;
Transition and Disclosure.&#148; Compensation expense is measured as the excess of fair market value of
the stock subject to the option at measurement date over the exercise price of the option.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If compensation expense had been determined based on the grant date fair value for awards, in
accordance with SFAS No.&nbsp;123, the Company&#146;s net loss and loss per share would have been adjusted to
the pro forma amounts indicated 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="10" style="border-bottom: 1px solid #000000"><B>For the Year Ended 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>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>
</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">$</TD>
    <TD align="right">(1,716</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(467,723</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(26,311</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Add: Total stock-based employee
compensation expenses included in
reported net loss, net of related
tax effects</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">97</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">658</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">743</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deduct: Total stock-based employee
compensation expenses determined
under fair value method for all
awards, net of related tax effects</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,496</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18,492</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(19,612</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Pro forma net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(12,115</TD>
    <TD nowrap>)</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>
    <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>
    <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">$</TD>
    <TD align="right">(0.00</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.33</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.01</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.01</TD>
    <TD nowrap>)</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>
    <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">$</TD>
    <TD align="right">(0.02</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(3.27</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.13</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.12</TD>
    <TD nowrap>)</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 fair value of stock options granted for the years ended December&nbsp;31, 2003, 2004 and 2005 is
estimated on the date of grant using the Black-Scholes option-pricing 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="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>For the Year Ended 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>2003</B></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>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected lives</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">5 &#150; 10 years</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">5 &#150; 10 years</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">9 years</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dividend yield</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Risk free interest rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right" nowrap>2.5% &#150; 3.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right" nowrap>0.8% &#150; 4.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right" nowrap>2.6% &#150; 3.3</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected volatility</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"  nowrap>59.7% &#150; 67.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"  nowrap>55.9% &#150; 64.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right" nowrap>55.0% &#150; 57.1</TD>
    <TD nowrap>%</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 issued for the year ended December&nbsp;31, 2005 is
estimated on the date of grant using the Black-Scholes option-pricing 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="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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>For the 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,</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>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected lives</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">0.5 years</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dividend yield</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Risk free interest rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.3 &#150; 1.9</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected volatility</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"  nowrap>38.0 &#150; 42.8</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-15
</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: 6pt"><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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(w)&nbsp;Employee Benefit Plans</I>
</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 contributes 2% 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, 2005, there is a $60 shortfall in
the plan&#146;s assets. Total pension plan expenses for the years ended December&nbsp;31, 2003, 2004 and 2005
were approximately $46, $76 and $55, respectively. Additional disclosures regarding this pension
plan pursuant to SFAS No.&nbsp;132, &#147;Employers&#146; Disclosures about Pensions and Other Postretirement
Benefits&#148; are not considered necessary due to the insignificance of the amounts involved.
</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 contributes up to 6% of eligible employee compensation at the rate of 50% of employee
contributions to the 401(k) plan. The Company&#146;s matching contributions under the 401(k) plan were
$258, $320 and $395 for the years ended December&nbsp;31, 2003, 2004 and 2005, respectively. The
matching contributions are accrued monthly and adjusted when the actuals 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 lump-sum 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 National Pension Fund upon
retirement. The expense for severance benefits for the period from August&nbsp;5, 2004 to December&nbsp;31,
2004 and for the year ended December&nbsp;31, 2005 were approximately $1,793 and $6,333, respectively.
</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 $4,072, $7,226 and $10,711 with respect to these retirement plans in the years ended
December&nbsp;31, 2003, 2004 and 2005, respectively.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(x)&nbsp;Operating Leases</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Rental payments under operating leases are expensed on a straight-line basis over the periods of
the respective leases.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(y)&nbsp;Product Warranties</I>
</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 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 2003, 2004 and 2005 were
insignificant.
</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: 6pt"><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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(z)&nbsp;Research and Development</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and development expenses are expensed as incurred.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(aa)&nbsp;Income Taxes</I>
</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: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(bb)&nbsp;Net Loss Per Share</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Basic net loss per share is computed using the weighted average number of ordinary shares
outstanding. Diluted net loss per share is computed using the weighted average number of ordinary
shares outstanding and dilutive potential ordinary shares from the assumed exercise of 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 potentially dilutive securities for each period presented from its diluted net
loss 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 anti-dilutive.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A summary of the excluded potentially dilutive securities outstanding as of December&nbsp;31 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="11" style="border-bottom: 1px solid #000000"><B>Year Ended 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>2003</B></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>
</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">172,513</TD>
    <TD>&nbsp;</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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,022</TD>
    <TD>&nbsp;</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>
</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 $0.927 to $1.871 per share
(equivalent to approximately $9.27 to $18.71 per ADS) as of December&nbsp;31, 2005. The weighted
average exercise prices of options outstanding were approximately $1.58, $1.01 and $1.01
(equivalent to $15.80, $10.10 and $10.10 per ADS) as of December&nbsp;31, 2003, 2004 and 2005,
respectively. The excluded stock options have per share exercise prices ranging from approximately
$0.14 to $3.99 (equivalent to $1.40 and $39.90 per ADS) as of December&nbsp;31, 2003, 2004 and 2005.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(cc)&nbsp;New Accounting Pronouncements</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In November&nbsp;2004, the FASB issued SFAS No.&nbsp;151, &#147;Inventory Costs, an amendment of ARB No.&nbsp;43,
Chapter&nbsp;4&#148; (&#147;SFAS 151&#148;). SFAS 151 requires certain abnormal expenditures to be recognized as
expenses in the current period. It also requires that the amount of fixed production overhead
allocated to inventory be based on the normal capacity of the production facilities. The standard
is effective for the fiscal year beginning January&nbsp;1, 2006. It is not expected that SFAS No.&nbsp;151
will have a material effect on the Company&#146;s consolidated financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In December&nbsp;2004, the FASB issued SFAS No.&nbsp;123(R), &#147;Share-Based Payment&#148; (&#147;SFAS 123(R)&#148;). This
statement revises SFAS No.&nbsp;123, &#147;Accounting for Stock-Based Compensation,&#148; (&#147;SFAS 123&#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 fair-value based measurement method in
accounting for share-based payment
</DIV>


<P align="center" style="font-size: 10pt">F-17
</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: 6pt"><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">transactions with employees and to record compensation expense for all stock awards granted, and to
awards modified, repurchased or cancelled after the required effective date. In addition, the
Company is 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) will be effective for annual periods beginning after June&nbsp;15, 2005, which is the Company&#146;s
first quarter of fiscal 2006. The Company presently accounts for stock-based compensation under the
intrinsic method. See Note 1(v) for the effect on reported net loss if the Company had accounted
for its share options and employee share purchase rights using the fair value recognition
provisions of SFAS 123.
</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;Share-Based Payment&#148; (&#147;SAB 107&#148;). SAB 107 provides the SEC staff position regarding the
application of SFAS 123(R). SAB 107 contains interpretive guidance related to the interaction
between SFAS 123(R) and certain SEC rules and regulations, as well as provides the staff&#146;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 Company is currently reviewing the requirements of SFAS 123(R) and SAB 107 and
expects that the adoption of SFAS 123(R) will have a material impact on the Company&#146;s consolidated
results of operations and earnings per share.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In May&nbsp;2005, the FASB issued Statement No.&nbsp;154, &#147;Accounting Changes and Error Corrections&#148; (&#147;SFAS
154&#148;). SFAS 154 requires retrospective application to prior periods&#146; financial statements of
changes in accounting principle. It also requires that the new accounting principle be applied to
the balances of assets and liabilities as of the beginning of the earliest period for which
retrospective application is practicable and that a corresponding adjustment be made to the opening
balance of retained earnings for that period rather than being reported in an income statement. The
statement will be effective for accounting changes and corrections of errors made in fiscal years
beginning after December&nbsp;15, 2005. The Company is currently evaluating the effect of the adoption
of SFAS 154 on the Company&#146;s consolidated financial position or results of operations but does not
expect it to have a material impact.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In September&nbsp;2005, the FASB ratified Emerging Issues Task Force Issue No.&nbsp;04-13, &#147;Accounting for
Purchases and Sales of Inventory with the Same Counterparty&#148; (&#147;EITF 04-13&#148;). EITF 04-13 discusses
whether inventory purchase and sales transactions with the same counterparty that are entered into
in contemplation of one another should be combined and treated as a nonmonetary exchange and
addresses (a)&nbsp;under what circumstances should two or more transactions with the same counterparty
(counterparties)&nbsp;be viewed as a single nonmonetary transaction within the scope of APB Opinion No.
29, &#147;Accounting for Nonmonetary Transactions&#148; (&#147;APB 29&#148;) and SFAS No.&nbsp;153, &#147;Exchanges of
Nonmonetary Assets, an Amendment of APB 29&#148; (&#147;SFAS 153&#148;) and (b)&nbsp;if nonmonetary transactions within
the scope of APB 29 and SFAS 153 involve inventory, are there any circumstances under which the
transactions should be recognized at fair value. The pronouncement is effective for new inventory
arrangements entered into, or modifications or renewals of existing inventory arrangements
occurring in interim or annual reporting periods beginning after March&nbsp;15, 2006. The Company does
not expect that this pronouncement will have a material effect on its financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>2. Related Party Transactions</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of December&nbsp;31, 2005, Temasek Holdings, through its wholly-owned subsidiary, Singapore
Technologies Semiconductors Pte Ltd, beneficially owns approximately
36% of the Company&#146;s outstanding
ordinary shares. Singapore Technologies Pte Ltd (&#147;STPL&#148;), a wholly-owned subsidiary of Temasek
Holdings, was the holding company of Singapore Technologies Semiconductors Pte Ltd prior to a
restructuring completed on December&nbsp;31, 2004 pursuant to which all the assets of Singapore
Technologies Pte Ltd were transferred to Temasek Holdings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Companies within the Temasek Holdings group, including Chartered Semiconductor Manufacturing Ltd
(&#147;Chartered&#148;), engage in transactions with the Company in the normal course of their respective
businesses. These transactions, such as for gas, water, electricity, facilities management,
transportation and telecommunication services, are on customary terms and conditions no different
from those with third parties.
</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: 6pt"><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&#146;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&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 $1,086 and $1,146 for 2003 and 2004, respectively. 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 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 for 2003, 2004 and 2005 were $13,940, $18,537 and $12,647, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company previously participated in a cash management program managed by a bank for the former
STPL group (&#147;STPL pooled cash&#148;). Under the program, cash balances were pooled and daily cash
surpluses or shortfalls of the Company within the pool earned or bore interest at prevailing
interest rates. This arrangement was terminated as of November&nbsp;30, 2004. In the past, the Company
had placed surplus cash as short-term deposits with ST Treasury Services Ltd (&#147;STPL treasury
deposits&#148;), a wholly-owned subsidiary of Temasek Holdings, but the Company had ceased to do so
since October&nbsp;1, 2004. Interest income under this arrangement for 2003 and 2004 amounted to $1,286
and $255, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of December&nbsp;31, 2004 and 2005, there were the following amounts owing by (to)&nbsp;affiliates:
</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="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="6" style="border-bottom: 1px solid #000000"><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>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amounts due from affiliates</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">Accounts receivable, net of allowance for sales returns</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">6,810</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:15px; text-indent:-15px">Amounts due to affiliates</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">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(137</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(62</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"><B>3. Cash and Cash Equivalents</B>
</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="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="6" style="border-bottom: 1px solid #000000"><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>
</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">$</TD>
    <TD align="right">37,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">29,126</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">152,849</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">153,991</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">37,560</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,891</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">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,712</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">$</TD>
    <TD align="right">227,509</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</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>
</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: 6pt"><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"><B>4. Marketable Securities</B>
</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="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&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="30" style="border-bottom: 1px solid #000000"><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="14" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14" style="border-bottom: 1px solid #000000"><B>2005</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">Available-for-sale
corporate debt securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">20,961</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(780</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">20,181</TD>
    <TD>&nbsp;</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>
</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">Held-to-maturity
certificates of deposit</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">$</TD>
    <TD align="right">8,916</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</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>
</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="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="6" style="border-bottom: 1px solid #000000"><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>
</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">$</TD>
    <TD align="right">2,060</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">17,648</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">18,121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,803</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">$</TD>
    <TD align="right">20,181</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">35,451</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 2003 were $5,062 and $22, respectively. Gross realized gains
and losses in 2004 were $86 and $623, respectively. Gross realized gains and losses in 2005 were
$nil and $nil, respectively. Proceeds from the sales or maturities of available-for-sale
marketable securities during 2003, 2004 and 2005 were $83,319, $177,184 and $16,513, respectively.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>5. Accounts Receivable</B>
</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="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="6" style="border-bottom: 1px solid #000000"><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>
</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">$</TD>
    <TD align="right">151,549</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">243,830</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">(1,899</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,840</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">$</TD>
    <TD align="right">149,650</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">240,990</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">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="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" 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>
</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">$</TD>
    <TD align="right">1,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</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>
</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">(1,102</TD>
    <TD nowrap>)</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>
</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">839</TD>
    <TD>&nbsp;</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>
</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>&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>
</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">1,362</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 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-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: 6pt"><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>6. Other Receivables</B>
</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="6" style="border-bottom: 1px solid #000000"><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>
</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">$</TD>
    <TD align="right">580</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,229</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">1,322</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,313</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">3,785</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,051</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">9,492</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,796</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">1,634</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,947</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">$</TD>
    <TD align="right">16,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,336</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: 12pt"><B>7. Inventories</B>
</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="6" style="border-bottom: 1px solid #000000"><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>
</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">$</TD>
    <TD align="right">42,267</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">63,079</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Work-in-progress</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,472</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,727</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">951</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">677</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">$</TD>
    <TD align="right">54,690</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">79,483</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: 12pt"><B>8. Prepaid Expenses and Other Assets</B>
</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="6" style="border-bottom: 1px solid #000000"><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>
</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">$</TD>
    <TD align="right">27,137</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10,054</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">4,004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,543</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">2,422</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">Loans to vendors</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,879</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,329</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fixed deposits pledged for bank loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">394</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">376</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">$</TD>
    <TD align="right">38,836</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">26,727</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: 12pt">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="6" style="border-bottom: 1px solid #000000"><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>
</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">$</TD>
    <TD align="right">7,071</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,623</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">33,992</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,879</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fixed deposits pledged for bank loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">727</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">Other deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,225</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">289</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loans to vendors</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,771</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,441</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Debt issuance cost, net of accumulated
amortization of $3,481 and $3,026</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,677</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,895</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,706</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,070</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">76,169</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">65,429</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-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: 6pt"><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 lease-back arrangements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Included in current and non-current loan to vendors are amounts of $5,000 and $15,000 extended by
the Company in June&nbsp;2003 and January&nbsp;2004, respectively, to a vendor to secure a specified minimum
quantity of substrates up to December&nbsp;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 by quarterly installments of $450 and
$882 up to June&nbsp;2007 and December&nbsp;2008, respectively. During the year ended December&nbsp;31, 2005,
$4,880 was repaid.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>9. Property, Plant and Equipment</B>
</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="6" style="border-bottom: 1px solid #000000"><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>
</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">$</TD>
    <TD align="right">6,147</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,857</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">164,083</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">170,206</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">1,404,959</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,660,504</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">$</TD>
    <TD align="right">1,595,053</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,856,431</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">$</TD>
    <TD align="right">559,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">749,400</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">$</TD>
    <TD align="right">1,035,803</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,107,031</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 $119,938, $163,975 and $195,923 for the years ended December&nbsp;31, 2003,
2004 and 2005, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the third quarter of fiscal 2004, following the consummation of the merger, the Company adopted
ChipPAC&#146;s policy to depreciate equipment and machinery on a straight-line basis over 8&nbsp;years, from
5&nbsp;years previously. The impact of this change was depreciation savings of $23,373 for year ended
December&nbsp;31, 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, for the year ended December&nbsp;31, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company routinely reviews the remaining estimated useful lives of their equipment and machinery
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 and
machinery. However, due to the nature of the 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
machinery and equipment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Land use rights represent payments to secure, on a fully-paid 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 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Included in property, plant and equipment are equipments acquired under capital lease at a cost of
$31,889 and $20,406 as of December&nbsp;31, 2004 and 2005, respectively. The accumulated depreciation
for these leased assets for the year ended December&nbsp;31, 2004 and 2005 amounted to $7,317 and
$3,775, respectively.
</DIV>


<P align="center" style="font-size: 10pt">F-22
</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: 6pt"><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>10. Intangible Assets</B>
</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 31, 2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>December 31, 2005</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">(458</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,242</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,558</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,142</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">(1,333</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,667</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">(4,533</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,467</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">(20,688</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">78,612</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">(70,338</TD>
    <TD nowrap>)</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">13,180</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,871</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,309</TD>
    <TD>&nbsp;</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>
</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">$</TD>
    <TD align="right">152,180</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(26,350</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">125,830</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</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>
</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: 12pt">Amortization expense for 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>For the Year Ended 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>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>
</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">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">458</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,100</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Technology and intellectual property</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,200</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer relationships</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,688</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,650</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Software, licenses and others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">512</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,265</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">512</TD>
    <TD>&nbsp;</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>
</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">Intangible assets are generally being amortized over estimated useful lives of two to ten years.
Estimated future amortization expense as of December&nbsp;31, 2005 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">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">36,330</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,694</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,163</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,202</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,658</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,733</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">72,780</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: 12pt"><B>11. Goodwill</B>
</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="6" style="border-bottom: 1px solid #000000"><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>
</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">$</TD>
    <TD align="right">2,209</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">523,598</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Goodwill related to acquisitions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">974,389</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">Impairment charges</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(453,000</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">Purchase adjustments</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">(973</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">$</TD>
    <TD align="right">523,598</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">522,625</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-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: 6pt"><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">As of December&nbsp;31, 2003, the Company had goodwill of $2,209 related to the acquisition of Winstek.
As a result of the acquisition of ChipPAC, Inc. in August&nbsp;2004, the Company recorded additional
goodwill of $974,389, inclusive of purchase adjustments of $4,880 in the fourth quarter of 2004
related primarily to equipment and deferred taxes valuation. In 2005, additional purchase
adjustments of $973 related to the cost of acquisition of $453 and fair value of liabilities
acquired of $520 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 and 2005. 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, the Company completed its annual test for impairment and determined that the fair value of
the reporting units exceed their carrying value, and therefore goodwill was not impaired.
</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: 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="1%" nowrap align="left">(a)</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 had affected the short-term earnings expectation of the
Company; and</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="1%" 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 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>12. Business Combination</B>
</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 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,
assembly, 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.
</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 risk-free 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>


<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: 6pt"><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">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>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term debts</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 long-term 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 for a period not to exceed one year
from the consummation date (the allocation period) in accordance with SFAS No.&nbsp;141, &#147;Business
Combinations&#148; (&#147;SFAS 141&#148;) and EITF No.&nbsp;95-3, &#147;Recognition of Liabilities in Connection with a
Purchase Business Combination.&#148; The allocation period was intended to differentiate between amounts
that were determined as a result of the identification and valuation process required by SFAS 141
for all assets acquired and liabilities assumed and amounts that were determined as a result of
information that was not previously obtained being obtained.
</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>



<P align="center" style="font-size: 10pt">F-25
</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 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 straight-line basis over an estimated
life of seven years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Technology and intellectual property were related to ChipPAC&#146;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.
</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 straight-line 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; 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, 2003 or 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, 2003 or 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="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"><B>For the 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="6" style="border-bottom: 1px solid #000000"><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>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>
</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">$</TD>
    <TD align="right">809,880</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</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">(75,154</TD>
    <TD nowrap>)</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>
    <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">$</TD>
    <TD align="right">(0.04</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</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>
    <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">$</TD>
    <TD align="right">(0.41</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</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, non-recurring
charges: impairment of goodwill of $453,000 and merger related expenses of $5,399 for the year
ended December&nbsp;31, 2004.
</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: 12pt"><B>13. Accrued Operating Expenses</B>
</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="6" style="border-bottom: 1px solid #000000"><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>
</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">$</TD>
    <TD align="right">22,609</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">31,324</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">12,789</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,082</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">2,832</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,378</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">3,060</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,780</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">3,511</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,732</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">19,098</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,636</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">$</TD>
    <TD align="right">63,899</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">96,932</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: 12pt"><B>14. Income Taxes</B>
</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>For the Year Ended 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>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>
</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 nowrap align="left">$</TD>
    <TD align="right">(122</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,674</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,698</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">650</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(462,675</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16,880</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">528</TD>
    <TD>&nbsp;</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>
</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">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>For the Year Ended 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>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>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current:</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">$</TD>
    <TD align="right">(1,706</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,283</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(72</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Foreign</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(225</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(172</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(373</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,931</TD>
    <TD nowrap>)</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>
</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:</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">$</TD>
    <TD align="right">741</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(9,145</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(617</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Foreign</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">485</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,860</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,627</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,226</TD>
    <TD>&nbsp;</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>
</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">$</TD>
    <TD align="right">(705</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</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>
</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">The Company was previously granted pioneer status 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; In December&nbsp;2003, an application was submitted to the
Singapore Economic Development Board (&#147;EDB&#148;) to revoke the Company&#146;s pioneer status granted from
January&nbsp;1, 1996 to December&nbsp;31, 2003. 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 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&nbsp;2004, the application for the revocation was approved by EDB. 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 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 align="left" style="font-size: 10pt; margin-top: 6pt">A reconciliation of the expected tax expense (benefit)&nbsp;at the 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>For the Year Ended 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>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>
</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% (2004: 20.0%, 2003: 22.0%)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">116</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-deductible expenses, including goodwill
impairment charges</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">175</TD>
    <TD>&nbsp;</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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-taxable income</DIV></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">(1,212</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,194</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 nowrap align="left">&nbsp;</TD>
    <TD align="right">(121</TD>
    <TD nowrap>)</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>
</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">(5,781</TD>
    <TD nowrap>)</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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tax benefits from employee stock 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">&#151;</TD>
    <TD nowrap></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,084</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Reinvestment allowance</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">(10,415</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,755</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change in valuation allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,383</TD>
    <TD>&nbsp;</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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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>&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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Benefit of tax status change</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">(935</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">Taxable foreign exchange adjustment</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">2,639</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,283</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">All other items, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">186</TD>
    <TD>&nbsp;</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>
</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">Income tax expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">705</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,894</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,689</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">The pioneer status relief had the effect of decreasing diluted net loss per ordinary share by $0.01
and diluted net loss per ADS by $0.06 for the year ended December&nbsp;31, 2003. The pioneer status
relief was revoked in September&nbsp;2004.
</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;31, 2004 and 2005 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="6" style="border-bottom: 1px solid #000000"><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>
</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">$</TD>
    <TD align="right">29,372</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">34,787</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">45,656</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,136</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">23,581</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,336</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">18,276</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,551</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">67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,165</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">116,952</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150,975</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">(80,538</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(110,671</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">$</TD>
    <TD align="right">36,414</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">40,304</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">$</TD>
    <TD align="right">17,855</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">26,386</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">15,908</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,618</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">33,763</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,004</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 align="left">$</TD>
    <TD align="right">2,651</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(6,700</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">During the year ended December&nbsp;31, 2004, as part of our acquisition of ChipPAC, we 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. We
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. As of December&nbsp;31, 2004,
$5,916 of the Korean tax credit carryforwards was utilized.
</DIV>


<P align="center" style="font-size: 10pt">F-28
</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: 6pt">The deferred tax assets as of December&nbsp;31, 2004 and 2005 arose principally as a result of the
deferred tax benefit associated with tax loss carryforwards and investment tax credits. The
Company recorded a valuation allowance of $80,538 and $110,671 as of December&nbsp;31, 2004 and 2005,
respectively, which represents an increase of $71,863 and $30,133 in 2004 and 2005, 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, 2005, the Company has approximately $136,947 of tax loss carryforwards available
to offset against future taxable income, certain amounts of which will expire in varying amounts
from 2006 to 2024. Changes in stock ownership can result in a limitation on the amount of net
operating loss that are available as carryforwards. The Company determined it had undergone such an
ownership change during 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, 2005, the Company has approximately
$2,941 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, 2005, the Company has approximately $3,956, $298,121, $46,180 and $104,771 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 2006 through 2012.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>15. Short-Term Borrowings</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The short-term borrowings relate to the lines of credit with Cho Hung Bank, Hana Bank and the
National Agricultural Cooperation Federation Bank in South Korea, with credit limits of $25,000,
$5,000 and $4,000, respectively. The lines of credit bore interest at rates ranging from 2.1% to
3.3% and 3.59% to 5.86% for the years ended December&nbsp;31, 2004 and 2005, respectively. As of
December&nbsp;31, 2004 and 2005, $19,874 and $16,891 of short-term borrowings remain outstanding,
respectively. These lines of credit are subject to annual review by the lenders for the continued
use of the facilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">
</DIV>
<P align="center" style="font-size: 10pt">F-29
</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>


<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>16. Capital Leases</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Future minimum lease payments under capital leases for equipment and machinery as of December&nbsp;31,
2005 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 ending December&nbsp;31,</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">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,428</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2007</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: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" style="background: #cceeff">
    <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">
    <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">11,157</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 7.1% per annum</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(386</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</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,771</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current installments of obligations under capital leases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,091</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">Obligations under capital leases, excluding current
installments</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 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.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>17. Long-term Debts</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Long-term 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="6" style="border-bottom: 1px solid #000000"><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>
</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 fixed-rate notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">183,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</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 fixed-rate 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 fixed-rate 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 fixed-rate 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">50,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">6.75% senior fixed-rate 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 fixed-rate 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">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">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,760</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">51,951</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53,987</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">8,342</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,866</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrued yield-to-maturity interest on notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,789</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,963</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">796,582</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">794,076</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">(154,407</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18,651</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">$</TD>
    <TD align="right">642,175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">775,425</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 semi-annually 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 conversion price may be subject to adjustments for certain events. 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
</DIV>



<P align="center" style="font-size: 10pt">F-30


<!-- 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">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. Between December 9 and 15 2004, the Company repurchased $16,500
aggregate principal of these convertible notes for $18,150 and recorded loss of $266. On January
14, 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 rights 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% 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 short-term borrowings. In July
2005, the Company cancelled $42,580 aggregate principal amount of the convertible notes repurchased
by the Company. Following the redemption and cancellation, $31,500 aggregate principal amount of
these convertible notes remained outstanding.
</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 conversion price may
be subject to adjustments for certain events. 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&#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% 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">On August&nbsp;5, 2004, in connection with the merger of ChipPAC, the Company assumed the outstanding
borrowings of ChipPAC. The face value of ChipPAC long-term debts consisted of $165,000 of 12.75%
senior subordinated notes due 2009, $50,000 of 8.0% convertible subordinated notes due 2011 and
$150,000 of 2.5% convertible subordinated notes due 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The $165,000 12.75% senior subordinated notes were issued by ChipPAC International Company Limited
(&#147;ChipPAC International&#148;), a wholly-owned subsidiary of ChipPAC. These notes were fully and
unconditionally guaranteed on a senior subordinated basis by ChipPAC and certain of its
subsidiaries. The notes would mature on August&nbsp;1, 2009, with interest at the rate of 12.75% per
annum payable semi-annually on August 1 and February 1 of each year. ChipPAC International may
redeem all or a portion of these notes at any time on or after August&nbsp;1, 2004 at designated
redemption prices. On September&nbsp;3, 2004, ChipPAC International commenced a cash tender offer to
repurchase any and all of the outstanding $165,000 principal amount of these notes at a repurchase
price of 106.375% of the principal amount thereof plus accrued and unpaid interest. In conjunction
with the tender offer, ChipPAC International also solicited consents of holders of these notes to
adopt amendments to the indenture governing such notes that would eliminate substantially all of
the restrictive covenants and certain events of default in the indenture. On October&nbsp;7, 2004, the
Company completed the tender offer and consent solicitation of any and all of the outstanding
notes. ChipPAC International received valid tenders of the notes and deliveries of related consents
from holders of approximately 62.1% or $102,500 aggregate principal amount of the notes
outstanding. ChipPAC International paid approximately $111,474, including accrued and unpaid
interest for the senior subordinated notes validly tendered and related consents validly delivered.
In November&nbsp;2004, the Company repurchased the remaining 37.9%, or $62,500 aggregate principal
amount of the senior subordinated notes, as permitted under the indenture
</DIV>


