CHROMA