<P align="center" style="font-size: 10pt">F-31
</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: 6pt">governing such notes. The Company recorded a loss of $531 on the repurchase of the notes. The
tender offer and repurchase of the 12.75% senior subordinated notes were financed by part of the
proceeds from the issuance of the senior unsecured notes due November&nbsp;15, 2011 below.
</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
semi-annually 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">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 semi-annually 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. The conversion price may be subject to adjustments for certain
events. 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. 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, if any, to, but excluding, the purchase date.
</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 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 convertible into the Company&#146;s 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,
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 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">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 semi-annually
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
</DIV>


<P align="center" style="font-size: 10pt">F-32
</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: 6pt">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 short-term debts with Overseas-Chinese Banking Corporation Limited and Bank of
America N.A.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In 2005, STATS ChipPAC Korea obtained a U.S. dollars term loan facility of $15,000 from Hana Bank.
As at December&nbsp;31, 2005, the interest rate on the loan was 6.0% per annum. The principal and
interest on the loan is repayable in 4 equal quarterly installments commencing February 28, 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In 2002, Winstek entered into three floating rate New Taiwan dollar loans of $1,766, $2,649 and
$7,359 with Chiaotung Bank. The interest rates on the loans are revised from time to time by
Chiaotung Bank. As at December&nbsp;31, 2005, the interest rates on the loans were 3.4% per annum.
Interest on all three loans is payable on a monthly basis in New Taiwan dollars. The principal on
the $1,766 loan and the $2,649 loan are each repayable in 21 equal quarterly installments
commencing March&nbsp;29, 2004 and May&nbsp;15, 2004, respectively. The principal on the $7,359 loan is
repayable in 13 equal quarterly installments commencing June&nbsp;27, 2003. As of December&nbsp;31, 2005, the
$1,766 loan is secured by fixed deposit and land pledged to the bank of $3,172, the $2,649 loan is
secured by fixed deposit and building pledged to the bank of $6,643 and the $7,359 loan is secured
by fixed deposit and machinery pledged to the bank of $3,847.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In 2003, Winstek entered into two floating rate New Taiwan dollar loans of $4,416 and $2,944 with
Chiaotung Bank and Hsinchu International Bank, respectively. The interest rates on the loans are
revised from time to time by the banks. As at December&nbsp;31, 2005, the interest rates on the loans
were 3.4% and 2.8% per annum, respectively. Interest on all two loans is payable on a monthly basis
in New Taiwan dollars. The principal on the $4,416 loan is repayable in 13 equal quarterly
installments commencing November&nbsp;10, 2004, and the principal on the $2,944 loan is repayable in 48
unequal monthly installments commencing January&nbsp;10, 2004. The loans are secured by machinery
pledged to the banks of $5,899 as of December&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In 2004, Winstek entered into a floating rate New Taiwan dollar term loan facility of NT$1.8
billion ($56,711) with a syndicate of lenders, with Chiaotung Bank as the agent bank. The purpose
of the term loan is for the expansion of Winstek&#146;s testing capacity. The loan may also be accessed
through letters of credit. The term loan must be fully drawn within 18&nbsp;months from August&nbsp;27, 2004,
the date of the first drawdown. Winstek must satisfy certain conditions precedent with respect to
each drawdown. As of December&nbsp;31, 2005, Winstek has drawn down NT$997.2&nbsp;million ($29,965) 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 term loan is the rate set by Chunghwa Post Co. Ltd. plus
1.3% per annum. As of December&nbsp;31, 2005, the interest rate on the loan was 3.2% per annum. Interest
on the loan is payable on a monthly basis. The loan is secured by certain machinery purchased with
the loan proceeds amounting to $31,880 as of December&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In 2005, Winstek entered into three Taiwan dollar floating rate loan of $9,015, $6,010 and $1,502
with Taishin Bank, China Development Bank and Hsinchu International Bank, respectively. The
interest rates on the loans are revised from time to time by the banks. As at December&nbsp;31, 2005,
the interest rates were 2.2%, 2.2% and 2.7% per annum, respectively. Interest on all three loans is
payable on a monthly basis in New Taiwan dollars. The principal on the $9,015 and $6,010 loans are
repayable on maturity. The principal on the $1,502 loan is repayable in 12 equal quarterly
installments commencing February&nbsp;18, 2006. The $9,015 loan is secured by machinery pledged to the
bank of $17,013.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In 2003, Winstek entered into a Taiwan dollar fixed rate loan with Taiwan Life Insurance Company of
$2,711. As of December&nbsp;31, 2005, the loan bears interest at the rate of 3.4% per annum. Interest
and principal are repayable in 12 equal quarterly installments commencing December&nbsp;26, 2003. The
loan is secured by machinery pledged to Taiwan Life Insurance Company amounting to $2,174 as of
December&nbsp;31, 2005.
</DIV>


<P align="center" style="font-size: 10pt">F-33
</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: 6pt">In 2004, Winstek entered into a Taiwan dollar fixed rate loan with Taiwan Life Insurance Company of
$3,303. As of December&nbsp;31, 2005, the interest rate on the loan is 3.4% per annum. Interest and
principal on the loan is repayable in 16 equal quarterly installments. As of December&nbsp;31, 2005, the
loan is secured by machinery pledged to Taiwan Life Insurance Company amounting to $4,550.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In 2004, two Taiwan dollar fixed rate commercial papers of NT$50.0&nbsp;million ($1,577) each were
issued through Taching Bill Co. (guaranteed by Far East Commercial Bank) and Chung Hsing Bill Co.
(guaranteed by Fu-Hua Commercial Bank) for two years, commencing
November&nbsp;12, 2004 and December&nbsp;24, 2004, respectively. The interest rates on the commercial papers were 1.7 % per annum for Taching
Bill Co. and 1.9% per annum for Chung Hsing Bill Co. Interest is repayable every two months and
principal is repayable on maturity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In 2005, Winstek entered into a Taiwan dollar fixed rate loan of $3,005 with IBT Bank. As of
December&nbsp;31, 2005, the interest rate on the loan is 2.5% per annum. Interest on the loan is payable
on a monthly basis in New Taiwan dollars. The principal is repayable in 6 equal half-yearly
installments commencing May&nbsp;17, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In addition to amounts disclosed above, the Company has deposits of $2,608 pledged as security for
bank credit and facility lines made available to the Company as of December&nbsp;31, 2005. As of
December&nbsp;31, 2004, $1,121 deposits were pledged as security.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Annual maturities of long-term debts as of December&nbsp;31, 2005 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 ending December&nbsp;31,</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">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">18,651</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51,275</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">301,229</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,921</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">265,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">794,076</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">Substantially all assets of the STATS ChipPAC consolidated group, with the exception of Winstek and
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.), have been pledged
as collateral under the terms of the 6.75% Senior Notes due 2011 or the 7.5% Senior Notes due 2010.
The indenture governing the 6.75% senior notes and the 7.5% senior notes has been fully and
unconditionally guaranteed, on an unsecured senior basis, by the parent company and the
guaranteeing subsidiaries. See Note 28, Condensed Consolidating Financial Information. These
indentures contain certain covenants 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 and the 7.5% senior notes are cross-defaulted to the Company&#146;s
other indebtedness.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>18. Unutilized Credit Facilities</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">At December&nbsp;31, 2005, the Company has undrawn banking and credit facilities consisting of long-term
loans and bank guarantees of $185,569 with financial institutions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The notional letters of credit amounts outstanding at December&nbsp;31, 2004 and 2005 were $nil and
$8,951, respectively.
</DIV>


<P align="center" style="font-size: 10pt">F-34
</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"><B>19. Other Non-Current Liabilities</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Other non-current 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="6" style="border-bottom: 1px solid #000000"><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>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred grant</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">268</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred tax liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,763</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,654</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">16,331</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,957</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">$</TD>
    <TD align="right">50,362</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</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: 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">The deferred grant in 2004 referred to a 5-year grant of $13,878 obtained by the Company from the
Economic Development Board under its Research Incentive Scheme for Companies in 1997 to acquire
equipment to be used in certain research and development projects. The grant, which was a
reimbursement of specified costs, has no requirement for repayment. Amounts received for
asset-related grant were deferred and recognized in other income over the life of the related
asset.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>20. Share Capital</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On November&nbsp;5, 2003, the Company issued 83,389,375 new ordinary shares of par value S$0.25 each
with proceeds of $115&nbsp;million (net proceeds of $111&nbsp;million). The 83,389,375 new shares were
admitted to the Official List of the Singapore Exchange Securities Trading Limited on November&nbsp;6,
2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On August&nbsp;5, 2004, the Company completed the acquisition of ChipPAC. The Company issued 861,907,530
new ordinary shares of par value S$0.25 each and assumed options to purchase 76,492,951 ordinary
shares to effect the acquisition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As a result of the employees exercising their share options in 2003, 2004 and 2005,
1,115,470, 5,802,800 and 31,961,575 ordinary shares were issued, respectively.
</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. The Singapore law was revised effective January&nbsp;30, 2006 whereby common
stock par value is eliminated. The revision will result in all ordinary shares being recorded with
no par value.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>21. Additional Paid-in Capital</B>
</DIV>

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

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of December&nbsp;31, 2004 and 2005, the Company&#146;s share premium account amounted to $1,406,019 and
$1,414,721, respectively.
</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: 12pt"><B>22. Accumulated Other Comprehensive Loss</B>
</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="6" style="border-bottom: 1px solid #000000"><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>
</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 align="left">$</TD>
    <TD align="right">5,865</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,320</TD>
    <TD>&nbsp;</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 nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,785</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(775</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unrealized loss on available-for-sale marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">780</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,027</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">$</TD>
    <TD align="right">2,860</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,572</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"><B>23. Share Options and Incentive Plans</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Effective May&nbsp;1999, the Company adopted the Share Option Plan which provides for a maximum of 150
million shares (subject to adjustment under the plan) to be reserved for option plans. Options
granted under the plan may include non-statutory options as well as incentive stock options
intended to qualify under Section&nbsp;422 of the United States Internal Revenue Code. Option periods
may not exceed 10&nbsp;years from the date of grant. Upon leaving the employment of the Company,
outstanding options remain exercisable for a specified period.
</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, and
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">Prior to 2000, share options granted prior to May&nbsp;1999 under the previous Employees&#146; Share
Ownership Scheme were converted using the higher of par value or net tangible asset value. In
April&nbsp;2002, share options were granted with exercise prices determined by the average of the last
5-day closing prices prior to grant date. These two bases gave rise to exercise prices of the
share options being lower than their fair market values at grant date and resulted in the
recognition of stock compensation charges.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In connection with the merger with ChipPAC, the Company adopted the Substitute Purchase and Option
Plan (&#147;Substitute Option Plan&#148;) and Substitute Equity Incentive Plan (&#147;Substitute EIP&#148;)
(collectively the &#147;Substitute Plans&#148;) to enable substitute options to be granted to holders of
options granted under the ChipPAC shares options and incentive plans. The number of ordinary shares
that may be issued under the Substitute Option Plan and Substitute EIP, may not exceed, in the
aggregate, 7.2&nbsp;million and 73&nbsp;million shares, respectively. On August&nbsp;5, 2004, the Company effected
an amendment to the Share Option Plan to increase the shares to be reserved for option plans to 245
million shares (subject to adjustment under the plan).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In August&nbsp;2004, the Company adopted an employee share purchase plan (&#147;ESPP&#148;) for the benefit of its
employers. A maximum aggregate of 130&nbsp;million shares have been reserved for issuance under the
ESPP. The ESPP qualifies in the United States under Section&nbsp;423 of the United States for Internal
Revenue Code. Under the ESPP, substantially all employees may purchase the Company&#146;s ordinary
shares through periodic payroll deductions or lump sum payments at a price equal to 85.0% of the
lower of the fair market value at the beginning or the end specified six-month 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 ends on February&nbsp;14, 2005. Share purchases are limited to 15.0% of an
employee&#146;s eligible compensation.
</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 stock option activity for the years ended December&nbsp;31, 2003, 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>&nbsp;</TD>
    <TD>&nbsp;</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>&nbsp;</TD>
    <TD>&nbsp;</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>&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>
</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>
</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, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54,275</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.65</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted during the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,956</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.17</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lapsed during the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,094</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.69</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercised during the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,115</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.62</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">Options outstanding at December&nbsp;31, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,022</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.58</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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted during the year</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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lapsed during the year</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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercised during the year</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>
</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">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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted during the year</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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lapsed during the year</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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercised during the year</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>
</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">Options outstanding at December&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">124,175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.01</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercisable at December&nbsp;31, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,728</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.66</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"><!-- 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">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">$</TD>
    <TD align="right">1.13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercisable at December&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62,785</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.30</TD>
    <TD>&nbsp;</TD>
</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">Weighted-average fair value of options granted in 2003, 2004 and 2005 were $0.60, $0.92 and $0.38,
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table summarizes information about fixed stock options outstanding at December&nbsp;31,
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="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="10" style="border-bottom: 1px solid #000000"><B>Options Outstanding</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" 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 nowrap align="center" colspan="2">&nbsp;</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 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 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>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>Weighted</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><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>Average</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">

<TD nowrap align="left" style="border-bottom: 1px solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Prices</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"  style="border-bottom: 1px solid #000000"><B>12/31/2005</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>12/31/2005</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>
</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>
</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 $0.15</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">143</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">3.8 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">143</TD>
    <TD>&nbsp;</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 $0.29</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,272</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">6.8 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,780</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$0.32 to $0.47</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,093</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">5.3 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.43</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,999</TD>
    <TD>&nbsp;</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 $0.89</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62,614</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">8.2 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.69</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,957</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.79</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$0.91 to $1.09</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,761</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">6.7 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.96</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,117</TD>
    <TD>&nbsp;</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 $1.66</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,420</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">6.4 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,917</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.43</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$2.01 to $2.61</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">4.0 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.06</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$3.99</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">4.3 years</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,750</TD>
    <TD>&nbsp;</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>&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 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">124,175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&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">62,785</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>&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 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">Total compensation expense recognized for stock-based compensation on share options and employee
share purchase rights for the years ended December&nbsp;31, 2003, 2004 and 2005 were $97, $658 and $743,
respectively.
</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: 12pt"><B>24. Commitments and Contingencies</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>(a)&nbsp;Commitments</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of December&nbsp;31, 2004 and 2005, capital commitments 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="6" style="border-bottom: 1px solid #000000"><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>
</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">$</TD>
    <TD align="right">1,598</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,204</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Plant and machinery</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,717</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">144,169</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">$</TD>
    <TD align="right">47,210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">121,822</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">The Company is party to certain royalty and licensing agreements which have anticipated payments of
approximately $4,640 per annum for 2006 through 2010. Following the acquisition of ChipPAC, the
Company assumed the obligation to pay until June&nbsp;30, 2007 additional contingent incentive payments
to Cirrus Logic, Inc. of up to approximately $1,625 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 for
the years ended December&nbsp;31, 2003, 2004 and 2005 was $2,597, $4,781 and $8,499, 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
lease-back arrangements. These leases extend through 2008. Operating lease rental expenses,
including amortization of lease prepayments, in respect of these leases for the years ended
December&nbsp;31, 2003, 2004 and 2005 were $18,118, $39,543 and $30,514, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Future minimum lease payments under non-cancelable operating leases as of December&nbsp;31, 2005 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 ending December&nbsp;31,</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">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">13,795</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,488</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,390</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,600</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,556</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,819</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">112,648</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: 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>(b)&nbsp;Contingent liabilities</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the normal course of business, the Company is 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. (&#147;Seagate&#148;) 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
Cross-Complaint against ChipPAC, Amkor and Sumitomo Bakelite, Ltd., the Japanese manufacturer of
the allegedly defective epoxy mold compound. On April&nbsp;14, 2005, the Company reached a resolution
with Seagate with respect to this litigation. As part of a broader settlement agreement among all
parties to this matter, the Company had agreed to pay a fee in consideration of a release from all
claims related to this litigation. The amount related to the settlement is being paid by the
Company&#146;s insurer.
</DIV>


<P align="center" style="font-size: 10pt">F-38
</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">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 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. Due to the inherent uncertainties of the lawsuit, the Company cannot accurately
predict the ultimate outcome. The final resolution of the lawsuit 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 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 agreement by those taxing authorities. The Company accrues costs associated with these
matters when they are probable and reasonably estimable. The Company does not believe that it is
probable that losses associated with these matters beyond those already recognized will be incurred
in amounts that would be material to its financial position, results of operations, or cash flows.
</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 $15,727 as of
December&nbsp;31, 2005) 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 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 $2,620 as of
December&nbsp;31, 2005) was made on January&nbsp;9, 2004, for the interest 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. 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, 2005 is estimated to be 31.6&nbsp;billion South Korean Won
(approximately $30,981 as of December&nbsp;31, 2005). As of December&nbsp;31, 2005, 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 align="left" style="font-size: 10pt; margin-top: 6pt"><B>25. Other Non-Operating Income (Expense), net</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"><B>For the 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="10" style="border-bottom: 1px solid #000000"><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>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>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Government grant income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,347</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</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 valign="bottom">
    <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>&nbsp;</TD>
    <TD align="right">5,040</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(537</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">Loss from 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">(797</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,653</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">183</TD>
    <TD>&nbsp;</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>
</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">7,570</TD>
    <TD>&nbsp;</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>
</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-39
</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"><B>26. Fair Value of Financial Instruments</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="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>December 31,</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>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Carrying</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Estimated</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Carrying</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Estimated</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Fair Value</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Fair Value</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>$</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>$</B></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>&nbsp;</TD>
    <TD align="right">227,509</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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">224,720</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">20,181</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,181</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">35,451</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Pledged fixed deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,121</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">2,608</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">Short-term borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,874</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,874</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">16,891</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Long-term debts, excluding
senior and convertible
notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,293</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,163</TD>
    <TD>&nbsp;</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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Senior and convertible notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">736,289</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">748,907</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">726,463</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">708,110</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: 6pt"><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: 6pt"><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: 6pt"><B><I>Pledged fixed deposits</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 fixed deposits of
similar terms and remaining maturities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Short-term borrowings and long-term 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>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><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>



<P align="center" style="font-size: 10pt">F-40
</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"><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 align="left" style="font-size: 10pt; margin-top: 12pt"><B>27. Business Segment, Geographic and Major Customer Data</B>
</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>

<P align="center" style="font-size: 10pt">F-41
</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">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>For the Year Ended 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>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>
</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <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 align="left">$</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</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:15px; text-indent:-15px">&#151; packaging &#151; leaded</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">638</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">189</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">13,301</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,708</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,459</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">13,940</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,544</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,648</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>
    <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">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" 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">76,485</TD>
    <TD>&nbsp;</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>
</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">93,841</TD>
    <TD>&nbsp;</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>
</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">139,388</TD>
    <TD>&nbsp;</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>
</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">309,714</TD>
    <TD>&nbsp;</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>
</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">Rest of 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">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; packaging &#151;
array</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">998</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">129,082</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">3,895</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,585</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,038</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">34,200</TD>
    <TD>&nbsp;</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">86,277</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">39,093</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">121,282</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">232,397</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">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" 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">932</TD>
    <TD>&nbsp;</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>
</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">4,015</TD>
    <TD>&nbsp;</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>
</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">12,997</TD>
    <TD>&nbsp;</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>
</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">17,944</TD>
    <TD>&nbsp;</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>
</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">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">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; packaging &#151; array</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">78,416</TD>
    <TD>&nbsp;</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>
</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">102,389</TD>
    <TD>&nbsp;</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>
</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">199,886</TD>
    <TD>&nbsp;</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>
</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">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>
</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">Long-lived 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"><B>For the 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="6" style="border-bottom: 1px solid #000000"><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>
</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">$</TD>
    <TD align="right">391,522</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">350,960</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">24,704</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,574</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">619,577</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">730,497</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">$</TD>
    <TD align="right">1,035,803</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,107,031</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">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"><B>For the 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="6" style="border-bottom: 1px solid #000000"><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>
</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">$</TD>
    <TD align="right">689,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">531,141</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">23,190</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,843</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">447,060</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">603,668</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">$</TD>
    <TD align="right">1,159,350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</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: 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-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="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="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&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"><B>For the Year Ended</B></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>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>2003</B></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>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>%</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">Customer A</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.6</TD>
    <TD>&nbsp;</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">12.0</TD>
    <TD>&nbsp;</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>
</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">13.6</TD>
    <TD>&nbsp;</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>
</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">42.8</TD>
    <TD>&nbsp;</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>
</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>&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100.0</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>&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"><B>28. Condensed Consolidating Financial Information</B>
</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 (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
(&#147;Non-Guarantor 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
subsidiaries, except STATS ChipPAC Shanghai Co., Ltd., STATS ChipPAC Test Services (Shanghai) Co.,
Ltd., STATS ChipPAC Semiconductor Shanghai Co., Ltd., Winstek (&#147;Non-Guarantor 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
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.
</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 OPERATIONS<BR>
For the Year Ended December&nbsp;31, 2003</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="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>&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>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 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>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">$</TD>
    <TD align="right">337,934</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12,137</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">31,041</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(421</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">380,691</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">(291,769</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12,546</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(23,908</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">209</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(328,014</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" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,165</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(409</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,133</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(212</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,677</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">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" 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">32,228</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,307</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,264</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(324</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,475</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">14,808</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">672</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(185</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,295</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other general expenses, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">502</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">536</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">(664</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">374</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">47,538</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,843</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,936</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,173</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,144</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)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,373</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,252</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,197</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">961</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">533</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">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</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,618</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">167</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,785</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">(12,474</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">(1,520</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">(13,994</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>&nbsp;</TD>
    <TD align="right">1,496</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">138</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,634</TD>
    <TD>&nbsp;</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">(1,590</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">1,590</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 non-operating income (expense), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,611</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">(41</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">7,570</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 other income (expense), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(339</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">(1,256</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,590</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">(1,712</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,252</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,941</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,551</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">528</TD>
    <TD>&nbsp;</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">(965</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">774</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(514</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">(705</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" 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">(2,677</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,478</TD>
    <TD nowrap>)</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">2,551</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(177</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 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">(1,539</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" 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">(2,677</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,478</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,427</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,012</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,716</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>
</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 STATEMENTS OF CASH FLOWS<BR>
For the Year Ended December&nbsp;31, 2003</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="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>&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>Non &#150;</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 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>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>
</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">$</TD>
    <TD align="right">(2,677</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,478</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,427</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,012</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,716</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>
</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">98,823</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,761</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,235</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(209</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">120,610</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">11,732</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,732</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">1,155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,155</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">503</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">307</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(752</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100</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">7,366</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,366</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">(2,875</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">(492</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">(3,367</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(741</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">(505</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">(1,246</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest in loss 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">1,539</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,539</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss (gain)&nbsp;on sale and maturity of marketable
securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,025</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">(15</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">(5,040</TD>
    <TD nowrap>)</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">1,590</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">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,590</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">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">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(54</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">(54</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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>
</TR>
<TR valign="bottom">
    <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">(27,196</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(865</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,216</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">(30,277</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">(2,827</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(643</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,932</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Inventories</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,095</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">(10,095</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">(15,854</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,533</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">(16,783</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <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">9,640</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">368</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,761</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,769</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amounts due to affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(743</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(537</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(213</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 cash provided by operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">64,529</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,311</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15,708</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">82,548</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: 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 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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from sales of marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">70,238</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,328</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">77,566</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">5,753</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,753</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <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">(32,924</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">(10,926</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">(43,850</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">(15,533</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">3,092</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,441</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">Purchase of additional shares in subsidiary</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(467</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">(467</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">(168,968</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,172</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(38,186</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">(209,326</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 nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,136</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">189</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">(3,946</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" 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">$</TD>
    <TD align="right">(146,037</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,171</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(38,503</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12,441</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(174,270</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>
</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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Repayment of short-term 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">$</TD>
    <TD align="right">(27,419</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(27,419</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Repayment of long-term debts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14,768</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">(4,945</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">(19,713</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">112,245</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,673</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12,441</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">117,477</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <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">112,345</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112,345</TD>
    <TD>&nbsp;</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">49,839</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,839</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">3,500</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">4,723</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,223</TD>
    <TD>&nbsp;</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">6,784</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,784</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">(7,405</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(317</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,140</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">(12,862</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" 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 align="left">$</TD>
    <TD align="right">212,701</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(317</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">34,731</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(12,441</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">234,674</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>
<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 align="left">$</TD>
    <TD align="right">131,193</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(177</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,936</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">142,952</TD>
    <TD>&nbsp;</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">2,326</TD>
    <TD>&nbsp;</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</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,550</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">163,646</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">398</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,617</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">167,661</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>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</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">297,165</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">221</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15,777</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">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: 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 BALANCE SHEETS<BR>
As of 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 &#150;</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">$</TD>
    <TD align="right">184,824</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</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 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">787</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,273</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,060</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">66,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,444</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,331</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">149,650</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">250,479</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">194,605</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66,326</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,719</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(525,508</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,623</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">8,022</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">863</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">238</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,813</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">19,916</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,868</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,572</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">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54,690</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">32,971</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,525</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">273</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">740</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,327</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,836</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:60px; text-indent:-15px">Total current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">563,087</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">196,733</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,739</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">162,734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,396</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(525,508</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">492,181</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,097</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</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</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,121</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">391,523</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,912</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">199,234</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">176,780</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">263,530</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(176</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,035,803</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Investment in subsidiaries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">750,620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="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">(750,620</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">Intangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,398</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,802</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,816</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118,358</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,456</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">125,830</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">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">312,758</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102,591</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">106,040</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">523,598</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Prepaid expenses and other non-current
assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,686</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">487</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,242</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">184</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,570</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,169</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:60px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,766,411</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">204,934</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">588,789</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">560,647</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">425,016</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,274,095</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,271,702</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">$</TD>
    <TD align="right">7,957</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,314</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">41,448</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,148</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">14,714</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">68,573</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">20,028</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,610</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,268</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,728</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51,638</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">36,773</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,307</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,382</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,953</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,484</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,899</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">13</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">450</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,038</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Short-term 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">19,874</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,874</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">4,941</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">173</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,205</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">437,110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,216</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(525,508</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">137</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">805</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,782</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,587</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Short-term debts and current
installments of long-term debts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">137,107</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">154,407</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:60px; text-indent:-15px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">207,611</TD>
    <TD>&nbsp;</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">133,856</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">454,929</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">86,462</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(525,516</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">368,153</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">10,771</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,771</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term debts, excluding current
installments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">399,182</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">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,993</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">642,175</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other non-current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">268</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,792</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,189</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,113</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">50,362</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">607,061</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">210,811</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">180,419</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">465,118</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">133,568</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(525,516</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,071,461</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">&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">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,891</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,891</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">1,159,350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,877</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">408,370</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">95,529</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">291,448</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(789,470</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,159,350</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">1,766,411</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">204,934</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">588,789</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">560,647</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">425,016</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,274,095</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,271,702</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-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 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 &#150;</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">$</TD>
    <TD align="right">462,697</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</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">42,877</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,682</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">25,862</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,273</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,965</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 valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other general expenses (income), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(618</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33</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">44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(464</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: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">
    <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" style="background: #cceeff">
    <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">
    <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" 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">(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">
    <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" style="background: #cceeff">
    <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">
    <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">(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" 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">(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">
    <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">(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" 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">(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">
    <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">(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" 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">(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">
    <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 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 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">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" 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">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">
    <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" style="background: #cceeff">
    <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">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,162</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">(32</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">1,029</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">
    <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" style="background: #cceeff">
    <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">
    <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" style="background: #cceeff">
    <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">
    <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" style="background: #cceeff">
    <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">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by 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" style="background: #cceeff">
    <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">
    <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" style="background: #cceeff">
    <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">
    <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" style="background: #cceeff">
    <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">
    <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" style="background: #cceeff">
    <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">
    <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" 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">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">
    <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" 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 short-term 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">$</TD>
    <TD align="right">(22,006</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(72,006</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Repayment of long-term 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">
    <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" style="background: #cceeff">
    <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">
    <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" 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">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">
    <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" 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">(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">
    <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" 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">(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">
    <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" 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">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">
    <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-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 BALANCE SHEETS<BR>
As of December&nbsp;31, 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&#150;</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">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">5,590</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">26,727</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">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" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term 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">
    <TD nowrap><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" style="background: #cceeff">
    <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">
    <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" style="background: #cceeff">
    <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">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Prepaid expenses and other non-current
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">28,931</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">7,077</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65,429</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">Short-term 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 long-term 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">Long-term 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 non-current 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-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 OPERATIONS<BR>
For the Year Ended December&nbsp;31, 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&#150;</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">94,774</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">135,771</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:30px; text-indent:-15px">Other general expenses (income), 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 nowrap align="left">&nbsp;</TD>
    <TD align="right">(20</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">(20</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: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">
    <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" style="background: #cceeff">
    <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">
    <TD><DIV style="margin-left:30px; text-indent:-15px">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-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="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, 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>&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>&nbsp;</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>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">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">
    <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" style="background: #cceeff">
    <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">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">698</TD>
    <TD>&nbsp;</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">(209</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">1,278</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">
    <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" style="background: #cceeff">
    <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">
    <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" style="background: #cceeff">
    <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">
    <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" style="background: #cceeff">
    <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">
    <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" style="background: #cceeff">
    <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">
    <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" style="background: #cceeff">
    <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">
    <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" style="background: #cceeff">
    <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">
    <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" 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">(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">
    <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" 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">(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">
    <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 short-term 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">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Repayment of long-term 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" 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">13,521</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">
    <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" style="background: #cceeff">
    <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">
    <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" style="background: #cceeff">
    <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">
    <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" 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">(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">
    <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" 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 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">
    <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" 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">(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">
    <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" 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">$</TD>
    <TD align="right">144,841</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</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-51
</DIV>


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{"company-data": {"conformed-name": "STATS CHIPPAC LTD.", "cik": "0001101873", "assigned-sic": "3825", "irs-number": "000000000", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "20-F", "act": "34", "file-number": "333-75080", "film-number": "06648943"}, "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 25, 2005
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)
10 Ang Mo Kio Street 65
#05-17/20 Techpoint
Republic of Singapore
Singapore 569059
(Jurisdiction of incorporation or organization)
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
None
Securities registered or to be registered pursuant to Section 12(g) of the Act.
Ordinary Shares, including Ordinary Shares
represented by American Depositary Shares (each representing ten Ordinary Shares)
(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.
1,976,292,025 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
21
ITEM 4A.
UNRESOLVED STAFF COMMENTS
42
ITEM 5.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
42
ITEM 6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
58
ITEM 7.
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
71
ITEM 8.
FINANCIAL INFORMATION
73
ITEM 9.
THE OFFER AND LISTING
75
ITEM 10.
ADDITIONAL INFORMATION
76
ITEM 11.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
88
ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
89
ITEM 13.
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
89
ITEM 14.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
89
ITEM 15.
CONTROLS AND PROCEDURES
89
ITEM 16A.
AUDIT COMMITTEE FINANCIAL EXPERT
89
ITEM 16B.
CODE OF ETHICS
89
ITEM 16C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
89
ITEM 16D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEE
90
ITEM 16E.
ISSUER PURCHASES OF EQUITY SECURITIES
90
ITEM 17.
FINANCIAL STATEMENTS
90
ITEM 18.
FINANCIAL STATEMENTS
90
ITEM 19.
EXHIBITS
91
SIGNATURES
96
INDEX TO FINANCIAL STATEMENTS
F-1
EX-4.46 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.
EX-4.48 Supplemental Subsidiary Guarantee Agreement dated as of Feburary 21, 2006, by and between STATS ChipPAC Ltd. and U.S. Bank National Association with respect to the 7.5% Senior Notes 2010
EX-4.49 Supplemental Subsidiary Guarantee Agreement, dated as of Feburary 21, 2006, by and between STATS ChipPAC Ltd. and U.S. Bank National Association with respect to 6 3/4% Senior Notes due 2011
EX-8.1 List of subsidiaries
EX-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
EX-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
EX-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
EX-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 2002
EX-15.1 Consent Pricewaterhouse Coopers, Singapore, independent registered public accounting firm
EX-15.2 Consent of KPMG, 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, 2006 was S$1.62 per $1.00 for cable
transfers in Singapore dollars, KRW958.90 per $1.00 for cable transfers in South Korean Won,
RMB8.06 per $1.00 for cable transfers in Chinese Renminbi, MYR3.75 per $1.00 for cable transfers in
Malaysian Ringgit, NT$31.97 per $1.00 for cable transfers in New Taiwan dollars and ¥116.88 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, 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 years ended December 31, 2004 and 2005 the financial results of ChipPAC
from August 5, 2004. The term "pro forma" as used in this document
gives effect to the merger as if it had been consummated on January 1 of that particular year and
reflects ChipPAC's financial data for the 12 months ended December 31 for that particular year.
Since the beginning of fiscal 2005, we employed quarterly and fiscal year reporting periods
that end on the Sunday nearest to the calendar month end of that period. Our first three quarters
of 2005 ended on March 27, 2005, June 26, 2005 and September 25, 2005, respectively, and our fourth
quarter and fiscal year 2005 ended on December 25, 2005, the Sunday nearest to the calendar quarter
end of each period, while our quarterly periods in prior years ended on March 31, June 30,
September 30 and December 31, respectively. For ease of presentation, our first three quarters of
2005 and fourth quarter and fiscal year 2005 have been presented as ending on March 31, June 30,
September 30, and December 31, 2005, respectively, and unless otherwise specified or the context requires, references to "2005" refer to our fiscal year 2005.
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); reliance on a
small group of principal customers; decisions by customers to discontinue outsourcing of test and
packaging services; continued success in technological innovations; availability of financing;
delays in acquiring or installing new
1
Table of Contents
equipment; our substantial 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; limitations imposed
by our financing arrangements which may limit our ability to maintain and grow our business;
pricing pressures including declines in average selling prices; 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; inability to achieve
satisfactory internal controls to meet the requirements of Sarbanes Oxley Act of 2002; 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; unsuccessful acquisitions and investments in other companies and
businesses; 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.
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 31, 2004 and 2005 and for the fiscal years ended December 31, 2003, 2004 and 2005,
are derived from our consolidated financial statements which have been audited by KPMG (for year
ended December 31, 2003) and PricewaterhouseCoopers (PwC) (for years ended December 31, 2004 and
2005), independent registered public accounting firms, and are included in "Item 18. Financial
Statements." The selected consolidated financial data as of December 31, 2001, 2002 and 2003 and
for the fiscal years ended December 31, 2001 and 2002 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 years ended December 31, 2004 and 2005 the financial results of ChipPAC from August 5, 2004. The financial results
prior to the year ended December 31, 2004 reflect the financial results of STATS and do not include
the financial results of ChipPAC.
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Table of Contents
Year Ended December 31,
2001
2002
2003
2004
2005
(In thousands, except per share data and ratios)
Income Statement Data:
Net revenues
$
145,866
$
225,738
$
380,691
$
769,121
$
1,157,253
Cost of revenues
(217,789
)
(247,943
)
(328,014
)
(643,540
)
(968,023
)
Gross profit (loss)
(71,923
)
(22,205
)
52,677
125,581
189,230
Operating expenses:
Selling, general and administrative
(1)
37,065
36,693
36,475
84,965
135,771
Research and development
15,160
18,856
15,295
17,637
26,071
Goodwill impairment
(2)
—
—
—
453,000
—
Equipment impairments
(3)
23,735
14,666
—
—
—
Prepaid leases written off
(4)
3,145
764
—
—
—
Restructuring charges
—
—
—
—
830
Other general expenses (income), net
101
548
374
(464
)
(20
)
Total operating expenses
79,206
71,527
52,144
555,138
162,652
Operating income (loss)
(151,129
)
(93,732
)
533
(429,557
)
26,578
Other income (expense), net:
Interest income (expense), net
5,222
(5,143
)
(9,209
)
(24,386
)
(36,215
)
Foreign currency exchange gain (loss)
775
(512
)
1,634
(1,122
)
531
Other non-operating income (expense), net
1,990
3,419
7,570
(936
)
(1,076
)
Total other income (expense), net
7,987
(2,236
)
(5
)
(26,444
)
(36,760
)
Income (loss) before income taxes
(143,142
)
(95,968
)
528
(456,001
)
(10,182
)
Income tax benefit (expense)
8,810
7,163
(705
)
(7,894
)
(9,689
)
Income (loss) before minority interest
(134,332
)
(88,805
)
(177
)
(463,895
)
(19,871
)
Minority interest
313
(514
)
(1,539
)
(3,828
)
(6,440
)
Net income (loss)
$
(134,019
)
$
(89,319
)
$
(1,716
)
$
(467,723
)
$
(26,311
)
Net income (loss) per ordinary share:
Basic
$
(0.14
)
$
(0.09
)
$
(0.00
)
$
(0.33
)
$
(0.01
)
Diluted
$
(0.14
)
$
(0.09
)
$
(0.00
)
$
(0.33
)
$
(0.01
)
Net income (loss) per ADS:
Basic
$
(1.36
)
$
(0.90
)
$
(0.02
)
$
(3.27
)
$
(0.13
)
Diluted
$
(1.36
)
$
(0.90
)
$
(0.02
)
$
(3.27
)
$
(0.13
)
Ordinary shares (in thousands) used in per ordinary
share calculation:
Basic
989,083
991,549
1,005,374
1,428,954
1,961,950
Diluted
989,083
991,549
1,005,374
1,428,954
1,961,950
ADS (in thousands) used in per ADS calculation:
Basic
98,908
99,155
100,537
142,895
196,195
Diluted
98,908
99,155
100,537
142,895
196,195
Balance Sheet Data:
Cash and cash equivalents
$
115,214
$
167,661
$
313,163
$
227,509
$
224,720
Working capital
109,447
165,851
328,583
124,028
250,369
Total assets
576,578
721,968
993,852
2,271,702
2,393,382
Current installments of obligations under capital leases
2,564
6,558
5,296
7,587
7,091
Short-term borrowings and current installments of
long-term debt
14,045
21,588
6,841
174,281
35,542
Obligation under capital leases, excluding current
installments
7,689
5,520
812
10,771
3,680
Long-term debt, excluding current installments
14,045
218,370
358,789
642,175
775,425
Shareholders' equity
452,795
366,512
475,956
1,159,350
1,141,652
Share capital
$
159,961
$
160,295
$
172,434
$
298,233
$
303,052
Ordinary shares outstanding (in thousands)
989,683
992,115
1,076,620
1,944,330
1,976,292
(1)
Includes stock-based compensation expenses of $1,024,000, $60,000, $97,000, $658,000
and $743,000 in 2001, 2002, 2003, 2004 and 2005, respectively.
(2)
We recorded impairment charges of $453,000,000 in 2004 on our goodwill associated with
purchase accounting for the acquisition of ChipPAC.
(3)
The impairment charges were recognized in 2001 in accordance with SFAS No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" and in
2002 in accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets."
(4)
We recorded impairment charges of $3,145,000 in 2001 and $764,000 in 2002 to write off
prepaid leases for testers with no expectation of future use.
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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 and the results from operations of STATS and ChipPAC 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 downturn beginning in the fourth quarter of 2000,
which continued through 2001 and 2002. 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 a
modest recovery in late 2002 and continued its recovery momentum throughout 2003 and the first half
of 2004. In late 2004 and early 2005, however, we experienced a softening of our business as our
customers corrected their excess inventory positions. Although the semiconductor industry
gradually improved in 2005 as customers consumed their inventory position and then replenished
their supply chain in anticipation of increased demand, there are no assurances that such
improvement will continue or that there will not be a 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 subsidiary, ASE Test Limited, 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.
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Table of Contents
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;
•
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, and personal
computers, would 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, and
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, and personal computers places significant pressure on
the prices of the components that are used in this equipment. If the average selling prices of
communications equipment, consumer and multi-applications, and 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.
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
2005, our ten largest customers represented 69.7% of our net revenues. Our three largest
customers, Analog Devices, Inc., Freescale Semiconductor, Inc. and Intel Corporation, each
contributed in excess of 10% of our net revenues and in the aggregate contributed 32.1% of our net
revenues.
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."
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Table of Contents
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 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. STATS did not make any
write-downs in 2003. In 2003, ChipPAC wrote-down $11.7 million of impaired assets. In 2004 and
2005, no write-down of assets was made.
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 combined
capital expenditures were $392.0 million in 2004 and $277.7 million in 2005. In 2006, we expect
that our capital expenditures will be approximately $300.0 million. To grow our business, we will
need to increase our packaging and test capacity as well as replace existing equipment from time to
time. 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 the ability of our China subsidiaries to pay dividends or require us to seek
consents for the payment of dividends, upon which we rely in order to pay the interest on
the convertible notes;
•
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.
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We cannot assure you that we will be able to obtain the additional financing on terms that are
acceptable to us or at all.
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 experienced substantial losses in the past and may continue to do so in the future.
In 2005, we achieved an operating income of $26.6 million, but suffered a net loss of $26.3
million. In 2004, we suffered an operating loss of $429.6 million and a net loss of $467.7 million.
STATS achieved operating income of $0.5 million in 2003, but suffered net losses of $1.7 million.
Similarly, ChipPAC achieved operating income of $0.4 million in 2003, but suffered net losses of
$28.8 million. 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 the semiconductor industry does not
continue to recover from the downturn.
Our substantial indebtedness could adversely affect our financial health.
We have a substantial amount of indebtedness. As of December 31, 2005, we had total
indebtedness of $821.7 million, consisting of $365.0 million of unsecured senior notes, $361.5
million of unsecured convertible notes (of which $161.5 million were senior convertible notes and
$200.0 million were subordinated convertible notes), $78.3 million of senior secured debt
(including capital lease obligations) and $16.9 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. For example, certain
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. We may be
required to refinance our debt in order to make such payments. If such an event were to occur, or
at maturity of each series of convertible notes, we cannot assure you that we will have sufficient
funds or would be able to arrange financing on terms that are acceptable to us or at all or to
obtain waivers of prohibitions from lenders
7
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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 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 a result of accounting for the merger in 2004 using the purchase accounting method, we
recorded goodwill and other intangible assets upon the merger of approximately $974.4 million and
$147.2 million, respectively. 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 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 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 $19.5 million based on the exchange rate as at January 31, 2006) against ChipPAC
relating to withholding tax 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
on the transaction in question is required under the prevailing tax treaty. We have appealed this
assessment and believe that such assessment should be overturned. 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, 2005 is estimated to be KRW 31.6 billion
(approximately $32.9 million based on the exchange rate as at January 31, 2006). 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, 2006, our Company and our various subsidiaries held a
total of approximately 448 issued patents and pending patent applications. Of these, we have
approximately 94 patents granted or allowed by the U.S. Patent and Trademark Office and
approximately 42 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,
8
Table of Contents
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.
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 between Tessera and
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. We may also, from time to time, receive from customers,
requests for indemnification against pending or threatened infringement claims brought against such
customers. However, we cannot assure you that the resolution of any future allegation or request
for indemnification will not 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.
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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;
•
a shift by IDMs, between internal and outsourced test and packaging services;
•
general economic conditions in the markets addressed by end-users of semiconductors;
•
the seasonality of the semiconductor industry;
•
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 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 allows 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. In 2001, our capacity utilization declined substantially from prior levels, primarily
as a result of a decrease in demand for packaging and test services resulting from a downturn in
the overall semiconductor industry, particularly for communications applications. Due to the high
level of fixed costs, we suffered substantial gross loss in 2001 and 2002. While capacity
utilization increased in 2002, 2003, 2004 and 2005, no assurance can be given that capacity
utilization will continue to increase or be maintained or that it will not decline and adversely
affect our gross margin.
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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;
•
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 increase our capacity utilization
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, 6.75% senior notes due 2011, zero coupon
convertible notes due 2008, 1.75% convertible notes due 2007, 8.0% convertible subordinated notes
due 2011 and 2.5% convertible subordinated notes due 2008 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.
As a result of these limitations, we may encounter difficulties obtaining the required
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.
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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.
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.
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
have requested, and may request, research and development services relating to the development of
packages and/or services. These customers generally do not, and may 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 domestic 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. For
example, in 1999 and early 2000, we incurred significant costs in expectation of strong demand in
the semiconductor market, but this demand did not fully materialize because of the market downturn
between late 2000 and early 2003. 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.
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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 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
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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 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
(Private) Limited, through its wholly-owned subsidiary. Temasek Holdings' interests may conflict
with your interests.
Following a restructuring of the Temasek Holdings group of companies on December 31, 2004,
Temasek Holdings acquired all of the shareholdings in Singapore Technologies Semiconductors Pte Ltd
(STSPL) held by Temasek Holdings' wholly-owned subsidiary, Singapore Technologies Pte Ltd (STPL).
As of January 31, 2006, Temasek Holdings, through its wholly-owned subsidiary, Singapore
Technologies Semiconductors Pte Ltd (STSPL), beneficially owned approximately 36.03% of our
outstanding ordinary shares. Temasek Holdings, wholly-owned by the Minister of Finance
(Incorporated) for Singapore, a statutory body constituted by the Minister for Finance
(Incorporation) Act (Cap. 183), owns 100% of the ordinary shares of STSPL. As a result, Temasek
Holdings will have 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.
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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.
We may have conflicts of interest with our affiliates which may not be resolved in our favor.
In the past, a substantial portion of our financing, as well as certain amounts of our net
revenue, came from our affiliates, and we paid a management fee to STPL for certain services. We
have certain contractual and other business relationships and may engage in material transactions
with the Government of Singapore, companies within the Temasek Holdings group, including Chartered
Semiconductor Manufacturing Ltd. (Chartered), which is one of our customers. 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 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.
Investor confidence and the value of ADSs and ordinary shares may be adversely impacted if we or
our independent registered public accounting firm are unable to provide adequate attestation over
the adequacy of the internal control over our financial reporting as of December 31, 2006 as
required by Section 404 of the Sarbanes-Oxley Act of 2002.
We are subject to the Securities and Exchange Commission's (SEC) reporting obligations. The
SEC, as directed by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules requiring public
companies to include a report of management on the company's internal control over financial
reporting in its annual report on Form 10-K or Form 20-F, as the case may be, that contains an
assessment by management of the effectiveness of the company's internal control over financial
reporting. In addition, the company's independent registered public accounting firm must attest to
and report on management's assessment of the effectiveness of the company's internal control over
financial reporting. These requirements will first apply to our annual report on Form 20-F for the
fiscal year ending December 31, 2006. Management may not conclude that our internal control over
our financial reporting is effective. Moreover, even if management does conclude that our internal
control over our financial reporting is effective, if our independent registered public accounting
firm is not satisfied with our internal control over our financial reporting or the level at which
our controls are documented, designed, operated or reviewed, or if the independent registered
public accounting firm interprets the requirements, rules or regulations differently from us, then
they may decline to attest to management's assessment or may issue a report that is qualified. Any
of these possible outcomes could result in an adverse reaction in the financial marketplace due to
a loss of investor confidence in the reliability of our financial statements, which ultimately
could negatively impact the market price of ADSs and ordinary shares.
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;
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•
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;
•
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 are unable to take advantage of opportunities to market and sell STATS' and ChipPAC's
products and services to the other's traditional customers, we may not realize the full anticipated
benefits of the combination of STATS and ChipPAC.
Prior to the merger, STATS and ChipPAC each maintained separate and distinct customer bases
and business partners specific to their respective businesses. As a result of the merger, we intend
to take advantage of the customer bases of the formerly separate businesses in order to promote and
sell the products and services of one company to the traditional customers and business partners of
the other company. In the event that the traditional customers and business partners of either
STATS or ChipPAC are not receptive to the products and services of the other, we may not realize
some of the expected benefits of the merger, and our business may be harmed.
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 2005 and is effective through April 30, 2006. The collective bargaining
agreement was renewed in 2005 and is effective through April 30, 2007. As of January 31, 2006,
approximately 63% 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.
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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
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.
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.
In December 2005, we commenced construction of additional buildings next to our existing
facility in Qing Pu, Shanghai at an estimated cost of $53.4 million. Upon completion, the new
facility will increase the total floor space at that location by approximately 500,000 square feet.
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;
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•
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 new 300
millimeter (mm) 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. 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 our 300mm wafer bumping and Winstek's 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, or 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 reappearance 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.
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 November 2005, we set up a new facility in Song Jiang, China to provide 200mm gold
bumping services as part of our strategy to service the high growth liquid crystal display (LCD)
driver semiconductor market. This operation is expected to complete setup and begin customer
qualification in early 2006. In October 2005, we also set up 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. This operation is presently qualified and
in high volume production. In August 2004, we completed our merger with ChipPAC. In 2003, we set
up a new manufacturing facility in Shanghai, China as a first step of our strategic plan to
establish a significant manufacturing presence in China to service its existing international
customers as well as engage the indigenous Chinese foundries and design houses. In 2001, we
acquired a majority interest in Winstek, to enhance our position in the Taiwanese market.
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;
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•
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.
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.
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Singapore law contains provisions that could discourage a take-over of our Company.
The Securities and Futures Act, Chapter 289 of Singapore and the Singapore Code on Take-overs
and Mergers (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 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 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 are not 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, 2005, there were 492 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$427.9 billion. For the year ended December 31, 2005, the annualized aggregate trading value on
the SGX-ST (including shares traded on the CLOB International trading system) was approximately
S$200.8 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).
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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 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 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
We were 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
the SGX-ST (SGX-ST: STATSChP) and our ADSs are quoted on the Nasdaq National 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
and 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.
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Our capital expenditure in 2003, 2004 and 2005 amounted to $231.9 million, $270.8 million and
$277.7 million, respectively. Our capital expenditures are largely driven by the demand for our services, primarily to increase our packaging and testing capacity and to replace packaging and testing equipment from time-to-time. We expect our capital expenditure to be approximately $300.0 million
in 2006, as our capital expenditure spending continues to be targeted at demand we see from our
customers and the expansion of our facilities in China.
B. Business Overview
We are a leading service provider of semiconductor packaging design, 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 and array 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 (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. Our merger with ChipPAC, which significantly broadened our capabilities in both
packaging and test services, enabled us to take advantage of the customer bases of the formerly
separate businesses in order to promote and sell the products and services to an enlarged customer
base of the combined company.
We are headquartered in Singapore and our manufacturing facilities are strategically located
in Singapore, South Korea, China, Malaysia and Taiwan (through 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
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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.
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.
Beginning in the fourth quarter of 2000, the industry experienced a downturn which continued
through 2001 and 2002. 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 a modest recovery in
late 2002 and continued its recovery momentum throughout 2003 and the first half of 2004. In late
2004, however, we experienced a softening of our business as our customers corrected their excess
inventory positions. In the first half of 2005, the semiconductor industry gradually improved as
customers consumed their excess inventory position. The industry strengthened further in the
second half of 2005 as customers replenished their supply chain in anticipation of broad based
end-market demand.
The industry outlook for 2006 based on published materials by recognized industry research
analysts and associations is averagely strong in the range of 7-10% growth. The SATS market is
expected to grow at a faster pace than the semiconductor industry as a whole, driven by strong
demand for NAND flash, LCD driver integrated circuit (IC), handset and PC related chip.
In 2001, our net revenues decreased 56.0% over 2000 to $145.9 million, due to the 2001
downturn. Our net revenues increased 54.8% to $225.7 million in 2002. 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 and 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. 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.
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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. 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 200 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 2005. 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.
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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. For the year ended December 31,
2005, 72.2% of our net revenues were from packaging services and 27.8% of our net revenues were
from test and other services.
The following table sets forth, the percentage of net revenues by packaging product group and
testing and other services for the periods indicated. Our historical data for the year ended
December 31, 2004 includes the data for ChipPAC from August 5, 2004 and our historical data for the
year ended December 31, 2005 includes the data for ChipPAC for the full period.
STATS
STATS ChipPAC
Historical
Historical
Pro Forma
Historical
Year Ended
Year Ended
Year Ended
Year Ended
December 31,
December 31,
December 31,
December 31,
2003
2004
2004
2005
Packaging — array
20.6
%
40.6
%
47.2
%
50.2
%
Packaging — leaded
26.9
20.9
21.0
22.0
Test and other services
52.5
38.5
31.8
27.8
Total
100.0
%
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, lead-frame and array, contributed
approximately 22.0% and 50.2%, respectively, of our net revenues for the year ended December 31,
2005.
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 Leads
Description
Typical Applications
Plastic Dual In-line Package
(PDIP)
8-40
Lead-frame package
of low pin count
with 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,
access equipment
and multimedia
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Number
Package Format
of Leads
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 radio
frequency
(RF)/wireless
devices
Mobile phone, mass
storage, multimedia
and 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
Personal computers,
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
Personal computers,
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
application-specific
integrated
circuits (ASICs),
field programmable
gate arrays (FPGAs)
and digital signal
processors (DSPs)
Access/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:
Number
Package Format
of Leads
Description
Typical Applications
Quad Leadless Package (QLPp)
8-68
Lead-frame based near chip scale
Mobile phone, PDA, GPS
Bumped Chip Carrier
(BCC)
16-84
Lead-frame based near chip scale
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/WAN/LAN equipment and
PC/graphics, 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
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Number
Package Format
of Leads
Description
Typical Applications
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
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 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.
27
Table of Contents
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.
•
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.
•
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 of
Package Format
Balls
Description
Typical Applications
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-Chip/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
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Table of Contents
Number of
Package Format
Balls
Description
Typical Applications
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
performance
WAN/LAN equipment and base station
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
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.
In 2003, we introduced Flex-On-Cap (FOC) wafer bumping services, with
and without redistribution layers (RDL) for 150mm and 200mm wafers 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. In 2005, we also
started to offer 300mm wafer bumping services.
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 $322.0 million in the year ended December 31, 2005, compared to our test
revenue, pro forma for the merger, of $344.4 million in the year ended December 31, 2004. The
decrease of 6.5% reflected effects of the declining average selling prices and softening of the
industry in early 2005.
29
Table of Contents
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, 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.
•
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.
30
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•
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 facility
in Singapore for full production. As STATS ChipPAC Test Services, Inc. offers a similarly
configured and substantial range of tester platforms, handlers, probers, interface hardware and
manufacturing processes as our Singapore facility, this transfer is relatively 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, Malaysia 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.
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.
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Table of Contents
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. STATS and ChipPAC spent approximately $15.3 million and $11.7
million in 2003, respectively, on research and development. Our expenditures for research and
development for 2004 and 2005 were $17.6 million and $26.1 million, respectively. As of January
31, 2006, we employed over 230 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 and routers as well as high-end PCs. 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 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:
•
Land Grid Array (LGA);
•
System-in-Package LFBGA (LFBGA-SiP);
•
System-in-Package LGA (LGA-SiP);
32
Table of Contents
•
Flip-Chip BGA with Buildup Substrate and Heat Sink (fcBGA-H);
•
Lead free Flip-Chip Land Grid Array (fcLGA);
•
Wafer Level CSP (WLCSP);
•
Thin Quad Leadless Package (UQLPp);
•
Chip Scale Module Package (LFBGA-CSMP, fcLGA-CSMP, QLP-CSMP);
•
Low profile, Fine pitch BGA with Heatspreader (LFBGA-H);
•
Redistributed wafer bumping (RDL);
•
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);
•
Bumped Chip Carrier package family (BCC, BCC+, BCC++);
•
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);
33
Table of Contents
•
Stacked Die System-in-Package PBGA (PBGA-SiP-SD);
•
Flip-Chip Multi Package Module family module (fcBGA-MP);
•
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-PiP;
•
Package-on-Package (PoP) — LFBGA-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); and
•
Stacked Die Thin Small Outline Package (TSOP-SD7).
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.
Customers
Our customers include some of the largest semiconductor companies in the world. Since the
beginning of 2003, each of STATS and ChipPAC has been seeking to diversify and broaden their
respective customer bases. STATS' and ChipPAC's ten largest customers accounted for 78.8% and 79.1%
of STATS' and ChipPAC's respective net revenues in 2003. In the year ended December 31, 2004, pro
forma for the merger, our ten largest customers accounted for 67.0% of our net revenues. In the
year ended December 31, 2005, our ten largest customers accounted for 69.7% of our net revenues.
In 2005, our three largest customers, Analog Devices, Inc., Freescale Semiconductor, Inc. and Intel
Corporation, each contributed in excess of 10% of our net revenues and in the aggregate contributed
32.1% of our net revenues. As a result of the merger, we expect that we will enjoy a
well-diversified and broad customer base. 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.
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Table of Contents
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 historical data for the year ended December 31, 2004 includes the data for
ChipPAC from August 5, 2004 and our historical data for the year ended December 31, 2005 includes
the data for ChipPAC for the full period.
STATS
STATS ChipPAC
Historical
Historical
Pro Forma
Historical
Year Ended
Year Ended
Year Ended
Year Ended
December 31,
December 31,
December 31,
December 31,
2003
2004
2004
2005
Communications
58.3
%
60.1
%
57.9
%
55.2
%
Personal computers
29.9
22.8
21.1
21.5
Consumer, multi-applications and others
11.8
17.1
21.0
23.3
Total
100.0
%
100.0
%
100.0
%
100.0
%
Our customers are located around the world, but are principally headquartered in the United
States of America. 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 historical data for the year ended December
31, 2004 includes the data for ChipPAC from August 5, 2004 and our historical data for the year
ended December 31, 2005 includes the data for ChipPAC for the full period.
STATS
STATS ChipPAC
Historical
Historical
Pro Forma
Historical
Year Ended
Year Ended
Year Ended
Year Ended
December 31,
December 31,
December 31,
December 31,
2003
2004
2004
2005
United States of America
81.3
%
77.2
%
77.4
%
76.5
%
Europe
4.7
4.6
4.3
2.3
Asia
14.0
18.2
18.3
21.2
Total
100.0
%
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 small quantities
of raw material inventory and we have relatively low levels of 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, memory, storage and networking. We market our
leadership in advanced packaging, test technology, and 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 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.
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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. 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 discounts. 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. 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. We acquire our
packaging and test equipment on a purchase order basis, which exposes us to substantial risks. 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, 2006, we operated an aggregate of 3,614 wire
bonders. We purchase mold systems from major international manufacturers, including Apic Yamada
Corporation, Asahi Engineering Co Ltd and Dai-Ichi Seiko Co Ltd.
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., Agilent Technologies, Inc.
and LTX Corporation.
As of January 31, 2006, we operated 945 testers, comprising 666 mixed-signal testers, 151
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 945
testers, 157 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.
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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 late 2006. ISO 9000 is an
international standard on the requirements for production of 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.
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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.
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, 2006, our Company and our various subsidiaries held a
total of approximately 448 issued patents and pending patent applications. Of these, we have
approximately 94 patents granted or allowed by the U.S. Patent and Trademark Office and
approximately 42 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 dated December 22, 1988 between Tessera and
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. Tessera has also sued Advanced Micro Devices, Inc., Spansion LLC, Advanced
Semiconductor Engineering, Inc., ChipMOS Technologies, Inc., ChipMOS U.S.A. Inc., Silicon Precision
Industries Co., Ltd. and ST Microelectronics N.V. in the same lawsuit.
Our primary registered trademarks and trade names are "STATS" and "ChipPAC", and we have
commenced registration of our trade name "STATSChipPAC" after the merger of STATS and ChipPAC. 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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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.
Notes:
(1)
Incorporated in November 2005 in Song Jiang
district, Shanghai, China.
(2)
Incorporated in September 2005 in Hsin Chu
district, Taiwan.
(3)
STATS ChipPAC, Inc. (formerly ST Assembly
Test Services, Inc.) was merged into ChipPAC, Inc. effective as of
January 20, 2005, and the entity surviving the merger was renamed
STATS ChipPAC, Inc.
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D. Property, Plants and Equipment
Our packaging and test network comprises 13 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 — Supplies — Equipment." Our utilization rates for equipment for the years ended December 31, 2003, 2004 and 2005 were 66%, 69% and 72%, 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)
220,000
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
Pu Dong, Shanghai, China
20,736
Test facility
Wafer probe and distribution services
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, CP testing, COG assembly
and COF assembly for LCD driver IC
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
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(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. In
December 2005, we commenced construction of additional buildings next to our existing facility
in Qing Pu, Shanghai, at an estimated cost of $53.4 million in order to increase floor space
for business expansion. Upon completion, the new facilities will increase the total floor
space by approximately 500,000 square feet. The construction is expected to be completed in
November 2006.
(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.
ITEM 4A. UNRESOLVED STAFF COMMENTS
Not applicable
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. Our first three quarters of 2005 ended on March 27,
2005, June 26, 2005 and September 25, 2005, respectively, and our fourth quarter and fiscal year
2005 ended on December 25, 2005, the Sunday nearest to the calendar quarter end of each period,
while our quarterly periods in prior years ended on March 31, June 30, September 30 and December
31, respectively. For ease of presentation, our first three quarters of 2005 and fourth quarter and
fiscal year 2005 have been presented as ending on March 31, June 30, September 30, and December 31,
2005, respectively, and unless otherwise specified or the context requires, references to "2005"
refer to our fiscal year 2005.
Overview
We are a leading service provider of semiconductor packaging design, 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.
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 for the year ended December 31, 2004 compared with the year ended December 31,
2003 and for the year ended December 31, 2005 compared with the year ended December 31, 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 2003 and
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.
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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. Beginning in the fourth quarter of 2000, the industry experienced a
downturn which continued through 2001 and 2002. 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 a modest recovery in late 2002 and continued its recovery momentum throughout 2003 and the
first half of 2004. In late 2004, however, we experienced a softening of our business as our
customers corrected their excess inventory positions. In the first half of 2005, the semiconductor
industry gradually improved as customers consumed their excess inventory position. The industry
strengthened further in the second half of 2005 as customers replenished their supply chain in
anticipation of broad based end-market demand. The industry outlook for 2006 based on published
materials by recognized industry research analysts and associations is averagely strong in the
range of 7-10% growth. The SATS market is expected to grow at a faster pace than the semiconductor
industry as a whole driven by strong demand for NAND flash, LCD driver IC, handset and PC related
chip. In 2001, our net revenues decreased 56.0% over 2000 to $145.9 million, due to the 2001
downturn. Our net revenues increased 54.8% to $225.7 million in 2002. In 2003, our net
revenues grew by 68.6% over 2002 to $380.7 million. In 2004, our revenues grew further by 102.0% to
$769.1 million and 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. 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. 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 expanded our test and packaging capabilities in 2000 and
significantly increased the number of testers and wire bonders. The expansion of our test and
packaging capabilities by the end of 2000 allowed a significant increase in our net revenues.
However, the capacity utilization of our facilities decreased significantly in 2001 as a result of
the downturn in the semiconductor industry. The semiconductor industry is still recovering from the
worst downturn in its history and our capacity utilization has improved year over year from 2001 to
2005. 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 a result of accounting for the merger using the purchase
accounting method, we recorded goodwill and other intangible assets in 2004 upon the merger with
ChipPAC amounting to $974.4 million and $147.2 million, respectively. In 2005, additional purchase
adjustments of $1.0 million were made to goodwill. 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
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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. In 2005, 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 performed an impairment review at the end of 2004 and recorded an impairment
charge of $453.0 million to our results of operations for the year ended December 31, 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.
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, 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's Staff Accounting
Bulletin No. 104, "Revenue Recognition in Financial Statements."
Our sales arrangement include probe, packaging or test services sold on a standalone basis, as
well as multiple-element arrangements where probe, 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
44
Table of Contents
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 unrecovered 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 2003, we completed a review of the estimated useful lives of our packaging equipment. As a
result, effective from July 1, 2003, the lives used to depreciate certain packaging equipment were
changed prospectively from five years to seven years. The change reflected longer actual service
periods being achieved and expected to be achieved from similar new equipment. The impact of this
change was a reduction to depreciation expense of $6.8 million for the year ended December 31,
2003.
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 for the year ended December 31, 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
•
consultation with equipment manufacturers.
We believe that our principal competitors depreciate their packaging assets over periods of
six to eight years.
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Table of Contents
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 rates 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 2003, 2004 and 2005.
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 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.
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Table of Contents
In 2005, 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 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.
Results of Operations
The following table describes the composition of revenue by product group and test services,
as a percentage of net revenues:
Year Ended December 31,
2003
2004
2005
Net revenues
Packaging — array
20.6
%
40.6
%
50.2
%
Packaging — leaded
26.9
20.9
22.0
Test and other services
52.5
38.5
27.8
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,
2003
2004
2005
Total net revenues
100.0
%
100.0
%
100.0
%
Gross profit
13.8
16.3
16.4
Selling, general and administrative
9.6
11.0
11.7
Research and development
4.0
2.3
2.3
Goodwill impairment
0.0
58.9
0.0
Restructuring charges
0.0
0.0
0.1
Others general expenses (income), net
0.1
0.0
0.0
Operating income (loss)
0.1
(55.9
)
2.3
Other income (expense), net
0.0
(3.4
)
(3.2
)
Income tax expense
(0.1
)
(1.0
)
(0.8
)
Minority interest
(0.4
)
(0.5
)
(0.6
)
Net income (loss)
(0.4
)%
(60.8
)%
(2.3
)%
Year Ended December 31, 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 3-D 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
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Table of Contents
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.
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.
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Table of Contents
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 31, 2005 and 2004,
respectively.
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 Taxes
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.
Year Ended December 31, 2004 Compared to Year Ended December 31, 2003
Net Revenues
Net revenues were $769.1 million in 2004, an increase of 102.0% compared to $380.7 million in
2003. The increase was mainly from ChipPAC's operations which were consolidated from August 5, 2004
and an increase in unit shipments. Following our merger, revenue attributable to ChipPAC's
operations has had a relatively larger impact on our packaging revenues than on our test revenues.
Our packaging revenue in 2004 increased 161.6% to $472.8 million compared to 2003. Unit
volumes of our total packaging increased 244.9% in 2004 compared to 2003, and contributed to an
increase of $267.2 million in our net revenues. Average selling prices for our services have
generally declined over product life cycles. Average selling prices per pin for packaging services
in 2004 increased 5.3% compared to 2003, primarily due to changes in product mix and contributed to
an increase of $24.9 million in our net revenues. Test revenue in 2004 increased 47.9% to $295.7
million compared to 2003.
In 2004, revenues from the communications market increased 108.2% over 2003, and contributed
60.1% of our net revenues in 2004 compared to 58.3% of our net revenues in 2003. The revenue from
the communications market remained relatively strong with continued demand for more complex, higher
functionality mobile phone and infrastructure products. Revenue from the personal computers market
increased 53.8% over 2003 and contributed 22.7% of our net revenues in 2004. We expect to continue
to be dependent on the communications and personal computers markets for substantially all of our
revenues.
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Table of Contents
Gross Profit
Gross profit in 2004 was $125.6 million, an increase of $72.9 million compared to $52.7
million in 2003. Gross margin as a percentage of net revenues was 16.3% in 2004 compared to 13.8%
in 2003. In 2004, 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.
Overall equipment utilization was approximately 69% in 2004 compared to 66% in 2003. We continued
to experience pressure to reduce average selling prices in 2004. 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 2004 when compared to 2003.
Selling, General and Administrative
Selling, general and administrative expenses were $85.0 million in 2004 compared to $36.5
million in 2003, an increase of 132.9% compared to 2003. As a percentage of net revenues, selling,
general and administrative expenses were 11.0% in 2004, compared to 9.6% in 2003. The increase in
selling, general and administrative expenses was primarily due to the inclusion of merger and
integration expenses and ChipPAC expenses which amounted to $41.2 million in 2004, inclusive of the
amortization of the intangible assets which amounted to $21.1 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. Continued measures to control costs and
manage discretionary expenses in 2004, were partially offset by the additional headcount employed
in 2004.
Research and Development
Research and development expenses in 2004 were $17.6 million compared to $15.3 million in
2003, an increase of $2.3 million. Research and development expenses had increased primarily due to
the inclusion of ChipPAC expenses which amounted to $6.1 million, inclusive of the amortization of
the acquired intangible assets which amounted to $1.3 million in 2004. However, expenses were
partially offset by a reduction in expenses due to higher government grant income, depreciation
savings from the change in equipment useful lives and continued cost control.
Goodwill Impairment
As required by U.S. GAAP, we performed our annual valuation of goodwill. Based on the
valuation, we took a special, non-cash charge of $453.0 million in our operating results in 2004.
This charge does not affect operating results of prior periods and will have no future cash impact.
The goodwill arose from the purchase accounting for the acquisition of ChipPAC. The majority of the
purchase price was derived from share values near the announcement date as required by U.S. GAAP
and resulted in $974.4 million of goodwill. There was no goodwill impairment in 2003.
Net Interest Income (Expense)
Net interest expense was $24.4 million in 2004 compared to $9.2 million in 2003. Net interest
expense consisted of interest income of $4.4 million and interest expense of $28.8 million in 2004
and interest income of $4.8 million and interest expense of $14.0 million in 2003. The decrease in
interest income in 2004 was primarily due to lower yields on the marketable debt 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.
Total outstanding interest-bearing debt was $834.8 million and $371.7 million as of December 31,
2004 and 2003, respectively.
Foreign Currency Exchange Gain (Loss)
Net foreign currency exchange loss was $1.1 million in 2004, compared to net foreign currency
exchange gain of $1.6 million in 2003. 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.
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Table of Contents
Income Taxes
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
$7.9 million in 2004 compared to $0.7 million in 2003.
Quarterly Results
The following table sets forth our unaudited results of operations, including as a percentage
of net revenue, for the eight fiscal quarters ended December 31, 2005. 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
June
September
December
March
June
September
December
31, 2004
30, 2004
30, 2004
30, 2004
31, 2005
30, 2005
30, 2005
31, 2005
(In thousands)
Net revenues
$
132,328
$
138,995
$
231,951
$
265,847
$
234,146
$
264,346
$
301,298
$
357,463
Cost of revenues
(111,949
)
(114,358
)
(193,600
)
(223,634
)
(209,748
)
(228,541
)
(250,588
)
(279,146
)
Gross profit
20,379
24,637
38,351
42,213
24,398
35,805
50,710
78,317
Operating expenses:
Selling, general and administrative
10,252
11,648
28,286
34,778
32,285
33,766
34,041
35,679
Research and development
3,086
2,903
5,781
5,867
5,942
6,536
6,243
7,350
Goodwill impairment
—
—
—
453,000
—
—
—
—
Restructuring charges
—
—
—
—
830
—
—
—
Other general expenses (income), net
(37
)
(511
)
11
73
(39
)
(5
)
(7
)
31
Total operating expenses
13,301
14,040
34,078
493,718
39,018
40,297
40,277
43,060
Operating income (loss)
7,078
10,597
4,273
(451,505
)
(14,620
)
(4,492
)
10,433
35,257
Other income (expenses), net:
Interest income (expenses), net
(3,328
)
(3,620
)
(8,365
)
(9,073
)
(9,447
)
(8,283
)
(9,148
)
(9,337
)
Foreign currency exchange gain (loss)
1,026
(1,299
)
151
(1,000
)
(391
)
71
880
(29
)
Other non-operating income
(expenses), net
81
(435
)
(438
)
(144
)
(1,544
)
157
227
84
Total other income (expenses), net
(2,221
)
(5,354
)
(8,652
)
(10,217
)
(11,382
)
(8,055
)
(8,041
)
(9,282
)
Income (loss) before income taxes
4,857
5,243
(4,379
)
(461,722
)
(26,002
)
(12,547
)
2,392
25,975
Income tax expense
(509
)
(123
)
(1,713
)
(5,549
)
(1,139
)
(1,159
)
(1,247
)
(6,144
)
Income (loss) before minority interest
4,348
5,120
(6,092
)
(467,271
)
(27,141
)
(13,706
)
1,145
19,831
Minority interest
(282
)
(463
)
(1,352
)
(1,731
)
22
(1,357
)
(2,156
)
(2,949
)
Net income (loss)
$
4,066
$
4,657
$
(7,444
)
$
(469,002
)
$
(27,119
)
$
(15,063
)
$
(1,011
)
$
16,882
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Table of Contents
Fiscal Quarter Ended
(As a Percentage of Revenues)
March
June
September
December
March
June
September
December
31, 2004
30, 2004
30, 2004
30, 2004
31, 2005
30, 2005
30, 2005
31, 2005
Net revenues
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Cost of revenues
(84.6
)
(82.3
)
(83.5
)
(84.1
)
(89.6
)
(86.5
)
(83.2
)
(78.1
)
Gross profit
15.4
17.7
16.5
15.9
10.4
13.5
16.8
21.9
Operating expenses:
Selling, general and administrative
7.7
8.5
12.2
13.1
13.8
12.8
11.2
9.9
Research and development
2.3
2.1
2.5
2.2
2.5
2.4
2.1
2.1
Goodwill impairment
0.0
0.0
0.0
170.4
0.0
0.0
0.0
0.0
Restructuring charges
0.0
0.0
0.0
0.0
0.3
0.0
0.0
0.0
Other general expenses (income), net
0.1
(0.5
)
0.0
0.0
0.0
0.0
0.0
0.0
Total operating expenses
10.1
10.1
14.7
185.7
16.6
15.2
13.3
12.0
Operating income (loss)
5.3
7.6
1.8
(169.8
)
(6.2
)
(1.7
)
3.5
9.9
Other income (expenses), net:
Interest income (expenses) net
(2.5
)
(2.6
)
(3.6
)
(3.4
)
(4.0
)
(3.1
)
(3.0
)
(2.6
)
Foreign currency exchange gain (loss)
0.8
(0.9
)
0.1
(0.4
)
(0.2
)
0.0
0.3
0.0
Other non-operating income (expenses), net
0.1
(0.3
)
(0.2
)
(0.1
)
(0.7
)
0.1
0.1
0.0
Total other income (expenses), net
(1.6
)
(3.8
)
(3.7
)
(3.9
)
(4.9
)
(3.0
)
(2.6
)
(2.6
)
Income (loss) before income taxes
3.7
3.8
(1.9
)
(173.7
)
(11.1
)
(4.7
)
0.9
7.3
Income tax expense
(0.4
)
(0.1
)
(0.7
)
(2.1
)
(0.5
)
(0.5
)
(0.4
)
(1.7
)
Income (loss) before minority interest
3.3
3.7
(2.6
)
(175.8
)
(11.6
)
(5.2
)
0.5
5.6
Minority interest
(0.2
)
(0.3
)
(0.6
)
(0.6
)
(0.0
)
(0.5
)
(0.7
)
(0.8
)
Net income (loss)
3.1
%
3.4
%
(3.2
)%
(176.4
)%
(11.6
)%
(5.7
)%
(0.2
)%
4.8
%
Liquidity and Capital Resources
Our principal source of liquidity consists of cash, cash equivalents and marketable
securities, which amounted to $260.2 million as of December 31, 2005. 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
$309.8 million, of which $124.3 million was utilized as of December 31, 2005. 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 and to replace packaging and testing
equipment from time-to-time. We expect this to be approximately $300.0 million in 2006, as our
capital expenditure spending continues to be targeted at demand that we see from our customers and
the expansion of our facilities in China. We spent $277.7 million on capital expenditures in 2005,
compared to $270.8 million in 2004.
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,
as well as capital lease and debt service repayment obligations for 2006. 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.
The Companies (Amendment) Act 2005 of Singapore (Companies Amendment Act), which became
effective on January 30, 2006, introduced key amendments to the Companies Act, Chapter 50 of
Singapore (Companies Act). 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, we are considering implementing a share repurchase program and amending our
employee share plans to, among other things, allow us the flexibility to deliver repurchased
ordinary shares held in treasury (instead of issuing new ordinary shares) to eligible plan
participants. If our Board of Directors determines that it would be in the best interest of our
Company and our shareholders to adopt a share repurchase program, we expect to seek shareholders'
approval to adopt a share repurchase program within specified mandates relating to maximum
repurchase price and volume and timing and manner of repurchases at our next annual general meeting
of shareholders to
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be held in April 2006. Any such repurchases would be made in compliance with Rule 10b-18 under
the Securities and Exchange Act of 1934, as amended (Exchange Act). 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.
Total Borrowings
As of December 31, 2005, our total debt outstanding consisted of $821.7 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, $50.0 million of 8.0% convertible subordinated notes due 2011, $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.
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.
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
Other than the guarantee provided on our 2.5% convertible subordinated notes due 2008, 6.75%
senior notes due 2011 and 7.5% senior notes due 2010 (see Note 28: Condensed Consolidating
Financial Information), and the tax guarantee to the South Korean Tax Authorities as discussed
below, we have no performance guarantees. We also have no 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 $406.7 million as of December 31, 2005.
Contractual Obligations
Our total commitments on our loans, capital lease, operating leases, and other agreements as
of December 31, 2005, were as follows:
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Table of Contents
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)
$
—
$
35,589
$
—
$
—
$
35,589
Zero coupon convertible notes due 2008
(1)(2)
—
125,874
—
—
125,874
2.5% convertible subordinated notes due 2008
—
150,000
—
—
150,000
8% convertible subordinated notes due 2011
—
—
—
50,000
50,000
6.75% senior notes due 2011
—
—
—
215,000
215,000
7.50% senior notes due 2010
—
—
150,000
—
150,000
Capital lease obligations
7,091
3,680
—
—
10,771
Long-term loans
18,651
41,041
7,921
—
67,613
Short-term loans
16,891
—
—
—
16,891
Total on balance sheet commitments
$
42,633
$
356,184
$
157,921
$
265,000
$
821,738
Off balance sheet commitments:
Operating leases
$
13,795
$
19,878
$
17,156
$
61,819
$
112,648
Royalty/licensing agreements
4,640
9,282
9,282
—
23,204
Contingent payments to Cirrus
875
750
—
—
1,625
Purchase obligations:
— Capital commitments
147,373
—
—
—
147,373
— Inventory purchase commitments
121,822
—
—
—
121,822
Total off balance sheet commitments
288,505
29,910
26,438
61,819
406,672
Total commitments
$
331,138
$
386,094
$
184,359
$
326,819
$
1,288,410
(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.
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. On April 14, 2005, we reached a resolution with
Seagate with respect to this litigation. As part of a broader settlement agreement among all
parties to this matter, we had agreed to pay a fee in consideration of a release from all claims
related to this litigation. The amount related to the settlement is being paid by our Company's
insurer.
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. Due
to the inherent uncertainties of the lawsuit, we cannot accurately predict the ultimate outcome.
The final resolution of the lawsuit could result in significant liability and could have a material
adverse effect on the business, financial condition and the results of operations of our Company.
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 $16.7 million based on the exchange rate as
of January 31, 2006) 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 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
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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 $2.8 million
based on the exchange rate as of January 31, 2006) was made on January 9, 2004, for the interest 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. In the event that
we are not successful with the appeal, the maximum amount payable including potential interest and
local surtax estimated to be 31.6 billion South Korean Won
(approximately $32.9 million based on the exchange rate as of
January 31, 2006). As of
December 31, 2005, 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 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 (premium) on certain of our
outstanding 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 2005, non-cash related items included $281.9 million
related to depreciation and amortization (including amortization of capitalized debt issuance costs
and leasing prepayments), $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, 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.
In 2004, cash provided by operations was $136.6 million compared to $82.5 million in 2003.
Cash provided and used by operations is calculated by adjusting our net income (loss) by non-cash
related items such as depreciation and amortization, accretion of discount (premium) on certain of
our outstanding 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, $11.4 million
from the accretion of discount and premium, $0.1 million from
gain on sale of assets, $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 inventories, other receivables, prepaid expenses
and other assets and decreases in accounts payable, accrued operating expenses and other payables.
Working capital source of cash included decrease in accounts receivable and amounts due from
affiliates.
Cash Flows From Investing Activities
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.
In 2004, cash used in investing activities was $264.8 million compared to $174.3 million in
2003. The primary usage of cash in investing activities was related to the acquisition of property
and equipment of $287.6 million in 2004 and $209.3 million in 2003. The increase in capital
expenditure is directly related to our increase in revenues and forecasted demand from customers.
In 2004 and 2003, we invested in marketable securities which amounted to $160.9 million and $43.9
million, respectively, and received proceeds from the sale or maturity of our marketable securities
of $177.2 million and $83.3 million, respectively. In 2004, we recorded $7.2 million of net cash
acquired in the merger with ChipPAC.
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Cash Flows From Financing Activities
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 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 shares through the employee share
option scheme and the employee share purchase plan.
In 2004, cash provided by financing activities was $41.1 million compared to cash provided by
financing activities of $234.7 million in 2003. In 2004, $107.6 million was borrowed and $81.0
million was repaid on our borrowings and debts as compared to $49.8 million and $47.1 million,
respectively, in 2003. In 2004, we raised $210.5 million from the issue of our 6.75% senior notes
due 2011, net of expenses, and repurchased the $165.0 million face value 12.75% ChipPAC senior
notes at an aggregate consideration of $175.5 million and repurchased $16.5 million aggregate
principal of our 1.75% convertible notes at an aggregate consideration of $18.1 million. In 2003,
we raised $112.3 million from the issue of a $115.0 million zero coupon notes due 2008, net of
expenses. In addition, $7.2 million and $12.9 million of capital lease payments were made in 2004
and 2003, respectively. In 2004 and 2003, $2.0 million and $117.5 million, respectively, were
provided by the issuance of new shares.
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 the income derived in the previous years. We received a partial
refund of taxes amounting to $4.6 million in April 2005. 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 2003, hedge accounting has not been applied as the contracts entered into do not qualify as
hedges under U.S. GAAP. Gains and losses on these contracts have been recorded as foreign currency
gains or losses. As of December 31, 2003, we had no foreign currency forward contracts outstanding
or any other derivative financial instruments, except for a premium deposit of $10.0 million
denominated in Singapore dollars. The premium deposit is entered with Citibank, whereby interest
earned on the deposit is at an enhanced rate of 3.95%. Upon its maturity on January 26, 2004,
Citibank redeemed the principal and interest in U.S. dollars at the pre-determined strike price.
In 2004 and 2005, we 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 Malaysian Ringgit and to benefit from our expectations of future exchange rate
fluctuations. As of December 31, 2005, our Company has a series of foreign currency forward
contract with total contract value of approximately $68.0 million. In 2005, our Company
additionally entered into a series of gold forward contract with total contract value of
approximately $7.0 million to hedge against fluctuations in gold prices. All forward contracts
qualify for hedge accounting as defined by SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities."
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Foreign Currency Risk
A portion of our costs is denominated in foreign currencies, like the Singapore dollar, the
South Korean Won, the Malaysian Ringgit, the Chinese Renminbi 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 November 2004, the FASB issued SFAS No. 151, "Inventory Costs, an amendment of ARB No. 43,
Chapter 4" (SFAS 151), which requires certain abnormal expenditures to be recognized as expenses in
the current period. It also requires that the amount of fixed production overhead allocated to
inventory be based on the normal capacity of the production facilities. The standard is effective
for the fiscal year beginning January 1, 2006. It is not expected that SFAS No. 151 will have a
material effect on our consolidated financial statements.
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," (SFAS 123) 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 stock awards granted, and to awards modified, repurchased or cancelled after the required
effective date. In addition, we 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) will be effective for annual periods beginning after June 15,
2005, which is our first quarter of fiscal 2006. We presently account for stock-based compensation
under the intrinsic method. See Note 1(v) of our audited consolidated financial statements for the
effect on reported net loss if we had accounted for our share options and employee share purchase
rights using the fair value recognition provisions of SFAS 123.
In March 2005, the SEC released SEC Staff Accounting Bulletin No. 107, "Share-Based Payment"
(SAB 107). SAB 107 provides the SEC staff position regarding the application of SFAS 123(R). SAB
107 contains interpretive guidance related to the interaction between
SFAS 123(R)
and certain SEC
rules and regulations, as well as provides the staff'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. We are currently reviewing the
requirements of
SFAS 123(R)
and SAB 107 and expect that the adoption of
SFAS 123(R)
will have a
material impact on our consolidated results of operations and earnings per share.
In May 2005, the FASB issued Statement No. 154, "Accounting Changes and Error Corrections"
(SFAS 154). SFAS 154 requires retrospective application to prior periods' financial statements of
changes in accounting principle. It also requires that the new accounting principle be applied to
the balances of assets and liabilities as of the beginning of the earliest period for which
retrospective application is practicable and that a corresponding adjustment be made to the opening
balance of retained earnings for that period rather than being reported in an income statement. The
statement will be effective for accounting changes and corrections of errors made in fiscal years
beginning after December 15, 2005. We are currently evaluating the effect of the adoption of SFAS
154 on our consolidated financial position or results of operations but do not expect it to have a
material impact.
In September 2005, the FASB ratified Emerging Issues Task Force Issue No. 04-13, "Accounting
for Purchases and Sales of Inventory with the Same Counterparty" (EITF 04-13). EITF 04-13 discusses
whether inventory purchase and sales transactions with the same counterparty that are entered into
in contemplation of one another should be combined and treated as a nonmonetary exchange and
addresses (a) under what circumstances should two or more transactions with the same counterparty
(counterparties) be viewed as a single nonmonetary transaction within the scope of APB Opinion No.
29, "Accounting for Nonmonetary Transactions" (APB 29) and SFAS No. 153, "Exchanges of Nonmonetary
Assets, an Amendment of APB 29" (SFAS 153) and (b) if nonmonetary transactions within the scope of
APB 29 and SFAS 153 involve inventory, are there any circumstances under which the transactions
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should be recognized at fair value. The pronouncement is effective for new inventory
arrangements entered into, or modifications or renewals of existing inventory arrangements
occurring in interim or annual reporting periods beginning after March 15, 2006. We do not expect
that this pronouncement will have a material effect on our financial statements.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
The following table sets forth the name, age (as at January 31, 2006) and position of each
director and member of senior management:
Name
Age
Position
Board of Directors
Charles R. Wofford
(1)(2)(3)(4)
72
Chairman of our Board of Directors
Lim Ming Seong
(5)
58
Deputy Chairman of our Board of Directors
Tan Lay Koon
47
Director, President and Chief Executive Officer
Peter Seah Lim Huat
(6)(7)
59
Director
Tay Siew Choon
(8)(9)
58
Director
Steven H. Hamblin
(1)(6)(9)(10)
57
Director
Richard J. Agnich
(1)(7)(11)
62
Director
Robert W. Conn
(1)
63
Director
R. Douglas Norby
(1)(10)
70
Director
Park Chong Sup
(1)(8)
58
Director
Senior Management
Wan Choong Hoe
52
Corporate Vice President, Chief Operating Officer
Michael G. Potter
39
Corporate Vice President, Chief Financial Officer
Han Byung Joon
46
Corporate Vice President, Chief Technology Officer
Jeffrey R. Osmun
42
Corporate Vice President, Worldwide Sales and Marketing
Ng Tiong Gee
43
Corporate Vice President, Chief Information Officer
Scott J. Jewler
40
Corporate Vice President, Chief Strategy Officer
Dennis W. Daniels
51
Corporate Vice President, Human Resources
Janet T. Taylor
48
Corporate 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.
(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 Budget Committee.
(9)
Member of the Executive Committee.
(10)
Member of the Audit Committee.
(11)
Chairman of the Audit Committee.
Our Board of Directors held four meetings in person in 2005. The average attendance by
directors at Board meetings they were scheduled to attend was 93%.
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.
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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 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
December 31, 2004. Mr. Tay Siew Choon was an employee of STPL until March 31, 2004 and immediately
thereafter became a Corporate Advisor of STPL until December 31, 2004.
Board of Directors
Charles R. Wofford
Mr. Charles Richard Wofford has been a member of our Board of Directors since February 1998.
He was appointed Chairman of our Board of Directors in August 2002 and re-appointed to our Board of
Directors in 2003, 2004 and 2005. 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, CEO 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 became our Deputy Chairman in June 1998 and was re-elected to our Board of
Directors in 2001. 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.
Tan Lay Koon
Mr. Tan Lay Koon was appointed our President and Chief Executive Officer on June 26, 2002. He
was appointed to our Board of Directors on the same date. 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 was appointed to our Board of Directors in 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 the
Institute of Defence and Strategic 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.
Tay Siew Choon
Mr. Tay Siew Choon was appointed to our Board of Directors in July 2002. He is the Deputy
Chairman of Green Dot Capital Pte Ltd, a subsidiary of Temasek Holdings. He was the Chief
Operating Officer and managing director of STPL until April 1, 2004 and
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the Corporate Advisor of STPL until December 31, 2004. He is also the Chairman of SNP
Corporation Ltd and Co-Chairman of NexGen Financial Holdings Limited. He is also a board member of
Chartered, Straco Corporation Limited, Pan-United Corporation Ltd and SNP-Leefung Holdings Limited.
Mr. Tay graduated from Auckland University in 1970 with a Bachelor of Engineering in Electrical
Engineering under the Colombo Plan Scholarship and a Master of Science in System Engineering from
the former University of Singapore in 1974.
Steven H. Hamblin
Mr. Steven Hugh Hamblin was appointed to our Board of Directors in 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 Semiconductor
Manufacturing Ltd. He received his Bachelor of Science in Civil Engineering from the University of
Missouri, Columbia and his Master of Science in Industrial Administration from Carnegie-Mellon
University.
Richard J. Agnich
Mr. Richard J. Agnich was appointed to our Board of Directors in 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 was appointed to our Board of Directors in 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 nine
private companies: NEXX Systems, Inc., Pivotal Systems, Inc., PathScale, Inc., Nuelight Inc., 3Leaf
Networks, Inc., Ascendent Systems, Inc., Quorum Systems, Inc., Tarari Systems, Inc. and Novowave,
Inc. He is a member of one other public company board, Intersil Corporation, and serves on
Intersil's nominating and compensation committees. 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.
R. Douglas Norby
Mr. R. Douglas Norby was appointed to our Board of Directors in 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., Jazz Semiconductor, Inc. and Neterion, Inc., and serves as the Chairman of
Alexion's, Jazz Semiconductor's and Neterion's audit committee. He received his B.A. in Economics
from Harvard University and M.B.A. from Harvard Business School.
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Park Chong Sup
Dr. Park Chong Sup was appointed to our Board of Directors in 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 since November 2004. 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. 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.
Senior Management
Wan Choong Hoe
Mr. Wan Choong Hoe was appointed 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.
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.
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, before
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.
Jeffrey R. Osmun
Mr. Jeffrey R. Osmun was appointed Corporate Vice President, Worldwide Sales and Marketing.
Operations in September 2002. Mr. Osmun joined us in September 1999 as Director of Sales, U.S.
Central Region and was later appointed Vice President, North American Sales. Prior to that, he
served as National Sales Manager of Kyocera America Inc. and, before that, held the post of
Director of Development — College of Engineering and Applied Sciences for Lehigh University. Mr.
Osmun received his Bachelor of Science in Mechanical Engineering from Lehigh University in 1985.
Ng Tiong Gee
Mr. Ng Tiong Gee was appointed Chief Information Officer in May 2001. 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
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1987. He also holds a Master's Degree in Science (computer integrated manufacturing) and
Business Administration from the Nanyang Technological University in Singapore.
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.
Dennis W. Daniels
Mr. Dennis W. Daniels was appointed Corporate Vice President, Human Resources in August 2004.
Mr. Daniels was Vice President, Corporate Administration and Human Resources at ChipPAC prior to
the merger, a position he had held since November 2003. Prior to joining ChipPAC, he held several
executive human resources positions at Solectron Corp, Chase Manhattan Mortgage Corp, PepsiCo and
Tenneco Oil Corp. Before that, Mr. Daniels was an officer in the United States Marine Corps. Mr.
Daniels holds a Bachelor of Science degree in Journalism from the University of Kansas and a
Master's degree in Public Administration from the University of Missouri.
Janet T. Taylor
Ms. Janet T. Taylor was appointed Corporate Vice President, 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.
B. Compensation of Directors and Senior Management
In 2005, the aggregate amount of
compensation and bonus paid for all of our directors and senior management was approximately $4.7 million.
In addition, a bonus in the amount of $360,799 was approved for
Mr. Tan Lay Koon and bonuses in the aggregate amount of $503,893 were approved for our
senior management (excluding Mr. Tan, our Executive Director) by our Employee Resources and Compensation
Committee with respect to services rendered in 2005 which will be paid in 2006.
Executive
Non executive
Directors
Directors
(1)
Total
(2)
Charles R. Wofford
$
110,840
$
110,840
Lim Ming Seong
58,000
58,000
Tan Lay Koon
$
1,079,518
(3)
1,097,518
Peter Seah Lim Huat
47,160
47,160
Tay Siew Choon
41,000
41,000
Steven H. Hamblin
70,000
70,000
Richard J. Agnich
45,000
45,000
Robert W. Conn
35,000
35,000
R. Douglas Norby
41,000
41,000
Park Chong Sup
41,000
41,000
Senior management (excluding our Executive Director) as a group
3,129,007
$
1,079,518
$
489,000
$
4,697,525
(1)
We will seek approval at our annual general meeting in 2006 for the payment of directors'
fees of approximately $489,000 for the financial year ended December 31, 2005.
(2)
Does not include compensation given in the form of stock 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 bonus in the amount of $601,332 paid in 2005 with respect to services rendered in 2004.
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As of January 31, 2006, we have ten 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 2005 will be submitted for approval by our shareholders at our annual general
meeting to be held in April 2006.
We have provided to our directors and officers customary directors and officers liability
insurance cover.
We have engaged an outside consultant to advise us on our overall compensation scheme. Effective
January 30, 2006, the Companies Act was amended pursuant to the Companies Amendment Act, as a
result of which 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 required to be cancelled. As part of our re-evaluation of our
overall compensation scheme, we are considering implementing a share repurchase program and
amending our employee share plans to, among other things, allow us the flexibility to deliver
repurchased ordinary shares held in treasury (instead of issuing new ordinary shares) to eligible
plan participants. If our board of directors determines that it would be in the best interest of
our Company and our shareholders, we expect to seek 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 next annual general
meeting of shareholders to be held in April 2006. Any such repurchases would be made in compliance
with Rule 10b-18 under the Exchange Act. We also understand that Temasek Holdings has obtained a ruling from the
Securities Industry Council of Singapore that, subject to certain conditions, Temasek Holdings and its concert parties
will be exempted from making a general offer for our Company if Temasek Holdings' interest in our Company's shares
increases by more than 1% in any six-month period solely as a result of the purchases by our Company of our Company's shares
under a share repurchase program.
We expect that the revised compensation scheme would continue to include a short term (annual)
incentive plan, as currently in place, to reward our senior executives and other eligible employees
for their performance and contributions. The short term incentive plan is and we anticipate that it
would continue to be funded by a pool of monies that we would set aside based on a predetermined
aggregate percentage of payroll. Payment in 2005 is, and we anticipate it will continue to be in
2006, dependant on the level of achievement against corporate financial targets as well as plant
and functional goals. We expect that each participant would continue to have a bonus target as a
percentage of base salary.
In addition to the short term incentive plan, we anticipate that senior executives and other
designated employees would also be eligible to receive share options under our employee share
option plan. Grants under the employee share option plan would be determined by job level and individual performance and
vesting would be over a four-year period
.
We anticipate that the employee share option plan would be phased out over a one-year period
and replaced by long term incentives in the form of restricted shares. Therefore, we anticipate
that one-half of the share based compensation for 2006 would be granted pursuant to the employee share option plan
and the other half would be granted pursuant to the restricted share plan. Grants of restricted
shares would be based on our Company's performance against certain financial goals and vesting would be over a three-year period.
Further, it is anticipated that Mr. Tan Lay Koon and a very limited group of the most senior
executives would be eligible to participate in an additional restricted share plan. Under the
proposed restricted share plan, fully vested shares would be granted based on grant targets for
each eligible participant based on our Company's achievement of certain financial "stretch"
goals. Finally, we expect that Mr. Tan Lay Koon and a very limited group of the most senior
executives would participate in a modified long term cash incentive plan based on measuring
Economic Value Added (EVA). EVA improvement year over year would fund 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).
Prior to 2005, the group incentive EVA pool was 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 was 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 senior executive had his or her own notional EVA bank account. The bonus
earned each year was added to his or her notional EVA bank account, and payment was 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 is under review. It is
anticipated that this plan will be modified for 2006 as described above.
We do not provide any post-retirement benefits, other than pursuant to the plans required or
permitted by local regulations and described below.
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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 $4.0
million for 2003, $4.6 million for 2004 and $4.8 million for 2005.
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 the year ended December 31, 2005 were approximately $0.7 million and $1.9 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 and $21,200 for such retirement payments for the period August 5, 2004
to December 31, 2004 and for the year ended December 31, 2005, respectively. Accrued gratuity
benefits for eligible employees are adjusted annually.
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 the
year ended December 31, 2005, the aggregate expenses under this plan were $1.2 million and $1.8
million, respectively.
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 contributes its pension obligations to Central Trust of China, as required by the
Labor Standards Law. 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. Winstek's total expenses under this plan were
$46,000 for 2003, $76,000 for 2004 and $55,000 for 2005.
STATS ChipPAC, Inc. and STATS ChipPAC Test Services, Inc. have a 401(k) savings plan to which
we contribute up to 6% of eligible employee compensation at the rate of 50% of employee
contributions to the 401(k) plan. Our matching contributions under the 401(k) plan were $258,000,
$320,000 and $395,000 for the year ended December 31, 2003, 2004 and 2005, 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.
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. (formerly ChipPAC Korea Company 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 period August 5, 2004 to December 31, 2004 and for the year ended December 31, 2005
were approximately $1.8 million and $6.3 million, respectively.
Under the National Pension Act of South Korea, STATS ChipPAC Korea 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 the
year ended December 31, 2005 were approximately $0.7 million and $2.1 million, respectively.
C. Board Practices
Board of Directors
Our Articles of Association set the minimum number of directors at two. We currently have ten
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. Accordingly, the appointments
of Mr. Peter Seah Lim Huat, Mr. Steven H. Hamblin and Mr. Richard J. Agnich will expire and we will
seek shareholders' approval for their re-appointment at the next annual general meeting of
shareholders to be held in 2006. 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-election.
Directors who are aged 70 or older are eligible for re-election upon the approval of the
shareholders of our Company by way of an ordinary resolution passed at an annual general meeting
and, if re-elected, will hold office
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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 2006.
As of January 31, 2006, Temasek Holdings, through its wholly-owned subsidiary, Singapore
Technologies Semiconductors Pte Ltd (STSPL), beneficially owned approximately 36.03% of our
outstanding ordinary shares. Temasek Holdings, wholly-owned by the Minister of Finance
(Incorporated) for Singapore, a statutory body constituted by the Minister for Finance
(Incorporation) Act (Cap. 183), owns 100% of the ordinary shares of STSPL. As a result, Temasek
Holdings will have 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.
Committees of our Board of Directors
(i) 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. Since 2004 and
currently, the members of the Audit Committee are Mr. Richard J. Agnich (Chairman), Mr. Steven H.
Hamblin and Mr. R. Douglas Norby. 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 four meetings in 2005.
(ii) 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. Steven H. Hamblin. In January 2006, Mr. Seah
resigned as Chairman of the Executive Resource & Compensation Committee and Mr. Wofford was
appointed Chairman. Also in January 2006, Mr. Lim Ming Seong resigned as a member of the
Executive Resource & Compensation Committee and Mr. Hamblin 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.
Prior to July 2005, the specific duties and responsibilities of the Executive Resource &
Compensation Committee included the following:
•
Review and approve the compensation policies and incentive programs for key
management executives;
•
Consider, review and approve the entire specific remuneration package and service
contract terms for each key management executive, except that the compensation of the
Chief Executive Officer was further required to be approved by our Board; and
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•
Review and approve all our option plans, stock plans and other equity based plans.
Nasdaq Marketplace Rule 4350 (c) regarding director independence was required to be
implemented by foreign private issuers with effect from July 31, 2005. Accordingly, in July 2005,
our Board adopted a new charter for our Executive Resource & Compensation Committee. From July 31,
2005 to December 31, 2005, because Mr. Seah and Mr. Lim do not qualify as independent directors
under the Nasdaq Marketplace Rules, any compensation decision with regard to our chief executive
officer or any other executive officers would have been determined by or recommended to the Board
for determination by a majority of our independent directors. Our chief executive officer would
have been required to recuse himself from all deliberations and voting in respect of his
compensation. During such period, the duties and responsibilities of the Executive Resource &
Compensation Committee did not include any compensation decision with regard to our chief executive
officer or any other executive officer.
In January 2006, our Board adopted a new charter for our Executive Resource & Compensation
Committee which became effective on January 16, 2006. Our Board has resolved, with effect from
January 16, 2006, to rely 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 senior management executive. The Executive Resource & Compensation
Committee also reviews and approves all our option plans, stock 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.
Specifically, the duties and responsibilities of the Executive Resource & Compensation
Committee included the following:
•
Review and approve our Company's policy for determining executive remuneration
including the remuneration policy with regard to key management executives;
•
Consider, review, vary and make recommendations the board with respect to the entire
specific remuneration package and service contract terms for each key management
executive;
•
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 2005.
(iii) Budget Committee
The Budget Committee currently consists of Mr. Lim Ming Seong (Chairman), Mr. Tay Siew Choon
and Dr. Park Chong Sup. 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 2005.
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(iv) Executive Committee
The Executive Committee currently consists of Mr. Charles R. Wofford (Chairman), Mr. Tay Siew
Choon and Mr. Steven H. Hamblin. 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 2005.
(v) 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. In 2005, the members of the
Nominating and Corporate Governance Committee were Mr. Charles R. Wofford (Chairman), Mr. Peter
Seah Lim Huat and Mr. Lim Ming Seong. In January 2006, Mr. Lim Ming Seong resigned as a member of
the Nominating and Corporate Governance Committee and Mr. Richard J. Agnich was appointed as a
member.
Nasdaq Marketplace Rule 4350 (c) regarding director independence was required to be
implemented by foreign private issuers with effect from July 31, 2005. Accordingly, in July 2005,
our Board adopted a new charter for our Nominating and Corporate Governance Committee. 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.
From July 31, 2005 to December 31, 2005, because Mr. Seah and Mr. Lim do not qualify as
independent directors under the Nasdaq Marketplace Rules, any director nominees would have been
selected by or recommended to the Board for selection by a majority of our independent directors.
During such period, the duties and responsibilities of the Nominating and Corporate Governance
Committee did not include the selection of or recommendation to the Board for selection by a
majority of our independent directors, any director nominees.
In January 2006, our Board adopted a new charter for our Nominating and Corporate Governance
Committee which became effective on January 16, 2006. Our Board has resolved, with effect from
January 16, 2006, to rely 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:
•
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 one meeting in 2005.
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D. Employees
As of December 31, 2005, we employed 12, 782 full-time employees and 360 temporary employees
or contract employees.
As of December 31, 2005, approximately 1,488 of our employees at the Icheon, South Korea
facility are 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 2005 and is effective
through April 30, 2006. 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:
STATS
STATS ChipPAC
as of December 31,
as of December 31,
2003
2004
2005
Function
Direct and Indirect Labor (Manufacturing)
3,596
10,398
11,376
Indirect Labor (Administration)
279
653
1,535
Research and Development
129
229
231
Total
(1)
4,004
11,280
13,142
Location
Singapore
3,461
3,828
3,896
China
16
2,459
3,540
Malaysia
—
2,310
2,462
South Korea
—
2,031
2,424
Taiwan
376
443
562
United States
145
198
245
Others
6
11
13
Total
(1)
4,004
11,280
13,142
(1)
The approximate 182% increase in headcount was the result of additional hires in 2004 to
support the increase in the volume of our operations and the addition of ChipPAC employees as
a result of the merger with ChipPAC.
E. Share Ownership for Directors and Senior Management
Based on an aggregate of 1,976,627,005 ordinary shares outstanding as of January 31, 2006,
each of our directors and senior management officers has 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, 2006.
Number of Ordinary Shares
Per Share Exercise
Issuable on Exercise of Option
Price (S$)
Exercisable Period
Charles R. Wofford
50,000
1.592
04/24/2002 to 04/23/2006
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
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Number of Ordinary Shares
Per Share Exercise
Issuable on Exercise of Option
Price (S$)
Exercisable Period
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
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
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
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
Tay Siew Choon
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 08/10/2009
37,500
1.01
05/03/2006 to 05/02/2010
37,500
0.925
10/31/2006 to 10/30/2010
Steven H. Hamblin
50,000
1.592
04/24/2002 to 04/23/2006
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
Richard J. Agnich
20,000
1.298
10/23/2002 to 10/22/2006
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
Robert W. Conn
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
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
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
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(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.
Employees' Share Ownership Scheme
We have engaged an outside consultant to advise us on our overall compensation scheme.
Effective January 30, 2006, the Companies Act was amended pursuant to the Companies Amendment Act,
as a result of which 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 required to be cancelled. As part of our re-evaluation of our
overall compensation scheme, we are considering implementing a share repurchase program and
amending our employee share plans to, among other things, allow us the flexibility to deliver
repurchased ordinary shares held in treasury (instead of issuing new ordinary shares) to eligible
plan participants. If our board of directors determines that it would be in the best interest of
our Company and our shareholders, we expect to seek shareholders' approval to adopt a revised
compensation scheme, including a share repurchase program within specified mandates relating to
maximum repurchase price and volume and timing and manner of repurchases, at our next annual
general meeting of shareholders to be held in April 2006. Any such repurchases would be made in
compliance with Rule 10b-18 under the Exchange Act. See " — B. Compensation of Directors and
Senior Management" for a discussion of anticipated changes to our compensation scheme.
We anticipate that the employee share option plan described below would be phased out over a
one-year period and replaced by long term incentives in the form of restricted shares. Therefore,
we anticipate that one-half of the share based compensation would be granted pursuant to the
employee share option plan and the other half would be granted pursuant to the restricted share
plan. Grants of restricted shares would be based on our Company's performance against two-year
financial goals and grant targets based on job level. Vesting would be over a three-year period.
Further, it is anticipated that Mr. Tan Lay Koon and a very limited group of the most senior
executives would be eligible to participate in an additional restricted share plan. Under the
proposed restricted share plan, fully vested shares would be granted based on grant targets for
each eligible participant based on our Company's achievement of three-year financial "stretch"
goals.
Share Option Plan
STATS ChipPAC Ltd. Substitute Purchase and Option Plan (Substitute Option Plan) and STATS
ChipPAC Ltd. Substitute Equity Incentive Plan (the Substitute EIP and collectively 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, 7.2 million and 73.0 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 (STATS
ChipPAC 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
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option plan may be either nonqualified
options or incentive stock options intended to qualify under Section 422 of the United States
Internal Revenue Code of 1986, as amended (Internal Revenue Code).
The aggregate number of ordinary shares that may be issued under the STATS ChipPAC option plan
may not exceed 245 million shares (subject to anti-dilution adjustment pursuant to the STATS
ChipPAC option plan).
STATS ChipPAC Ltd. Employee Share Purchase Plan 2004.
In connection with the merger,
effective August 5, 2004, our shareholders approved the adoption of the STATS ChipPAC Ltd. Employee
Share Purchase Plan 2004 (ESPP). The purpose of the ESPP is 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 intended to qualify under Sections 421 and 423 of the
Internal Revenue Code.
Participants in the ESPP may elect through payroll deductions or a lump sum contribution to
purchase our ordinary shares or ADSs at a fixed discount.
A maximum aggregate of 130.0 million ordinary shares, whether issued in the form of ordinary
shares or ADSs, have been reserved for issuance under the ESPP.
As of January 31, 2006, options to purchase an aggregate of 123,569,105 ordinary shares were
outstanding, out of which 23,424,000 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 2006 to December 2015.
In 2006, we expect to grant to our directors, officers and employees additional options under
the STATS ChipPAC option plan. The exercise price of such options will be equal to the fair market
value of the underlying ordinary shares on the date of the grant.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major Shareholders
Prior to the consummation of our merger with ChipPAC in August 2004, STSPL held approximately
59.18% of our outstanding shares. This was reduced to approximately 32.67% following the
consummation of the merger.
Following a restructuring of the Temasek Holdings group of companies on December 31, 2004,
Temasek Holdings acquired all of the shareholdings in STSPL held by Temasek Holdings' wholly-owned
subsidiary, STPL. As of January 31, 2006, Temasek Holdings, through STSPL, beneficially owns
approximately 36.03% of our outstanding ordinary shares. Temasek Holdings, wholly-owned by the
Minister of Finance (Incorporated) for Singapore, a statutory body constituted by the Minister of
Finance (Incorporation) Act (Cap. 183), owns 100% of the ordinary shares of STSPL As a result,
Temasek Holdings will have 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 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 January 31, 2006 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
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person holding the options but are not
deemed outstanding for the purposes of computing the percentage ownership of any other person.
Name of Beneficial Owner
Number of Shares Beneficially Owned
Percentage Beneficially Owned
(3)
Temasek Holdings
(1)
712,228,050
36.03%
FMR Corp.
(2)
291,832,700
14.76%
(1)
Temasek Holdings, wholly-owned by the Minister of Finance (Incorporated) for Singapore, a
statutory body constituted by the Minister of Finance (Incorporation) Act (Cap. 183), owns
100% of the ordinary shares of STSPL. Temasek Holdings is deemed to beneficially own our
ordinary shares, which are owned directly by STSPL. Includes 5.32% of shares lent to Deutsche
Bank AG, Singapore Branch, and Morgan Stanley Stanley & Co. International Limited as of
January 31, 2006 pursuant to a Global Master Securities Lending Agreement in connection with
the issue of convertible notes due 2008 by STATS ChipPAC.
(2)
FMR Corp. wholly owns Fidelity Management & Research Company. FMR Corp. is deemed to
beneficially own our ordinary shares, which are owned directly by Fidelity Management &
Research Company. Members of the family of Edward C. Johnson, III, Chairman of FMR Corp., are
the predominant owners, directly or through trusts, of Series B shares of common stock of FMR
Corp., representing 49% of the voting power of FMR Corp.
(3)
Based on an aggregate 1,976,627,005 ordinary shares outstanding as of January 31, 2006.
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 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. Should we adopt a share repurchase program, we understand that Temasek
Holdings has obtained a ruling from the Securities Industry Council of Singapore that, subject to
certain conditions, Temasek Holdings and its concert parties will be exempted from making a general
offer for our Company if Temasek Holdings' interest in our Company's shares increases by more than 1% in
any six-month period solely as a result of the purchases by our Company of our Company's shares under a share
repurchase program. 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 since January 28, 2000.
As of January 31, 2006, 482,769,710 of our ordinary shares, representing 24.42% of our
outstanding shares, were held by a total of 20 holders of record with addresses in the United
States. Because many of our ordinary shares and ADSs were held by brokers and other 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, 2006, the closing price of our ordinary shares on the SGX-ST was S$1.14 per
ordinary share and the closing price of our ADSs on Nasdaq was $7.00 per ADS.
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 the years ended December 31, 2003 and 2004, we paid management fees of $1.1 million for
each year to STPL for various management and corporate services provided pursuant to the Singapore
Technologies Management and Support Services Agreement entered into in December 1999. Prior to this
agreement, these services were subject to a management fee computed based on certain percentages of
capital employed, revenue, manpower and payroll. We believe that our arrangement with STPL
approximates the cost of providing these services.
We participated in a cash management program managed by a bank for the former Singapore
Technologies Group. Under this program, cash balances are pooled with other companies in the former
Singapore Technologies Group. The daily cash surpluses or shortfalls of the companies within the
pool earn or bear interest at prevailing interest rates. This arrangement was terminated as of
November 30, 2004. In the past, we had deposited excess funds with ST Treasury Services Ltd, a
wholly-owned subsidiary of
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Temasek Holdings but we have ceased to do so since October 1, 2004. Our
insurance coverage is held under various insurance policies which are negotiated by our insurance
brokers along with those of other companies in the former Singapore Technologies Group. While this
enabled us to benefit from the group rates negotiated by our insurance brokers, these policies are
issued and billed directly to us and are further negotiated by us to tailor to our specific
insurance needs.
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 $13.2 million, $24.1 million and $14.7 million for 2003,
2004 and 2005, 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.
Legal Proceedings
On July 31, 2002, Seagate Technology L.L.C. 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. On April 14, 2005, we reached a resolution with Seagate with respect to this litigation.
As part of a broader settlement agreement among all parties to this matter, we have agreed to pay a
fee in consideration of a release from all claims related to this litigation. The amount being paid
by us as part of the settlement is being paid by our insurer.
In February 2006, STATS ChipPAC Ltd., 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 dated December 22, 1988, between Tessera and 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. Tessera has also sued Advanced Micro Devices, Inc., Spansion LLC, Advanced
Semiconductor Engineering, Inc., ChipMOS Technologies, Inc., ChipMOS U.S.A. Inc., Silicon Precision
Industries Co., Ltd. and ST Microelectronics N.V. in the same lawsuit.
We are not involved in any other legal 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
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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
on the SGX-ST
Price per ADS on Nasdaq
(in S$)
(in US$)
High
Low
High
Low
Annual for 2001
2.84
0.99
16.00
5.60
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
Quarterly highs and lows:
— quarter ending March 31, 2004
2.45
1.64
14.74
9.51
— quarter ending June 30, 2004
1.88
1.30
10.71
7.38
— quarter ending September 30, 2004
1.43
1.00
7.84
5.50
— quarter ending December 31, 2004
1.12
0.92
6.61
5.40
— quarter ending March 31, 2005
1.16
0.88
7.25
5.37
— quarter ending June 30, 2005
1.26
0.97
7.43
5.75
— quarter ending September 30, 2005
1.34
1.00
8.16
6.10
— quarter ending December 31, 2005
1.21
0.90
7.02
5.30
Monthly highs and lows:
August 2005
1.16
1.00
7.07
6.11
September 2005
1.16
1.03
6.84
6.10
October 2005
1.06
0.90
6.25
5.30
November 2005
1.13
0.94
6.65
5.50
December 2005
1.21
1.04
7.02
6.27
January 2006
1.17
1.01
7.50
6.19
February 2006 (up to February 21, 2006)
1.15
1.06
7.17
6.50
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 Nasdaq
(NASDAQ: STTS).
D. Selling Shareholders
Not applicable
E. Dilution
Not applicable
F. Expenses of the Issue
Not applicable
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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, which 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.
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All of our ordinary shares are in registered form. All our issued ordinary shares are entitled
to voting rights. We may, subject to and in accordance with the Companies Act 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 any remaining approved but un-issued 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, among others, new ordinary
shares may not be issued to transfer a controlling interest in our Company without the prior
approval in a 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), 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 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 together with the amount of the proper duty
chargeable, if any, 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 the total voting rights of all shareholders 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 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.
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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 and each proxy
shall have one vote, 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 or 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.
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 are paid pro rata among the shareholders in proportion
to the amount paid up on each shareholder's ordinary shares, unless the rights attaching any
ordinary shares or the terms of issue thereof provide otherwise. 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, 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 and its related and associated companies and companies whose associated
companies include any of these companies; a company and 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 our Company may be
imminent; partners; and an individual
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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 pursuant to a long-term
operating lease from the Housing and Development Board, 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. 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. and which Motorola, Inc. assigned to Freescale Semiconductor, Inc. in 2004). The agreement expires on December
31, 2010. Under this agreement, we are required to pay Freescale Semiconductor, Inc. a royalty
based upon a 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.
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In June 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 pursuant to a
Yangdo Tambo Agreement dated June 20, 2003, all its rights and interests in certain movable
property to be released and re-transferred upon the repayment of the loan. 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, except
that the last installment is 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 of 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 UD$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 January 2004, in order to enhance our yields on our cash deposits, we entered into a bond
transaction and an asset swap transaction with Deutsche Bank AG, London Branch. In exchange for the
purchase of certain bonds from the Bank at a bond purchase price of $96,116,000, the Bank agreed to
make four payments of $25,000,000 each spread out over the years 2004 to 2007, to us in respect of
the bonds. In consideration for such payments, we agreed to pledge the Bonds in favor of the Bank
and enter into an International Swaps and Derivatives Association (ISDA) Agreement (ISDA Agreement)
with the Bank. We liquidated the bonds and terminated the ISDA Agreement in August 2004.
On February 10, 2004, we signed an Agreement and Plan of Merger and Reorganization with
ChipPAC, pursuant to which a newly formed, wholly-owned subsidiary of ours merged with ChipPAC and
ChipPAC became our wholly-owned subsidiary. Pursuant to the merger, each share of Class A common
stock, par value US$0.01 per share, of ChipPAC was converted into the right to receive 0.87 of our
ADSs. STPL has entered into a voting agreement pursuant to which it agreed to vote approximately
59% of STATS outstanding capital stock beneficially owned by STPL in favor of the issuance of our
ADSs in connection with the merger and certain other related
matters. In addition, certain of ChipPAC's stockholders who owned approximately 18% of
ChipPAC's Class A common stock entered into a voting agreement pursuant to which they agreed to
vote in favor of the merger. The merger with ChipPAC was completed on August 5, 2004.
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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 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 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 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.
D. Exchange Controls
Currently, there are no exchange control restrictions in Singapore.
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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
Year Ended December 31,
2001
1.80
1.73
1.85
1.85
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
1.66
Month
August 2005
—
1.65
1.69
1.68
September 2005
—
1.67
1.69
1.68
October 2005
—
1.68
1.70
1.70
November 2005
—
1.69
1.70
1.69
December 2005
—
1.66
1.69
1.66
January 2006
—
1.62
1.65
1.62
February 2006 (up to February 21)
—
1.62
1.64
1.63
(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 22% for the year of assessment 2004 and a rate of 20% with effect from the year of
assessment 2005, 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
rate of 22% for the year of assessment 2004 and 20% with effect from the year of assessment 2005
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.
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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, 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.
Capital Gains on Disposal of Ordinary Shares and ADSs
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.
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.
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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.
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 supervision of a
court within the United States and the control of one or more U.S. persons 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 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, 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 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.
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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 Section 904(g) of the Internal Revenue Code, 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 are paid by our
Company and deemed to have been distributed to and paid by our shareholders. A U.S. Holder will not
be subject to United States federal income tax on such amounts, and the holder will 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 a maximum rate of tax of 15%. 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, 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.
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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.
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 its
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, 2005, our 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 $50.0 million and $150.0 million
subordinated convertible notes due June 15, 2011 and June 1, 2008, respectively, 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 2011 and 2008, and senior notes
due 2011 and 2010 bear interest of 8.0%, 2.5%, 6.75% and 7.5% per annum, respectively.
Currency Exchange Rates
A portion of our costs is denominated in 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, 2005, we have a series of foreign currency forward contracts with total contract value of approximately $68.0 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.
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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(l), 4, 15 and 17, and 26 to our audited
consolidated financial statements, respectively.
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
Based on our chief executive officer's and chief financial officer's evaluation of our
disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the
Exchange Act) as of the end of the period covered by this Form 20-F, they have concluded that our
disclosure controls and procedures are designed to ensure that information required to be disclosed
by us in the reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and forms and are
operating in an effective manner.
Changes to internal controls
There were no adverse changes in our internal controls over financial reporting that occurred
during the period covered by this annual report that has materially affected, or is likely to
materially affect, our internal control over financial reporting.
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our Board of Directors has determined that Mr. Steven H. Hamblin and Mr. R. Douglas Norby
qualify as "audit committee financial experts" 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
We have adopted a code of ethics that applies to all of our officers, directors and employees
and to all officers, directors and employees of our subsidiaries. The text of our Code of Business
Conduct and Ethics is posted on our internet website at
http://www.statschippac.com.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
KPMG served as our independent registered public accounting firm for the financial year ended
December 31, 2003, for which audited financial statements appear in this annual report on Form
20-F. 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 2004 and 2005.
89
Table of Contents
December 31,
2004
2005
(In thousands)
Audit Fees
$
918
$
849
Audit-Related Fees
160
33
Tax Fees
42
124
All Other Fees
35
229
Total
$
1,155
$
1,235
Audit Fees.
This category consists of fees billed for the annual audit services engagement 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 2004 and 2005.
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 KPMG and 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. ISSUER PURCHASES OF EQUITY SECURITIES
Neither we, nor any affiliated purchaser, made any purchase of our equity securities for the
year ended December 31, 2005.
ITEM 17. FINANCIAL STATEMENTS
See Item 18 for a list of the Financial Statements filed as part of this annual report.
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:
90
Table of Contents
Reports of Independent Registered Public Accounting Firms
Consolidated Balance Sheets as at December 31, 2004 and 2005
Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31,
2003, 2004 and 2005
Consolidated Statements of Shareholders' Equity for the years ended December 31, 2003, 2004
and 2005
Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2004 and 2005
Notes to the Consolidated Financial Statements
ITEM 19. EXHIBITS
The following exhibits are filed as part of this annual report:
1.1
Memorandum and Articles of Association of STATS ChipPAC Ltd. — incorporated by reference to
Exhibit 3.2 to Form F-4 (File No. 333-114232)of STATS ChipPAC Ltd., as filed with the
Securities and Exchange Commission on April 6, 2004
2.1
Form of specimen certificate representing STATS ChipPAC Ltd.'s ordinary shares —
incorporated by reference to Exhibit 4.1 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
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 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 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
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Table of Contents
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
Separation Agreement, dated as of February 10, 2004, among ST Assembly Test Services Ltd,
ChipPAC, Inc. and Dennis P. McKenna — incorporated by reference to Exhibit 10.33 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
4.11
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
4.12
Securities Pledge Agreement dated January 16, 2004 by and between ST Assembly Test Services
Ltd as Pledgor and Deutsche Bank AG, London Branch as Pledgee — 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 19, 2004
4.13
Confirmation Letter Agreement dated January 8, 2004 by and between ST Assembly Test
Services Ltd and Deutsche Bank AG, London Branch — incorporated by reference to Exhibit
4.14 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
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
4.15
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
4.16
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
4.17
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
4.18
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
4.19
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
92
Table of Contents
4.20
Share Pledge Agreement dated December 26, 2003 by and between ST Assembly Test Services Ltd
and 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
4.21
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
4.22
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
4.23
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
4.24
US$115 Million Reg S Global Note issued by ST Assembly Test Services Ltd under the
Indenture relating to the zero-rate 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
4.25
Purchase Agreement, dated as of May 22, 2003, by and between ChipPAC, Inc. and Lehman
Brothers Inc. — incorporated by reference to Exhibit 4.5 of Form S-3 (File No. 333-108236)
of ChipPAC, Inc. filed with the Securities and Exchange Commission on August 26, 2003
4.26
Registration Rights Agreement, dated March 28, 2003, by and between ChipPAC, Inc. and
Lehman brothers Inc. — incorporated by reference to Exhibit 10.39 of Form 10-Q (File No.
000-31173) of ChipPAC, Inc. filed with the Securities and Exchange Commission on August 8,
2003 for the period ended June 30, 2003
4.27
Indenture, dated as of May 28, 2003, by and between ChipPAC, Inc. and U.S. Bank National
Association, as trustee incorporated by reference to Exhibit 10.40 of Form 10-Q (File No.
000-31173) of ChipPAC, Inc. filed with the Securities and Exchange Commission on August 8,
2003 for the period ended June 30, 2003
4.28
Employment Agreement, dated as of February 26, 2004, among ST Assembly Test Services Ltd,
ChipPAC, Inc. and Dennis Daniels — incorporated by reference to Exhibit 4.7 of Form F-4
(File No. 333-114232) of STATS ChipPAC Ltd., as filed with the Securities and Exchange
Commission on April 6, 2004
4.29
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
4.30
Retention Agreement, entered into on April 18, 2004, among ST Assembly Test Services Ltd,
ChipPAC, Inc. and Robert Krakauer — incorporated by reference to Exhibit 10.42 to the
Quarterly Report on Form 10-Q (File No. 000-31173) of ChipPAC, Inc. for the three months
ended March 31, 2004, as filed with the Securities and Exchange Commission on May 10, 2004
4.31
Retention Agreement, dated as of May 11, 2004, between ChipPAC, Inc. and Patricia McCall —
incorporated by reference to Exhibit 10.44 to the Quarterly Report on Form 10-Q (File No.
000-31173) of ChipPAC, Inc. for the three months ended June 30, 3002, as filed with the
Securities and Exchange Commission on July 30, 2004
4.32
First Supplemental Indenture among ChipPAC Inc., as Company, ST Assembly Test Services Ltd,
as Parent, and U.S. Bank National Association, as Trustee, dated August 4, 2004 —
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
4.33
STATS ChipPAC Ltd. Substitute Share Purchase and Option Plan — incorporated by reference to
Exhibit 4.4 to Form S-8 POS (File No. 333-114232) of STATS ChipPAC Ltd. of August 25, 2004
93
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4.34
STATS ChipPAC Ltd. Substitute Equity Incentive Plan — incorporated by reference to Exhibit
4.5 to Form S-8 POS (File No. 333-114232) of STATS ChipPAC Ltd. of August 25, 2004
4.35
STATS ChipPAC Ltd. Share Option Plan — incorporated by reference to Exhibit 4.3 to Form S-8
(File No. 333-118555) of STATS ChipPAC Ltd. of August 25, 2004
4.36
STATS ChipPAC Ltd. Employee Share Purchase Plan 2004 — incorporated by reference to Exhibit
4.4 to Form S-8 (File No. 333-118555) of STATS ChipPAC Ltd. of August 25, 2004
4.37
Indenture, dated November 18, 2004, by and between STATS ChipPAC Ltd. and U.S. Bank
National Association — incorporated by reference to Exhibit 4.40 to the annual report on
Form 20-F (File No. 333-75080) for fiscal year ended December 31, 2004 of STATS ChipPAC
Ltd., as filed with the Securities and Exchange Commission on March 18, 2005 (Form 20-F
FY2004)
4.38
Purchase Agreement, dated as of November 5, 2004 by and between STATS ChipPAC Ltd, Deutsche
Bank AG, Singapore Branch and Lehman Brothers International (Europe) — incorporated by
reference to Exhibit 4.41 to the Form 20-F FY2004
4.39
Registration Rights Agreement, dated November 18, 2004, by and between STATS ChipPAC Ltd.
and STATS ChipPAC, Inc., STATS ChipPAC Test Services, Inc., STATS Holdings Limited,
ChipPAC, Inc., ChipPAC International Company Limited, ChipPAC Luxembourg S.a.R.L., ChipPAC
Liquidity Management Hungary Limited Liability Company, STATS ChipPAC (Barbados) Ltd.,
STATS ChipPAC (BVI) Limited, STATS ChipPAC Malaysia Sdn. Bhd., and STATS ChipPAC Korea Ltd.
(collectively, referred to as the Subsidiary Guarantors) and Deutsche Bank AG, Singapore
Branch and Lehman Brothers International (Europe) — incorporated by reference to Exhibit
4.42 to the Form 20-F FY2004
4.40
Subsidiary Guarantee Agreement, dated November 18, 2004, by and between STATS ChipPAC Ltd.,
the Subsidiary Guarantors party thereto and U.S. Bank National Association, as Trustee —
incorporated by reference to Exhibit 4.43 to the Form 20-F FY2004
4.41
Second Supplemental Indenture among ChipPAC International Company Limited, as Issuer,
ChipPAC, Inc., as Guarantor, and U.S. Bank National Association as Trustee, dated October
7, 2004 — incorporated by reference to Exhibit 4.44 to the Form 20-F FY2004
4.42
Second Supplemental Indenture among ChipPAC Inc., as Company, STATS ChipPAC Ltd., as
Parent, and U.S. Bank National Association, as Trustee, dated October 11, 2004 —
incorporated by reference to Exhibit 4.45 to the Form 20-F FY2004
4.43
Third Supplemental Indenture among ChipPAC Inc., as Company, STATS ChipPAC Ltd., as Parent,
and U.S. Bank National Association, as Trustee, dated November 2, 2004 — incorporated by
reference to Exhibit 4.46 to the Form 20-F FY2004
4.44
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 to Form 6-K (File No. 333-75080) of STATS ChipPAC Ltd., as filed with the
Securities and Exchange Commission on August 25, 2005
4.45
Registration Rights Agreement dated as of July 19, 2005 by and among STATS ChipPAC Ltd. and
STATS ChipPAC, Inc., STATS ChipPAC Test Services, Inc., STATS Holdings Limited, ChipPAC,
Inc., ChipPAC International Company Limited, ChipPAC Luxembourg S.a.R.L., ChipPAC Liquidity
Management Hungary Limited Liability Company, STATS ChipPAC (Barbados) Ltd., STATS ChipPAC
(BVI) Limited and STATS ChipPAC Malaysia Sdn. Bhd. (collectively referred to as the 2005
Subsidiary Guarantors) and Credit Suisse First Boston (Singapore) Limited and Deutsche Bank
AG, Singapore Branch — incorporated by reference to Exhibit 4.2 to Form 6-K (File No.
333-75080) of STATS ChipPAC Ltd., as filed with the Securities and Exchange Commission on
August 25, 2005
94
Table of Contents
4.46
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.
4.47
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, as
Trustee— incorporated by reference to Exhibit 4.3 to Form 6-K (File No. 333-75080) of STATS
ChipPAC Ltd., as filed with the Securities and Exchange Commission on August 25, 2005
4.48
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, as Trustee with respect to the 7.5% Senior Notes due 2010
4.49
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, as Trustee with respect to the 6
3
/
4
% Senior Notes due 2011
8.1
List of subsidiaries
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
15.2
Consent of KPMG, independent registered public accounting firm
95
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: February 28, 2006
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:
Corporate Vice President,
Chief Financial Officer
96
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
Page
FINANCIAL STATEMENTS
Reports of Independent Registered Public Accounting Firms
F-2
Consolidated Balance Sheets
F-4
Consolidated Statements of Operations
F-5
Consolidated Statements of Comprehensive 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.:
In our opinion, the accompanying consolidated balance sheets and the related consolidated
statements of operations, of comprehensive loss, 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, 2005 and 2004, and the results of their operations and their cash
flows for each of the two years in the period ended December 31, 2005, 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
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.
PricewaterhouseCoopers
Singapore
February 28, 2006
F-2
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders
ST Assembly Test Services Ltd:
We have audited the accompanying consolidated statements of operations, comprehensive loss,
shareholders' equity and cash flows of ST Assembly Test Services Ltd and subsidiaries for the year
ended December 31, 2003. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these consolidated financial
statements based on our audit.
We conducted our audit 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the consolidated results of operations and cash flows of ST Assembly Test
Services Ltd and subsidiaries for the year ended December 31, 2003, in conformity with U.S.
generally accepted accounting principles.
KPMG
Singapore
February 6, 2004
F-3
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31
In thousands of U.S. Dollars (except per share data)
Note
2004
2005
ASSETS
Current assets:
Cash and cash equivalents
3
$
227,509
$
224,720
Short-term marketable securities
4
2,060
17,648
Accounts receivable, net
5
149,650
240,990
Amounts due from affiliates
2
2,623
6,810
Other receivables
6
16,813
11,336
Inventories
7
54,690
79,483
Prepaid expenses and other current assets
8
38,836
26,727
Total current assets
492,181
607,714
Long-term marketable securities
4
18,121
17,803
Property, plant and equipment, net
9
1,035,803
1,107,031
Intangible assets
10
125,830
72,780
Goodwill
11
523,598
522,625
Prepaid expenses and other non-current assets
8
76,169
65,429
Total assets
$
2,271,702
$
2,393,382
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts and other payable
$
68,573
$
136,058
Payables related to property, plant and equipment purchases
51,638
79,425
Accrued operating expenses
13
63,899
96,932
Income taxes payable
2,038
2,235
Short-term borrowings
15
19,874
16,891
Amounts due to affiliates
2
137
62
Current obligations under capital leases
16
7,587
7,091
Current installments of long-term debts
17
154,407
18,651
Total current liabilities
368,153
357,345
Obligations under capital leases, excluding current installments
16
10,771
3,680
Long-term debts, excluding current installments
17
642,175
775,425
Other non-current liabilities
19
50,362
66,611
Total liabilities
1,071,461
1,203,061
Minority interest
40,891
48,669
Share capital:
Ordinary shares — par value S$0.25, Authorized 3,200,000,000
shares
Issued ordinary shares — 1,944,330,450 in 2004 and
1,976,292,025 in 2005
20
298,233
303,052
Additional paid-in capital
21
1,507,612
1,517,118
Accumulated other comprehensive loss
22
(2,860
)
(8,572
)
Accumulated deficit
(643,635
)
(669,946
)
Total shareholders' equity
1,159,350
1,141,652
Commitments and contingencies
24
Total liabilities and shareholders' equity
$
2,271,702
$
2,393,382
See accompanying notes to consolidated financial statements.
F-4
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31
In thousands of U.S. Dollars (except per share data)
Note
2003
2004
2005
Net revenues
$
380,691
$
769,121
$
1,157,253
Cost of revenues
(328,014
)
(643,540
)
(968,023
)
Gross profit
52,677
125,581
189,230
Operating expenses:
Selling, general and administrative
36,475
84,965
135,771
Research and development
15,295
17,637
26,071
Restructuring charges
—
—
830
Goodwill impairment
11
—
453,000
—
Other general expenses (income), net
374
(464
)
(20
)
Total operating expenses
52,144
555,138
162,652
Operating income (loss)
533
(429,557
)
26,578
Other income (expense), net:
Interest income
4,785
4,430
6,414
Interest expense
(13,994
)
(28,816
)
(42,629
)
Foreign currency exchange gain (loss)
1,634
(1,122
)
531
Other non-operating income (expense), net
25
7,570
(936
)
(1,076
)
Total other income (expense), net
(5
)
(26,444
)
(36,760
)
Income (loss) before income taxes
528
(456,001
)
(10,182
)
Income tax expense
14
(705
)
(7,894
)
(9,689
)
Loss before minority interest
(177
)
(463,895
)
(19,871
)
Minority interest
(1,539
)
(3,828
)
(6,440
)
Net loss
$
(1,716
)
$
(467,723
)
$
(26,311
)
Basic and diluted net loss per ordinary share
$
(0.00
)
$
(0.33
)
$
(0.01
)
Basic and diluted net loss per ADS
$
(0.02
)
$
(3.27
)
$
(0.13
)
Ordinary shares (in thousands) used in per ordinary
share calculation:
— basic and diluted
1,005,374
1,428,954
1,961,950
ADS (in thousands) used in per ADS calculation:
— basic and diluted
100,537
142,895
196,195
See accompanying notes to consolidated financial statements.
F-5
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
FOR THE YEARS ENDED DECEMBER 31
In thousands of U.S. Dollars
2003
2004
2005
Net loss
$
(1,716
)
$
(467,723
)
$
(26,311
)
Other comprehensive loss:
Unrealized gain (loss) on
available-for-sale marketable
securities
3,687
(548
)
(247
)
Realized (gain) loss on
available-for-sale marketable
securities included in net loss
(5,040
)
537
—
Unrealized gain on hedging instruments
—
3,953
133
Realized gain on hedging instruments
included in net loss
—
(168
)
(3,143
)
Foreign currency translation adjustment
698
3,287
(2,455
)
Comprehensive loss
$
(2,371
)
$
(460,662
)
$
(32,023
)
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, 2003
992,115
160,295
389,679
(9,266
)
(174,196
)
366,512
Share issuances
84,505
12,139
99,579
—
—
111,718
Stock compensation
—
—
97
—
—
97
Net loss
—
—
—
—
(1,716
)
(1,716
)
Other comprehensive loss
—
—
—
(655
)
—
(655
)
Balances at December 31, 2003
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
Stock 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
Stock 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 31, 2005
1,976,292
303,052
1,517,118
(8,572
)
(669,946
)
1,141,652
See accompanying notes to consolidated financial statements.
F-7
Table of Contents
STATS CHIPPAC LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
In thousands of U.S. Dollars
2003
2004
2005
Cash Flows From Operating Activities
Net loss
$
(1,716
)
$
(467,723
)
$
(26,311
)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization
120,610
188,683
254,138
Goodwill impairment
—
453,000
—
Amortization of leasing prepayments
11,732
25,718
25,790
Debt issuance cost amortization
1,155
1,913
1,961
Loss (gain) on sale of property, plant and equipment
100
(656
)
1,529
Accretion of discount on convertible notes
7,366
11,437
7,414
Loss from repurchase and redemption of senior and
convertible notes
—
797
1,653
Foreign currency exchange (gain) loss
(3,367
)
(830
)
(134
)
Deferred income taxes
(1,246
)
15,005
9,351
Minority interest in income of subsidiary
1,539
3,828
6,440
(Gain) loss on sale of marketable securities
(5,040
)
537
—
Others
(54
)
1,029
1,278
Changes in operating working capital:
Accounts receivable
(30,277
)
8,149
(91,340
)
Amounts due from affiliates
(2,932
)
4,427
(4,187
)
Inventories
(10,095
)
(1,171
)
(24,793
)
Other receivables, prepaid expenses and other assets
(16,783
)
(64,421
)
3,516
Accounts payable, accrued operating expenses and other
payables
11,769
(41,406
)
104,499
Amounts due to affiliates
(213
)
(1,699
)
(75
)
Net cash provided by operating activities
82,548
136,617
270,729
Cash Flows From Investing Activities
Proceeds from sales
of marketable securities
$
77,566
$
130,497
$
15,726
Proceeds from maturity of marketable securities
5,753
46,687
787
Purchases of marketable securities
(43,850
)
(160,943
)
(32,017
)
Acquisition of intangible assets
—
(1,428
)
(4,853
)
Acquisition of subsidiary, net of cash acquired
(467
)
7,208
—
Purchases of property, plant and equipment
(209,326
)
(287,574
)
(245,775
)
Others, net
(3,946
)
729
3,139
Net cash used in investing activities
(174,270
)
(264,824
)
(262,993
)
Cash Flows From Financing Activities
Repayment of
short-term debts
$
(27,419
)
$
(72,006
)
$
(143,276
)
Repayment of long-term debts
(19,713
)
(8,982
)
(37,670
)
Proceeds from issuance of shares, net of expenses
117,477
1,968
13,521
Proceeds from issuance of senior and convertible notes,
net of expenses
112,345
210,458
146,535
Repurchase and redemption of senior and convertible notes
—
(193,647
)
(167,263
)
Proceeds from bank borrowings
49,839
107,620
188,085
(Increase) decrease in restricted cash
8,223
2,927
(1,487
)
Grants received
6,784
—
246
Capital lease payments
(12,862
)
(7,210
)
(11,737
)
Contribution by minority interest in subsidiary, net
—
—
3,623
Net cash provided by financing activities
234,674
41,128
(9,423
)
Net increase in cash and cash equivalents
142,952
(87,079
)
(1,687
)
Effect of exchange rate changes on cash and cash
equivalents
2,550
1,425
(1,102
)
Cash and cash equivalents at beginning of the year
167,661
313,163
227,509
Cash and cash equivalents at end of the year
$
313,163
$
227,509
$
224,720
Supplementary Cash Flow Information
Interest paid
$
5,580
$
21,974
$
40,738
Income taxes paid
$
669
$
1,023
$
185
Non-cash items
Issuance of shares and assumption of share options in
connection with acquisition
$
—
$
1,066,994
$
—
Equipment acquired under capital leases
$
2,663
$
—
$
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
subsidiaries (collectively 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, a subsidiary, STATS ChipPAC, Inc. (formerly known as ST Assembly Test Services, Inc.) was
merged into ChipPAC. The surviving entity was renamed STATS ChipPAC, Inc.
In 2004, the Company's Taiwan subsidiary, Winstek Semiconductor Corporation ("Winstek"), issued new
shares to its employees as employee stock bonus and resulted in the dilution of the Company's
interest in Winstek from 55.0% to 54.5%. The Company recognized the loss of $62 on the dilution of
interest within shareholders' equity. In 2005, Winstek issued 10,555,556 shares of its capital
stock, par value NT$10, 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 the
gain of $61 on the resulting dilution of interest within shareholders' equity. The Company owned
approximately 52% of Winstek as of December 31, 2005.
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, 2005. Temasek Holdings, wholly-owned by the Minister of Finance
(Incorporated) for Singapore, a statutory body constituted by the Minister for Finance
(Incorporation) Act (Cap. 183), owns 100% of the ordinary shares of STSPL.
(b) Fiscal Year
Since the beginning of fiscal 2005, the Company 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. For
presentation purposes, the fiscal years have been presented as ending on December 31. 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.
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)
(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 additional paid-in capital as a component of shareholders' equity.
(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. 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 32%, 21% and 12% of revenues for the
years ended December 31, 2003, 2004 and 2005, respectively. The Company's five largest customers
collectively accounted for approximately 66%, 56% and 49% of revenues for the years ended December 31, 2003, 2004 and 2005,
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
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)
Company mitigates the concentration of credit risk in trade receivables through the Company's credit evaluation process, credit policies, credit control
and collection procedures.
Cash and cash equivalents are deposited with banks primarily in Singapore, South Korea, China,
Malaysia, British Virgin Islands, Taiwan and the United States of America. Deposits in these banks
may exceed the amount of insurance provided on such deposits, if any. The Company has not
experienced any losses to date on its bank cash deposits. Prior to December 2004, the Company also
participates in a pooled cash management arrangement and places short-term advances with affiliates
of Temasek Holdings.
South Korean, Chinese and Malaysian foreign currency exchange regulations 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. As of December 31, 2005, there were no restrictions on foreign funds flow.
(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, 2005.
(k) 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.
In 2004 and 2005, the Company entered into foreign currency forward contracts to protect the
Company from fluctuations in exchange rates. At December 31, 2005, the Company has a series of
foreign currency forward contracts with total contract value of approximately $68,000. In 2005, the
Company entered into a series of gold forward contracts with total contract value of approximately
$7,000 to hedge against fluctuations in gold prices. At December 31, 2005, the Company had realized
and unrealized gain of $3,143 and $133, respectively, on its foreign currency and gold forward
contracts. At December 31, 2004, the Company had realized and unrealized gain of $168 and $3,953,
respectively, on its foreign currency forward contracts. In 2003, hedge accounting has not been
applied as the foreign currency forward contracts entered into do not qualify as hedges. Gains and
losses on these contracts have been recorded as foreign currency gains or losses.
(l) Marketable Securities
Marketable securities at December 31, 2004 and 2005 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.
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, 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.
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)
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.
(m) 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.
(n) Business Combination
Business combinations are accounted for using the purchase method accounting. Business combinations
which are accounted for under the purchase method of 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.
(o) 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 one 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 use analyst estimates as well as comparable market analyses.
(p) 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 costs 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, determined by independent appraisals.
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)
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
(q) 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.
The Company adopted SFAS No. 143, "Accounting For Asset Retirement Obligations," ("SFAS 143") on
January 1, 2003, which addresses financial accounting and reporting for obligations associated with
the retirement of tangible long-lived assets and associated asset retirement costs. This statement
applies to legal obligations associated with the retirement of long-lived assets that result from
acquisition, construction, development and (or) normal use of asset.
(r) 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.
(s) Comprehensive Loss
The Company applies SFAS No. 130, "Reporting Comprehensive Income" with respect to reporting and
presentation of comprehensive loss and its components in a full set of financial statements.
Comprehensive loss consists of net loss, foreign currency translation adjustments and unrealized
gain (loss) on available-for-sale marketable securities and hedging instruments, and is presented
in the consolidated statements of comprehensive loss.
(t) Revenue Recognition
Revenue is derived primarily from wafer probe, 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.
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)
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, packaging or test services sold on a standalone
basis, as well as multiple-element arrangements where probe, 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:
For the Year Ended
December 31,
2003
2004
2005
%
%
%
Revenue
— packaging — array
20.6
40.6
50.2
— packaging — leaded
26.9
20.9
22.0
— test and other services
52.5
38.5
27.8
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.
(u) 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.
There are no restrictions on transferring technology or manufacturing products developed with
government grants.
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)
(v) Stock-Based
Employee Compensation
At December 31, 2005, the Company has two stock-based employee compensation plans, which are more
fully described in Note 23. The Company measures stock-based employee compensation expense for
financial statement purposes in accordance with the intrinsic method of APB Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25"), and its related interpretations, and
includes 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." Compensation expense is measured as the excess of fair market value of
the stock subject to the option at measurement date over the exercise price of the option.
If compensation expense had been determined based on the grant date fair value for awards, in
accordance with SFAS No. 123, the Company's net loss and loss per share would have been adjusted to
the pro forma amounts indicated below:
For the Year Ended December 31,
2003
2004
2005
Net loss as reported
$
(1,716
)
$
(467,723
)
$
(26,311
)
Add: Total stock-based employee
compensation expenses included in
reported net loss, net of related
tax effects
97
658
743
Deduct: Total stock-based employee
compensation expenses determined
under fair value method for all
awards, net of related tax effects
(10,496
)
(18,492
)
(19,612
)
Pro forma net loss
$
(12,115
)
$
(485,557
)
$
(45,180
)
Basic and diluted net loss per share:
As reported
$
(0.00
)
$
(0.33
)
$
(0.01
)
Pro forma
$
(0.01
)
$
(0.34
)
$
(0.02
)
Basic and diluted net loss per ADS:
As reported
$
(0.02
)
$
(3.27
)
$
(0.13
)
Pro forma
$
(0.12
)
$
(3.40
)
$
(0.23
)
The fair value of stock options granted for the years ended December 31, 2003, 2004 and 2005 is
estimated on the date of grant using the Black-Scholes option-pricing model with the following
assumptions:
For the Year Ended December 31,
2003
2004
2005
Expected lives
5 – 10 years
5 – 10 years
9 years
Dividend yield
0.0
%
0.0
%
0.0
%
Risk free interest rate
2.5% – 3.6
%
0.8% – 4.3
%
2.6% – 3.3
%
Expected volatility
59.7% – 67.4
%
55.9% – 64.9
%
55.0% – 57.1
%
The fair value of employee share purchase rights issued for the year ended December 31, 2005 is
estimated on the date of grant using the Black-Scholes option-pricing model with the following
assumptions:
For the Year Ended
December 31,
2005
Expected lives
0.5 years
Dividend yield
0.0
%
Risk free interest rate
1.3 – 1.9
%
Expected volatility
38.0 – 42.8
%
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)
(w) 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 contributes 2% 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, 2005, there is a $60 shortfall in
the plan's assets. Total pension plan expenses for the years ended December 31, 2003, 2004 and 2005
were approximately $46, $76 and $55, respectively. Additional disclosures regarding this pension
plan pursuant to SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement
Benefits" are not considered necessary due to the insignificance of the amounts involved.
STATS ChipPAC, Inc. and STATS ChipPAC Test Services, Inc. have a 401(k) savings plan where the
Company contributes up to 6% of eligible employee compensation at the rate of 50% of employee
contributions to the 401(k) plan. The Company's matching contributions under the 401(k) plan were
$258, $320 and $395 for the years ended December 31, 2003, 2004 and 2005, respectively. The
matching contributions are accrued monthly and adjusted when the actuals 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 National Pension Fund upon
retirement. The expense for severance benefits for the period from August 5, 2004 to December 31,
2004 and for the year ended December 31, 2005 were approximately $1,793 and $6,333, respectively.
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 $4,072, $7,226 and $10,711 with respect to these retirement plans in the years ended
December 31, 2003, 2004 and 2005, respectively.
(x) Operating Leases
Rental payments under operating leases are expensed on a straight-line basis over the periods of
the respective leases.
(y) Product Warranties
The Company guarantees that work performed will be free from any defects in workmanship, materials
and manufacture 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 2003, 2004 and 2005 were
insignificant.
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)
(z) Research and Development
Research and development expenses are expensed as incurred.
(aa) 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.
(bb) Net Loss Per Share
Basic net loss per share is computed using the weighted average number of ordinary shares
outstanding. Diluted net loss per share is computed using the weighted average number of ordinary
shares outstanding and dilutive potential ordinary shares from the assumed exercise of 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 potentially dilutive securities for each period presented from its diluted net
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 as of December 31 and the
range of related exercise prices follows:
Year Ended December 31,
2003
2004
2005
Convertible debt
172,513
369,235
287,999
Stock options
61,022
131,997
124,175
The conversion price of convertible debt outstanding was approximately $0.927 to $1.871 per share
(equivalent to approximately $9.27 to $18.71 per ADS) as of December 31, 2005. The weighted
average exercise prices of options outstanding were approximately $1.58, $1.01 and $1.01
(equivalent to $15.80, $10.10 and $10.10 per ADS) as of December 31, 2003, 2004 and 2005,
respectively. The excluded stock options have per share exercise prices ranging from approximately
$0.14 to $3.99 (equivalent to $1.40 and $39.90 per ADS) as of December 31, 2003, 2004 and 2005.
(cc) New Accounting Pronouncements
In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, an amendment of ARB No. 43,
Chapter 4" ("SFAS 151"). SFAS 151 requires certain abnormal expenditures to be recognized as
expenses in the current period. It also requires that the amount of fixed production overhead
allocated to inventory be based on the normal capacity of the production facilities. The standard
is effective for the fiscal year beginning January 1, 2006. It is not expected that SFAS No. 151
will have a material effect on the Company's consolidated financial statements.
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," ("SFAS 123") 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
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)
transactions with employees and to record compensation expense for all stock awards granted, and to
awards modified, repurchased or cancelled after the required effective date. In addition, the
Company is 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) will be effective for annual periods beginning after June 15, 2005, which is the Company's
first quarter of fiscal 2006. The Company presently accounts for stock-based compensation under the
intrinsic method. See Note 1(v) for the effect on reported net loss if the Company had accounted
for its share options and employee share purchase rights using the fair value recognition
provisions of SFAS 123.
In March 2005, the Securities and Exchange Commission released SEC Staff Accounting Bulletin No.
107, "Share-Based Payment" ("SAB 107"). SAB 107 provides the SEC staff position regarding the
application of SFAS 123(R). SAB 107 contains interpretive guidance related to the interaction
between SFAS 123(R) and certain SEC rules and regulations, as well as provides the staff'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 Company is currently reviewing the requirements of SFAS 123(R) and SAB 107 and
expects that the adoption of SFAS 123(R) will have a material impact on the Company's consolidated
results of operations and earnings per share.
In May 2005, the FASB issued Statement No. 154, "Accounting Changes and Error Corrections" ("SFAS
154"). SFAS 154 requires retrospective application to prior periods' financial statements of
changes in accounting principle. It also requires that the new accounting principle be applied to
the balances of assets and liabilities as of the beginning of the earliest period for which
retrospective application is practicable and that a corresponding adjustment be made to the opening
balance of retained earnings for that period rather than being reported in an income statement. The
statement will be effective for accounting changes and corrections of errors made in fiscal years
beginning after December 15, 2005. The Company is currently evaluating the effect of the adoption
of SFAS 154 on the Company's consolidated financial position or results of operations but does not
expect it to have a material impact.
In September 2005, the FASB ratified Emerging Issues Task Force Issue No. 04-13, "Accounting for
Purchases and Sales of Inventory with the Same Counterparty" ("EITF 04-13"). EITF 04-13 discusses
whether inventory purchase and sales transactions with the same counterparty that are entered into
in contemplation of one another should be combined and treated as a nonmonetary exchange and
addresses (a) under what circumstances should two or more transactions with the same counterparty
(counterparties) be viewed as a single nonmonetary transaction within the scope of APB Opinion No.
29, "Accounting for Nonmonetary Transactions" ("APB 29") and SFAS No. 153, "Exchanges of
Nonmonetary Assets, an Amendment of APB 29" ("SFAS 153") and (b) if nonmonetary transactions within
the scope of APB 29 and SFAS 153 involve inventory, are there any circumstances under which the
transactions should be recognized at fair value. The pronouncement is effective for new inventory
arrangements entered into, or modifications or renewals of existing inventory arrangements
occurring in interim or annual reporting periods beginning after March 15, 2006. The Company does
not expect that this pronouncement will have a material effect on its financial statements.
2. Related Party Transactions
As of December 31, 2005, Temasek Holdings, through its wholly-owned subsidiary, Singapore
Technologies Semiconductors Pte Ltd, 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 Singapore Technologies Semiconductors Pte Ltd prior to a
restructuring completed on December 31, 2004 pursuant to which all the assets of Singapore
Technologies Pte Ltd were transferred to Temasek Holdings.
Companies within the Temasek Holdings group, including Chartered Semiconductor Manufacturing Ltd
("Chartered"), engage in transactions with the Company in the normal course of their respective
businesses. These transactions, such as for gas, water, electricity, facilities management,
transportation and telecommunication services, are on customary terms and conditions no different
from those with third parties.
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)
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 $1,086 and $1,146 for 2003 and 2004, respectively. The service
agreement was terminated on December 31, 2004.
The Company has contracts with Chartered 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 for 2003, 2004 and 2005 were $13,940, $18,537 and $12,647, respectively.
The Company previously participated in a cash management program managed by a bank for the former
STPL group ("STPL pooled cash"). Under the program, cash balances were pooled and daily cash
surpluses or shortfalls of the Company within the pool earned or bore interest at prevailing
interest rates. This arrangement was terminated as of November 30, 2004. In the past, the Company
had placed surplus cash as short-term deposits with ST Treasury Services Ltd ("STPL treasury
deposits"), a wholly-owned subsidiary of Temasek Holdings, but the Company had ceased to do so
since October 1, 2004. Interest income under this arrangement for 2003 and 2004 amounted to $1,286
and $255, respectively.
As of December 31, 2004 and 2005, there were the following amounts owing by (to) affiliates:
December 31,
2004
2005
Amounts due from affiliates
Accounts receivable, net of allowance for sales returns
$
2,623
$
6,810
Amounts due to affiliates
Accounts payable
$
(137
)
$
(62
)
3. Cash and Cash Equivalents
Cash and cash equivalents consist of the following:
December 31,
2004
2005
Cash at banks and on hand
$
37,100
$
29,126
Cash equivalents
Bank fixed deposits
152,849
153,991
Money market funds
37,560
39,891
Foreign government treasury bills
—
1,712
$
227,509
$
224,720
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)
4. Marketable Securities
Marketable securities consist of the following:
December 31,
2004
2005
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
$
20,961
$
—
$
(780
)
$
20,181
$
27,562
$
—
$
(1,027
)
$
26,535
Held-to-maturity
certificates of deposit
$
—
$
—
$
—
$
—
$
8,916
$
—
$
—
$
8,916
Maturities of marketable securities (at fair value) are as follows:
December 31,
2004
2005
Marketable securities:
Due in one year or less
$
2,060
$
17,648
Due after one year through five years
18,121
17,803
$
20,181
$
35,451
Gross realized gains and losses in 2003 were $5,062 and $22, respectively. Gross realized gains
and losses in 2004 were $86 and $623, respectively. Gross realized gains and losses in 2005 were
$nil and $nil, respectively. Proceeds from the sales or maturities of available-for-sale
marketable securities during 2003, 2004 and 2005 were $83,319, $177,184 and $16,513, respectively.
5. Accounts Receivable
Accounts receivable consists of the following:
December 31,
2004
2005
Accounts receivable — third parties
$
151,549
$
243,830
Allowance for sales returns
(1,899
)
(2,840
)
$
149,650
$
240,990
Movements in the allowance for sales returns are as follows:
2003
2004
2005
Beginning
$
1,625
$
1,362
$
1,899
Utilized during the year
(1,102
)
(4,511
)
(1,094
)
Charged during the year
839
5,048
2,517
Writeback during the year
—
—
(482
)
Ending
$
1,362
$
1,899
$
2,840
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)
6. Other Receivables
Other receivables consist of the following:
December 31,
2004
2005
Deposits and staff advances
$
580
$
1,229
Grants receivable
1,322
1,313
Forward contract receivable
3,785
1,051
Taxes receivable
9,492
3,796
Other receivables
1,634
3,947
$
16,813
$
11,336
7. Inventories
Inventories consist of the following:
December 31,
2004
2005
Raw materials
$
42,267
$
63,079
Work-in-progress
11,472
15,727
Finished goods
951
677
$
54,690
$
79,483
8. Prepaid Expenses and Other Assets
Prepaid expenses and other current assets consist of the following:
December 31,
2004
2005
Leasing prepayments
$
27,137
$
10,054
Other prepayments and assets
4,004
9,543
Deferred income tax assets
2,422
1,425
Loans to vendors
4,879
5,329
Fixed deposits pledged for bank loans
394
376
$
38,836
$
26,727
Prepaid expenses and other non-current assets consist of the following:
December 31,
2004
2005
Leasing prepayments
$
7,071
$
2,623
Deferred income tax assets
33,992
38,879
Fixed deposits pledged for bank loans
727
2,232
Other deposits
5,225
289
Loans to vendors
13,771
8,441
Debt issuance cost, net of accumulated
amortization of $3,481 and $3,026
10,677
10,895
Others
4,706
2,070
$
76,169
$
65,429
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)
Leasing prepayments represent prepayments of lease rental obligations for certain plant and
machinery leased under sale and lease-back arrangements.
Included in current and non-current loan to vendors are amounts of $5,000 and $15,000 extended by
the Company in June 2003 and January 2004, respectively, to a vendor 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 by quarterly installments of $450 and
$882 up to June 2007 and December 2008, respectively. During the year ended December 31, 2005,
$4,880 was repaid.
9. Property, Plant and Equipment
Property, plant and equipment consist of the following:
December 31,
2004
2005
Cost:
Freehold land
$
6,147
$
5,857
Land and land use rights
19,864
19,864
Buildings, mechanical and electrical installation
164,083
170,206
Equipment
1,404,959
1,660,504
Total cost
$
1,595,053
$
1,856,431
Total accumulated depreciation
$
559,250
$
749,400
Property, plant and equipment, net
$
1,035,803
$
1,107,031
Depreciation charged to results of operations, including depreciation related to assets under
capital leases, amounted to $119,938, $163,975 and $195,923 for the years ended December 31, 2003,
2004 and 2005, respectively.
In the third quarter of fiscal 2004, following the consummation of the merger, the Company adopted
ChipPAC's policy to depreciate equipment and machinery on a straight-line basis over 8 years, from
5 years previously. The impact of this change was depreciation savings of $23,373 for year ended
December 31, 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, for the year ended December 31, 2004.
The Company routinely reviews the remaining estimated useful lives of their equipment and machinery
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 and
machinery. However, due to the nature of the 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
machinery and 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 equipments acquired under capital lease at a cost of
$31,889 and $20,406 as of December 31, 2004 and 2005, respectively. The accumulated depreciation
for these leased assets for the year ended December 31, 2004 and 2005 amounted to $7,317 and
$3,775, respectively.
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)
10. Intangible Assets
Intangible assets consist of the following:
December 31, 2004
December 31, 2005
Gross
Accumulated
Net
Gross
Accumulated
Net
Assets
Amortization
Assets
Assets
Amortization
Assets
Tradenames
$
7,700
$
(458
)
$
7,242
$
7,700
$
(1,558
)
$
6,142
Technology and intellectual
property
32,000
(1,333
)
30,667
32,000
(4,533
)
27,467
Customer relationships
99,300
(20,688
)
78,612
99,300
(70,338
)
28,962
Software, licenses and others
13,180
(3,871
)
9,309
18,528
(8,319
)
10,209
$
152,180
$
(26,350
)
$
125,830
$
157,528
$
(84,748
)
$
72,780
Amortization expense for intangible assets is summarized as follows:
For the Year Ended December 31,
2003
2004
2005
Tradenames
$
—
$
458
$
1,100
Technology and intellectual property
—
1,333
3,200
Customer relationships
—
20,688
49,650
Software, licenses and others
512
2,229
4,265
$
512
$
24,708
$
58,215
Intangible assets are generally being amortized over estimated useful lives of two to ten years.
Estimated future amortization expense as of December 31, 2005 is summarized as follows:
2006
$
36,330
2007
6,694
2008
6,163
2009
5,202
2010
4,658
Thereafter
13,733
Total
$
72,780
11. Goodwill
The changes in the carrying value of goodwill are as follows:
December 31,
2004
2005
Beginning
$
2,209
$
523,598
Goodwill related to acquisitions
974,389
—
Impairment charges
(453,000
)
—
Purchase adjustments
—
(973
)
Ending
$
523,598
$
522,625
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)
As of December 31, 2003, the Company had goodwill of $2,209 related to the acquisition of Winstek.
As a result of the acquisition of ChipPAC, Inc. in August 2004, the Company recorded additional
goodwill of $974,389, inclusive of purchase adjustments of $4,880 in the fourth quarter of 2004
related primarily to equipment and deferred taxes valuation. In 2005, additional purchase
adjustments of $973 related to the cost of acquisition of $453 and fair value of liabilities
acquired of $520 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 and 2005. Goodwill was allocated to reporting units associated with the Company's
acquisitions.
In 2005, the Company completed its annual test for impairment and determined that the fair value of
the reporting units exceed their carrying value, and therefore goodwill was not impaired.
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 testing and packaging 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,
assembly, 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.
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)
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
)
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 for a period not to exceed one year
from the consummation date (the allocation period) in accordance with SFAS No. 141, "Business
Combinations" ("SFAS 141") and EITF No. 95-3, "Recognition of Liabilities in Connection with a
Purchase Business Combination." The allocation period was intended to differentiate between amounts
that were determined as a result of the identification and valuation process required by SFAS 141
for all assets acquired and liabilities assumed and amounts that were determined as a result of
information that was not previously obtained being obtained.
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.
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)
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," 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, 2003 or 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, 2003 or 2004, nor is it necessarily
indicative of future operating results or financial position of the Company.
For the Year Ended
December 31,
2003
2004
Revenues
$
809,880
$
1,084,165
Net loss
(75,154
)
(484,695
)
Net loss per ordinary share:
Basic and diluted
$
(0.04
)
$
(0.25
)
Net loss per ADS:
Basic and diluted
$
(0.41
)
$
(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 for the year
ended December 31, 2004.
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)
13. Accrued Operating Expenses
Accrued operating expenses consist of the following:
December 31,
2004
2005
Staff costs
$
22,609
$
31,324
Purchase of raw materials
12,789
25,082
Maintenance fees, license fees and royalties
2,832
5,378
Interest expense
3,060
7,780
Provision for vacation liability
3,511
4,732
Others
19,098
22,636
$
63,899
$
96,932
14. Income Taxes
Income (loss) before income taxes consists of the following:
For the Year Ended December 31,
2003
2004
2005
Singapore
$
(122
)
$
6,674
$
6,698
Foreign
650
(462,675
)
(16,880
)
$
528
$
(456,001
)
$
(10,182
)
Income tax benefit (expense) consists of the following:
For the Year Ended December 31,
2003
2004
2005
Current:
Singapore
$
(1,706
)
$
7,283
$
(72
)
Foreign
(225
)
(172
)
(373
)
$
(1,931
)
$
7,111
$
(445
)
Deferred:
Singapore
$
741
$
(9,145
)
$
(617
)
Foreign
485
(5,860
)
(8,627
)
$
1,226
$
(15,005
)
$
(9,244
)
$
(705
)
$
(7,894
)
$
(9,689
)
The Company was previously granted pioneer status 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." In December 2003, an application was submitted to the
Singapore Economic Development Board ("EDB") to revoke the Company's pioneer status granted from
January 1, 1996 to December 31, 2003. 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 was approved by EDB. 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 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)
A reconciliation of the expected tax expense (benefit) at the statutory rate of tax to actual tax
expense (benefit) is as follows:
For the Year Ended December 31,
2003
2004
2005
Income tax expense (benefit) computed at Singapore
statutory rate of 20.0% (2004: 20.0%, 2003: 22.0%)
$
116
$
(91,200
)
$
(2,036
)
Non-deductible expenses, including goodwill
impairment charges
175
91,488
1,989
Non-taxable income
(253
)
(1,212
)
(2,194
)
Differences in tax rates
(121
)
6,898
15,434
Effect of recognizing deferred tax assets at
concessionary tax rate and tax credits
(5,781
)
(13,199
)
(6,539
)
Tax benefits from employee stock option plans
—
—
(2,084
)
Reinvestment allowance
—
(10,415
)
(5,755
)
Change in valuation allowance
6,383
23,137
30,133
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
All other items, net
186
693
1,143
Income tax expense
$
705
$
7,894
$
9,689
The pioneer status relief had the effect of decreasing diluted net loss per ordinary share by $0.01
and diluted net loss per ADS by $0.06 for the year ended December 31, 2003. The pioneer status
relief was revoked in September 2004.
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 31, 2004 and 2005 are as follows:
December 31,
2004
2005
Deferred income tax assets:
Operating loss carryforwards
$
29,372
$
34,787
Investment, and research and development tax credits
45,656
50,136
Reinvestment allowance
23,581
29,336
Property, plant and equipment
18,276
32,551
Others
67
4,165
116,952
150,975
Valuation allowance
(80,538
)
(110,671
)
$
36,414
$
40,304
Deferred income tax liabilities:
Property, plant and equipment
$
17,855
$
26,386
Allowances and reserves
15,908
20,618
33,763
47,004
Net deferred income tax assets (liabilities)
$
2,651
$
(6,700
)
During the year ended December 31, 2004, as part of our acquisition of ChipPAC, we 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. We
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. As of December 31, 2004,
$5,916 of the Korean tax credit carryforwards was utilized.
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)
The deferred tax assets as of December 31, 2004 and 2005 arose principally as a result of the
deferred tax benefit associated with tax loss carryforwards and investment tax credits. The
Company recorded a valuation allowance of $80,538 and $110,671 as of December 31, 2004 and 2005,
respectively, which represents an increase of $71,863 and $30,133 in 2004 and 2005, 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, 2005, the Company has approximately $136,947 of tax loss carryforwards available
to offset against future taxable income, certain amounts of which will expire in varying amounts
from 2006 to 2024. Changes in stock ownership can result in a limitation on the amount of net
operating loss that are available as carryforwards. The Company determined it had undergone such an
ownership change during 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, 2005, the Company has approximately
$2,941 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, 2005, the Company has approximately $3,956, $298,121, $46,180 and $104,771 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 2006 through 2012.
15. Short-Term Borrowings
The short-term borrowings relate to the lines of credit with Cho Hung Bank, Hana Bank and the
National Agricultural Cooperation Federation Bank in South Korea, with credit limits of $25,000,
$5,000 and $4,000, respectively. The lines of credit bore interest at rates ranging from 2.1% to
3.3% and 3.59% to 5.86% for the years ended December 31, 2004 and 2005, respectively. As of
December 31, 2004 and 2005, $19,874 and $16,891 of short-term borrowings remain outstanding,
respectively. These lines of credit are subject to annual review by the lenders for the continued
use of the facilities.
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)
16. Capital Leases
Future minimum lease payments under capital leases for equipment and machinery as of December 31,
2005 are as follows:
Payable in year ending December 31,
2006
$
7,428
2007
3,729
2008
—
2009
—
Thereafter
—
Total minimum obligations
11,157
Less amounts representing interest at rates ranging from
4.4% to 7.1% per annum
(386
)
Present value of minimum obligations
10,771
Current installments of obligations under capital leases
(7,091
)
Obligations under capital leases, excluding current
installments
$
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 31,
2004
2005
1.75% convertible senior fixed-rate notes
$
183,500
$
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
50,000
6.75% senior fixed-rate notes
215,000
215,000
7.5% senior fixed-rate notes
—
150,000
U.S. dollars bank loan at floating rates
—
2,760
Taiwan dollar loans at floating rates
51,951
53,987
Taiwan dollar loans and commercial papers at fixed rates
8,342
10,866
Accrued yield-to-maturity interest on notes
22,789
14,963
796,582
794,076
Less current amounts
(154,407
)
(18,651
)
$
642,175
$
775,425
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 conversion price may be subject to adjustments for certain events. 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
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)
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. Between December 9 and 15 2004, the Company repurchased $16,500
aggregate principal of these convertible notes for $18,150 and recorded loss of $266. On January
14, 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 rights to
require the Company to repurchase all or a portion of their notes on March 18, 2005 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. 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 cancelled $42,580 aggregate principal amount of the convertible notes repurchased
by the Company. Following the redemption and cancellation, $31,500 aggregate principal amount of
these convertible notes remained outstanding.
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 conversion price may
be subject to adjustments for certain events. 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% 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.
On August 5, 2004, in connection with the merger of ChipPAC, the Company assumed the outstanding
borrowings of ChipPAC. The face value of ChipPAC long-term debts consisted of $165,000 of 12.75%
senior subordinated notes due 2009, $50,000 of 8.0% convertible subordinated notes due 2011 and
$150,000 of 2.5% convertible subordinated notes due 2008.
The $165,000 12.75% senior subordinated notes were issued by ChipPAC International Company Limited
("ChipPAC International"), a wholly-owned subsidiary of ChipPAC. These notes were fully and
unconditionally guaranteed on a senior subordinated basis by ChipPAC and certain of its
subsidiaries. The notes would mature on August 1, 2009, with interest at the rate of 12.75% per
annum payable semi-annually on August 1 and February 1 of each year. ChipPAC International may
redeem all or a portion of these notes at any time on or after August 1, 2004 at designated
redemption prices. On September 3, 2004, ChipPAC International commenced a cash tender offer to
repurchase any and all of the outstanding $165,000 principal amount of these notes at a repurchase
price of 106.375% of the principal amount thereof plus accrued and unpaid interest. In conjunction
with the tender offer, ChipPAC International also solicited consents of holders of these notes to
adopt amendments to the indenture governing such notes that would eliminate substantially all of
the restrictive covenants and certain events of default in the indenture. On October 7, 2004, the
Company completed the tender offer and consent solicitation of any and all of the outstanding
notes. ChipPAC International received valid tenders of the notes and deliveries of related consents
from holders of approximately 62.1% or $102,500 aggregate principal amount of the notes
outstanding. ChipPAC International paid approximately $111,474, including accrued and unpaid
interest for the senior subordinated notes validly tendered and related consents validly delivered.
In November 2004, the Company repurchased the remaining 37.9%, or $62,500 aggregate principal
amount of the senior subordinated notes, as permitted under the indenture
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)
governing such notes. The Company recorded a loss of $531 on the repurchase of the notes. The
tender offer and repurchase of the 12.75% senior subordinated notes were financed by part of the
proceeds from the issuance of the senior unsecured notes due November 15, 2011 below.
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.
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. The conversion price may be subject to adjustments for certain
events. 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. 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, if any, to, but excluding, the purchase date.
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 convertible into the Company's 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,
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 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.
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
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)
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.
In 2005, STATS ChipPAC Korea obtained a U.S. dollars term loan facility of $15,000 from Hana Bank.
As at December 31, 2005, the interest rate on the loan was 6.0% per annum. The principal and
interest on the loan is repayable in 4 equal quarterly installments commencing February 28, 2007.
In 2002, Winstek entered into three floating rate New Taiwan dollar loans of $1,766, $2,649 and
$7,359 with Chiaotung Bank. The interest rates on the loans are revised from time to time by
Chiaotung Bank. As at December 31, 2005, the interest rates on the loans were 3.4% per annum.
Interest on all three loans is payable on a monthly basis in New Taiwan dollars. The principal on
the $1,766 loan and the $2,649 loan are each repayable in 21 equal quarterly installments
commencing March 29, 2004 and May 15, 2004, respectively. The principal on the $7,359 loan is
repayable in 13 equal quarterly installments commencing June 27, 2003. As of December 31, 2005, the
$1,766 loan is secured by fixed deposit and land pledged to the bank of $3,172, the $2,649 loan is
secured by fixed deposit and building pledged to the bank of $6,643 and the $7,359 loan is secured
by fixed deposit and machinery pledged to the bank of $3,847.
In 2003, Winstek entered into two floating rate New Taiwan dollar loans of $4,416 and $2,944 with
Chiaotung Bank and Hsinchu International Bank, respectively. The interest rates on the loans are
revised from time to time by the banks. As at December 31, 2005, the interest rates on the loans
were 3.4% and 2.8% per annum, respectively. Interest on all two loans is payable on a monthly basis
in New Taiwan dollars. The principal on the $4,416 loan is repayable in 13 equal quarterly
installments commencing November 10, 2004, and the principal on the $2,944 loan is repayable in 48
unequal monthly installments commencing January 10, 2004. The loans are secured by machinery
pledged to the banks of $5,899 as of December 31, 2005.
In 2004, Winstek entered into a floating rate New Taiwan dollar term loan facility of NT$1.8
billion ($56,711) with a syndicate of lenders, with Chiaotung Bank as the agent bank. The purpose
of the term loan is for the expansion of Winstek's testing capacity. The loan may also be accessed
through letters of credit. The term loan must be fully drawn within 18 months from August 27, 2004,
the date of the first drawdown. Winstek must satisfy certain conditions precedent with respect to
each drawdown. As of December 31, 2005, Winstek has drawn down NT$997.2 million ($29,965) 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 term loan is the rate set by Chunghwa Post Co. Ltd. plus
1.3% per annum. As of December 31, 2005, the interest rate on the loan was 3.2% per annum. Interest
on the loan is payable on a monthly basis. The loan is secured by certain machinery purchased with
the loan proceeds amounting to $31,880 as of December 31, 2005.
In 2005, Winstek entered into three Taiwan dollar floating rate loan of $9,015, $6,010 and $1,502
with Taishin Bank, China Development Bank and Hsinchu International Bank, respectively. The
interest rates on the loans are revised from time to time by the banks. As at December 31, 2005,
the interest rates were 2.2%, 2.2% and 2.7% per annum, respectively. Interest on all three loans is
payable on a monthly basis in New Taiwan dollars. The principal on the $9,015 and $6,010 loans are
repayable on maturity. The principal on the $1,502 loan is repayable in 12 equal quarterly
installments commencing February 18, 2006. The $9,015 loan is secured by machinery pledged to the
bank of $17,013.
In 2003, Winstek entered into a Taiwan dollar fixed rate loan with Taiwan Life Insurance Company of
$2,711. As of December 31, 2005, the loan bears interest at the rate of 3.4% per annum. Interest
and principal are repayable in 12 equal quarterly installments commencing December 26, 2003. The
loan is secured by machinery pledged to Taiwan Life Insurance Company amounting to $2,174 as of
December 31, 2005.
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)
In 2004, Winstek entered into a Taiwan dollar fixed rate loan with Taiwan Life Insurance Company of
$3,303. As of December 31, 2005, the interest rate on the loan is 3.4% per annum. Interest and
principal on the loan is repayable in 16 equal quarterly installments. As of December 31, 2005, the
loan is secured by machinery pledged to Taiwan Life Insurance Company amounting to $4,550.
In 2004, two Taiwan dollar fixed rate commercial papers of NT$50.0 million ($1,577) each were
issued through Taching Bill Co. (guaranteed by Far East Commercial Bank) and Chung Hsing Bill Co.
(guaranteed by Fu-Hua Commercial Bank) for two years, commencing
November 12, 2004 and December 24, 2004, respectively. The interest rates on the commercial papers were 1.7 % per annum for Taching
Bill Co. and 1.9% per annum for Chung Hsing Bill Co. Interest is repayable every two months and
principal is repayable on maturity.
In 2005, Winstek entered into a Taiwan dollar fixed rate loan of $3,005 with IBT Bank. As of
December 31, 2005, the interest rate on the loan is 2.5% per annum. Interest on the loan is payable
on a monthly basis in New Taiwan dollars. The principal is repayable in 6 equal half-yearly
installments commencing May 17, 2006.
In addition to amounts disclosed above, the Company has deposits of $2,608 pledged as security for
bank credit and facility lines made available to the Company as of December 31, 2005. As of
December 31, 2004, $1,121 deposits were pledged as security.
Annual maturities of long-term debts as of December 31, 2005 are as follows:
Payable in year ending December 31,
2006
$
18,651
2007
51,275
2008
301,229
2009
7,921
2010
150,000
Thereafter
265,000
$
794,076
Substantially all assets of the STATS ChipPAC consolidated group, with the exception of Winstek and
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.), have been pledged
as collateral under the terms of the 6.75% Senior Notes due 2011 or the 7.5% Senior Notes due 2010.
The indenture governing the 6.75% senior notes and the 7.5% senior notes has been fully and
unconditionally guaranteed, on an unsecured senior basis, by the parent company and the
guaranteeing subsidiaries. See Note 28, Condensed Consolidating Financial Information. These
indentures contain certain covenants 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 and the 7.5% senior notes are cross-defaulted to the Company's
other indebtedness.
18. Unutilized Credit Facilities
At December 31, 2005, the Company has undrawn banking and credit facilities consisting of long-term
loans and bank guarantees of $185,569 with financial institutions.
The notional letters of credit amounts outstanding at December 31, 2004 and 2005 were $nil and
$8,951, respectively.
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)
19. Other Non-Current Liabilities
Other non-current liabilities consist of the following:
December 31,
2004
2005
Deferred grant
$
268
$
—
Deferred tax liabilities
33,763
46,654
Others
16,331
19,957
$
50,362
$
66,611
The deferred grant in 2004 referred to a 5-year grant of $13,878 obtained by the Company from the
Economic Development Board under its Research Incentive Scheme for Companies in 1997 to acquire
equipment to be used in certain research and development projects. The grant, which was a
reimbursement of specified costs, has no requirement for repayment. Amounts received for
asset-related grant were deferred and recognized in other income over the life of the related
asset.
20. Share Capital
On November 5, 2003, the Company issued 83,389,375 new ordinary shares of par value S$0.25 each
with proceeds of $115 million (net proceeds of $111 million). The 83,389,375 new shares were
admitted to the Official List of the Singapore Exchange Securities Trading Limited on November 6,
2003.
On August 5, 2004, the Company completed the acquisition of ChipPAC. The Company issued 861,907,530
new ordinary shares of par value S$0.25 each and assumed options to purchase 76,492,951 ordinary
shares to effect the acquisition.
As a result of the employees exercising their share options in 2003, 2004 and 2005,
1,115,470, 5,802,800 and 31,961,575 ordinary shares were issued, respectively.
Under Singapore law, all increases in share capital (including rights issues) require prior
shareholders' approval. The Singapore law was revised effective January 30, 2006 whereby common
stock par value is eliminated. The revision will result in all ordinary shares being recorded with
no par value.
21. Additional Paid-in Capital
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 31, 2004 and 2005, the Company's share premium account amounted to $1,406,019 and
$1,414,721, respectively.
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)
22. Accumulated Other Comprehensive Loss
The components of accumulated other comprehensive loss are as follows:
December 31,
2004
2005
Currency translation loss
$
5,865
$
8,320
Unrealized gain on hedging instruments
(3,785
)
(775
)
Unrealized loss on available-for-sale marketable securities
780
1,027
$
2,860
$
8,572
23. Share Options and Incentive Plans
Effective May 1999, the Company adopted the Share Option Plan which provides for a maximum of 150
million shares (subject to adjustment under the plan) to be reserved for option plans. Options
granted under the plan may include non-statutory options as well as incentive stock options
intended to qualify under Section 422 of the United States Internal Revenue Code. Option periods
may not exceed 10 years from the date of grant. Upon leaving the employment of the Company,
outstanding options remain exercisable for a specified period.
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, and
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.
Prior to 2000, share options granted prior to May 1999 under the previous Employees' Share
Ownership Scheme were converted using the higher of par value or net tangible asset value. In
April 2002, share options were granted with exercise prices determined by the average of the last
5-day closing prices prior to grant date. These two bases gave rise to exercise prices of the
share options being lower than their fair market values at grant date and resulted in the
recognition of stock compensation charges.
In connection with the merger with ChipPAC, the Company adopted the Substitute Purchase and Option
Plan ("Substitute Option Plan") and Substitute Equity Incentive Plan ("Substitute EIP")
(collectively the "Substitute Plans") to enable substitute options to be granted to holders of
options granted under the ChipPAC shares options and incentive plans. The number of ordinary shares
that may be issued under the Substitute Option Plan and Substitute EIP, may not exceed, in the
aggregate, 7.2 million and 73 million shares, respectively. On August 5, 2004, the Company effected
an amendment to the Share Option Plan to increase the shares to be reserved for option plans to 245
million shares (subject to adjustment under the plan).
In August 2004, the Company adopted an employee share purchase plan ("ESPP") for the benefit of its
employers. A maximum aggregate of 130 million shares have been reserved for issuance under the
ESPP. The ESPP qualifies in the United States under Section 423 of the United States for Internal
Revenue Code. Under the ESPP, substantially all employees may purchase the Company's ordinary
shares through periodic payroll deductions or lump sum payments at a price equal to 85.0% of the
lower of the fair market value at the beginning or the end 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 ends on February 14, 2005. Share purchases are limited to 15.0% of an
employee's eligible compensation.
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 stock option activity for the years ended December 31, 2003, 2004
and 2005:
Weighted
Average
Options
Exercise Price
(In thousands)
Options outstanding at January 1, 2003
54,275
1.65
Granted during the year
10,956
1.17
Lapsed during the year
(3,094
)
1.69
Exercised during the year
(1,115
)
0.62
Options outstanding at December 31, 2003
61,022
1.58
Assumed through ChipPAC acquisition
76,493
0.55
Granted during the year
11,523
0.87
Lapsed during the year
(11,239
)
1.16
Exercised during the year
(5,802
)
0.33
Options outstanding at December 31, 2004
131,997
1.01
Granted during the year
27,299
0.59
Lapsed during the year
(16,972
)
1.03
Exercised during the year
(18,149
)
0.35
Options outstanding at December 31, 2005
124,175
$
1.01
Exercisable at December 31, 2003
33,728
$
1.66
Exercisable at December 31, 2004
66,097
$
1.13
Exercisable at December 31, 2005
62,785
$
1.30
Weighted-average fair value of options granted in 2003, 2004 and 2005 were $0.60, $0.92 and $0.38,
respectively.
The following table summarizes information about fixed stock options outstanding at December 31,
2005:
Options Outstanding
Options Exercisable
Weighted
Average
Weighted
Number
Remaining
Average
Number
Weighted
Range of Exercise
Outstanding at
Contractual
Exercise
Exercisable at
Average
Prices
12/31/2005
Life
Price
12/31/2005
Exercise Price
(In thousands)
(In thousands)
$0.14 to $0.15
143
3.8 years
$
0.15
143
$
0.15
$0.21 to $0.29
12,272
6.8 years
$
0.27
6,780
$
0.25
$0.32 to $0.47
5,093
5.3 years
$
0.43
4,999
$
0.43
$0.53 to $0.89
62,614
8.2 years
$
0.69
16,957
$
0.79
$0.91 to $1.09
1,761
6.7 years
$
0.96
1,117
$
0.97
$1.16 to $1.66
33,420
6.4 years
$
1.38
23,917
$
1.43
$2.01 to $2.61
3,122
4.0 years
$
2.06
3,122
$
2.06
$3.99
5,750
4.3 years
$
3.99
5,750
$
3.99
124,175
62,785
Total compensation expense recognized for stock-based compensation on share options and employee
share purchase rights for the years ended December 31, 2003, 2004 and 2005 were $97, $658 and $743,
respectively.
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)
24. Commitments and Contingencies
(a) Commitments
As of December 31, 2004 and 2005, capital commitments consist of the following:
December 31,
2004
2005
Capital commitments
Building, mechanical and electrical installation
$
1,598
$
3,204
Plant and machinery
34,717
144,169
Other commitments
Inventories
$
47,210
$
121,822
The Company is party to certain royalty and licensing agreements which have anticipated payments of
approximately $4,640 per annum for 2006 through 2010. Following the acquisition of ChipPAC, the
Company assumed the obligation to pay until June 30, 2007 additional contingent incentive payments
to Cirrus Logic, Inc. of up to approximately $1,625 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 for
the years ended December 31, 2003, 2004 and 2005 was $2,597, $4,781 and $8,499, respectively.
The Company has leased certain plant and equipment under operating leases and under sale and
lease-back arrangements. These leases extend through 2008. Operating lease rental expenses,
including amortization of lease prepayments, in respect of these leases for the years ended
December 31, 2003, 2004 and 2005 were $18,118, $39,543 and $30,514, respectively.
Future minimum lease payments under non-cancelable operating leases as of December 31, 2005 were:
Payable in year ending December 31,
2006
$
13,795
2007
10,488
2008
9,390
2009
8,600
2010
8,556
Thereafter
61,819
$
112,648
(b) Contingent liabilities
In the normal course of business, the Company is 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. On April 14, 2005, the Company reached a resolution
with Seagate with respect to this litigation. As part of a broader settlement agreement among all
parties to this matter, the Company had agreed to pay a fee in consideration of a release from all
claims related to this litigation. The amount related to the settlement is being paid by the
Company's insurer.
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. Due to the inherent uncertainties of the lawsuit, the Company cannot accurately
predict the ultimate outcome. The final resolution of the lawsuit could result in significant
liability 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 agreement by those taxing authorities. The Company accrues costs associated with these
matters when they are probable and reasonably estimable. The Company does not believe that it is
probable that losses associated with these matters beyond those already recognized will be incurred
in amounts that would be material to its financial position, results of operations, or cash flows.
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 $15,727 as of
December 31, 2005) 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 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 $2,620 as of
December 31, 2005) was made on January 9, 2004, for the interest 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. 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, 2005 is estimated to be 31.6 billion South Korean Won
(approximately $30,981 as of December 31, 2005). As of December 31, 2005, 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. Other Non-Operating Income (Expense), net
For the Year Ended
December 31,
2003
2004
2005
Government grant income
$
2,347
$
—
$
—
Gain (loss) on sale and maturity
of marketable securities
5,040
(537
)
—
Loss from repurchase and
redemption of senior and convertible notes
—
(797
)
(1,653
)
Other income, net
183
398
577
$
7,570
$
(936
)
$
(1,076
)
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. Fair Value of Financial Instruments
December 31,
2004
2005
Carrying
Estimated
Carrying
Estimated
Amount
Fair Value
Amount
Fair Value
$
$
$
$
Financial Assets:
Cash and cash equivalents
227,509
227,509
224,720
224,720
Marketable securities
20,181
20,181
35,451
35,451
Pledged fixed deposits
1,121
1,121
2,608
2,608
Financial Liabilities:
Short-term borrowings
19,874
19,874
16,891
16,891
Long-term debts, excluding
senior and convertible
notes
60,293
60,163
67,613
67,476
Senior and convertible notes
736,289
748,907
726,463
708,110
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.
Pledged fixed deposits
The fair value is based on current interest rates available to the Company for fixed deposits 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.
Senior and convertible notes
The fair value is estimated by obtaining quotes from market and brokers.
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)
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.
27. 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.
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)
Revenues by major service line and by geographical areas (identified by location of customer headquarters) were:
For the Year Ended December 31,
2003
2004
2005
Singapore
— packaging —
array
$
1
$
6
$
—
— packaging — leaded
638
830
189
— test and other services
13,301
17,708
12,459
13,940
18,544
12,648
United States
— packaging —
array
76,485
253,595
444,066
— packaging — leaded
93,841
145,511
230,462
— test and other services
139,388
195,082
210,511
309,714
594,188
885,039
Rest of Asia
— packaging —
array
998
49,500
129,082
— packaging — leaded
3,895
8,585
17,038
— test and other services
34,200
63,197
86,277
39,093
121,282
232,397
Europe
— packaging — array
932
9,264
7,672
— packaging — leaded
4,015
6,172
6,750
— test and other services
12,997
19,671
12,747
17,944
35,107
27,169
Total
— packaging — array
78,416
312,365
580,820
— packaging — leaded
102,389
161,098
254,439
— test and other services
199,886
295,658
321,994
$
380,691
$
769,121
$
1,157,253
Long-lived assets by geographical area were:
For the Year Ended
December 31,
2004
2005
Singapore
$
391,522
$
350,960
United States
24,704
25,574
Rest of Asia
619,577
730,497
Total
$
1,035,803
$
1,107,031
Net assets by geographical area were:
For the Year Ended
December 31,
2004
2005
Singapore
$
689,100
$
531,141
United States
23,190
6,843
Rest of Asia
447,060
603,668
Total
$
1,159,350
$
1,141,652
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)
Revenues from major customers, as a percentage of net revenues, were as follows:
For the Year Ended
December 31,
2003
2004
2005
%
%
%
Customer A
31.6
20.6
11.6
Customer B
12.0
11.1
10.4
Customer C
13.6
8.5
10.1
Others
42.8
59.8
67.9
100.0
100.0
100.0
28. 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 (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
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-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 OPERATIONS
For the Year Ended December 31, 2003
Non-
STATS
Guarantor
Guarantor
ChipPAC
Subsidiaries
Subsidiaries
Eliminations
Consolidated
Net revenues
$
337,934
$
12,137
$
31,041
$
(421
)
$
380,691
Cost of revenues
(291,769
)
(12,546
)
(23,908
)
209
(328,014
)
Gross profit (loss)
46,165
(409
)
7,133
(212
)
52,677
Operating expenses:
Selling, general and administrative
32,228
2,307
2,264
(324
)
36,475
Research and development
14,808
—
672
(185
)
15,295
Other general expenses, net
502
536
—
(664
)
374
Total operating expenses
47,538
2,843
2,936
(1,173
)
52,144
Operating income (loss)
(1,373
)
(3,252
)
4,197
961
533
Other income (expense), net:
Interest income
4,618
—
167
—
4,785
Interest expense
(12,474
)
—
(1,520
)
—
(13,994
)
Foreign currency exchange gain (loss)
1,496
—
138
—
1,634
Equity loss from investment in subsidiaries
(1,590
)
—
—
1,590
—
Other non-operating income (expense), net
7,611
—
(41
)
—
7,570
Total other income (expense), net
(339
)
—
(1,256
)
1,590
(5
)
Income (loss) before income taxes
(1,712
)
(3,252
)
2,941
2,551
528
Income tax benefit (expense)
(965
)
774
(514
)
—
(705
)
Loss before minority interest
(2,677
)
(2,478
)
2,427
2,551
(177
)
Minority interest
—
—
—
(1,539
)
(1,539
)
Net income (loss)
$
(2,677
)
$
(2,478
)
$
2,427
$
1,012
$
(1,716
)
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 STATEMENTS OF CASH FLOWS
For the Year Ended December 31, 2003
Non –
STATS
Guarantor
Guarantor
ChipPAC
Subsidiaries
Subsidiaries
Eliminations
Consolidated
Cash Flows From Operating Activities
Net income
(loss)
$
(2,677
)
$
(2,478
)
$
2,427
$
1,012
$
(1,716
)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization
98,823
5,761
16,235
(209
)
120,610
Amortization of leasing prepayments
11,732
—
—
—
11,732
Debt issuance cost amortization
1,155
—
—
—
1,155
Loss (gain) on sale of property, plant and equipment
503
307
42
(752
)
100
Accretion of discount on convertible notes
7,366
—
—
—
7,366
Foreign currency exchange gain
(2,875
)
—
(492
)
—
(3,367
)
Deferred income taxes
(741
)
—
(505
)
—
(1,246
)
Minority interest in loss of subsidiary
—
—
—
1,539
1,539
Loss (gain) on sale and maturity of marketable
securities
(5,025
)
—
(15
)
—
(5,040
)
Equity loss from investment in subsidiaries
1,590
—
—
(1,590
)
—
Others
—
—
(54
)
—
(54
)
Changes in operating working capital:
Accounts receivable
(27,196
)
(865
)
(2,216
)
—
(30,277
)
Amounts due from affiliates
(2,827
)
(643
)
1
537
(2,932
)
Inventories
(10,095
)
—
—
—
(10,095
)
Other receivables, prepaid expenses and other assets
(15,854
)
604
(1,533
)
—
(16,783
)
Accounts payable, accrued operating expenses and
other payables
9,640
368
1,761
—
11,769
Amounts due to affiliates
1,010
(743
)
57
(537
)
(213
)
Net cash provided by operating activities
$
64,529
$
2,311
$
15,708
$
—
$
82,548
Cash Flows From Investing Activities
Proceeds from sales of marketable securities
$
70,238
$
—
$
7,328
$
—
$
77,566
Proceeds from maturity of marketable securities
5,753
—
—
—
5,753
Purchases of marketable securities
(32,924
)
—
(10,926
)
—
(43,850
)
Acquisition of subsidiary, net of cash acquired
(15,533
)
—
3,092
12,441
—
Purchase of additional shares in subsidiary
(467
)
—
—
—
(467
)
Purchases of property, plant and equipment
(168,968
)
(2,172
)
(38,186
)
—
(209,326
)
Others, net
(4,136
)
1
189
—
(3,946
)
Net cash used in investing activities
$
(146,037
)
$
(2,171
)
$
(38,503
)
$
12,441
$
(174,270
)
Cash Flows From Financing Activities
Repayment of short-term debts
$
—
$
—
$
(27,419
)
$
—
$
(27,419
)
Repayment of long-term debts
(14,768
)
—
(4,945
)
—
(19,713
)
Proceeds from issuance of shares, net of expenses
112,245
—
17,673
(12,441
)
117,477
Proceeds from issuance of convertible notes, net of
expenses
112,345
—
—
—
112,345
Proceeds from bank borrowings
—
—
49,839
—
49,839
Decrease in restricted cash
3,500
—
4,723
—
8,223
Grants received
6,784
—
—
—
6,784
Capital lease payments
(7,405
)
(317
)
(5,140
)
—
(12,862
)
Net cash provided by (used in) financing activities
$
212,701
$
(317
)
$
34,731
$
(12,441
)
$
234,674
Net increase (decrease) in cash and cash equivalents
$
131,193
$
(177
)
$
11,936
$
—
$
142,952
Effect of exchange rate changes on cash and cash
equivalents
2,326
—
224
—
2,550
Cash and cash equivalents at beginning of the year
163,646
398
3,617
—
167,661
Cash and cash equivalents at end of the year
$
297,165
$
221
$
15,777
$
—
$
313,163
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 BALANCE SHEETS
As of December 31, 2004
STATS
Non –
STATS
ChipPAC
Guarantor
Guarantor
ChipPAC
ChipPAC
Korea
Subsidiaries
Subsidiaries
Eliminations
Consolidated
ASSETS
Current assets:
Cash and cash equivalents
$
184,824
$
533
$
1,976
$
19,002
$
21,174
$
—
$
227,509
Short-term marketable securities
—
—
—
787
1,273
—
2,060
Accounts receivable, net
66,875
—
—
70,444
12,331
—
149,650
Amounts due from affiliates
250,479
194,605
13,002
66,326
3,719
(525,508
)
2,623
Other receivables
8,022
70
7,620
863
238
—
16,813
Inventories
19,916
—
23,868
4,572
6,334
—
54,690
Prepaid expenses and other current assets
32,971
1,525
273
740
3,327
—
38,836
Total current assets
563,087
196,733
46,739
162,734
48,396
(525,508
)
492,181
Long-term marketable securities
18,097
—
—
—
24
—
18,121
Property, plant and equipment, net
391,523
4,912
199,234
176,780
263,530
(176
)
1,035,803
Investment in subsidiaries
750,620
—
—
—
—
(750,620
)
—
Intangible assets
1,398
2,802
1,816
118,358
1,456
—
125,830
Goodwill
—
—
312,758
102,591
106,040
2,209
523,598
Prepaid expenses and other non-current
assets
41,686
487
28,242
184
5,570
—
76,169
Total assets
$
1,766,411
$
204,934
$
588,789
$
560,647
$
425,016
$
(1,274,095
)
$
2,271,702
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts and other payables
$
7,957
$
2,314
$
41,448
$
2,148
$
14,714
$
(8
)
$
68,573
Payables related to property, plant and
equipment purchases
20,028
4
9,610
8,268
13,728
—
51,638
Accrued operating expenses
36,773
8,307
4,382
6,953
7,484
—
63,899
Income taxes payable
—
13
1,555
450
20
—
2,038
Short-term borrowings
—
—
19,874
—
—
—
19,874
Amounts due to affiliates
4,941
173
50,205
437,110
33,216
(525,508
)
137
Current obligations under capital leases
805
—
6,782
—
—
—
7,587
Short-term debts and current
installments of long-term debts
137,107
—
—
—
17,300
—
154,407
Total current liabilities
207,611
10,811
133,856
454,929
86,462
(525,516
)
368,153
Obligations under capital leases,
excluding current installments
—
—
10,771
—
—
—
10,771
Long-term debts, excluding current
installments
399,182
200,000
—
—
42,993
—
642,175
Other non-current liabilities
268
—
35,792
10,189
4,113
—
50,362
Total liabilities
607,061
210,811
180,419
465,118
133,568
(525,516
)
1,071,461
Minority interest
—
—
—
—
40,891
40,891
Total shareholders' equity
1,159,350
(5,877
)
408,370
95,529
291,448
(789,470
)
1,159,350
Total liabilities and shareholders' equity
$
1,766,411
$
204,934
$
588,789
$
560,647
$
425,016
$
(1,274,095
)
$
2,271,702
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 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
42,877
7,682
3,271
25,862
5,273
—
84,965
Research and development
10,811
1,047
2,933
1,952
894
—
17,637
Goodwill impairment
—
—
271,734
89,135
92,131
—
453,000
Other general expenses (income), net
(618
)
121
—
33
(44
)
44
(464
)
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
)
Income (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
)
Income (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 income (loss)
$
(467,723
)
$
(70,100
)
$
(269,930
)
$
(195,693
)
$
(88,622
)
$
624,345
$
(467,723
)
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 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
)
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
1,162
127
—
(193
)
(32
)
(35
)
1,029
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 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-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 BALANCE SHEETS
As of December 31, 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
Prepaid expenses and other current assets
15,096
1,357
3,468
1,216
5,590
—
26,727
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
Prepaid expenses and other non-current
assets
28,850
369
28,931
202
7,077
—
65,429
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-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 OPERATIONS
For the Year Ended December 31, 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
94,774
9,635
(46,995
)
135,771
Research and development
10,779
5,556
6,986
10,015
1,452
(8,717
)
26,071
Restructuring charges
734
—
—
96
—
—
830
Other general expenses (income), net
—
—
—
(20
)
—
—
(20
)
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-50
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, 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
)
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
698
134
344
311
(209
)
—
1,278
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-51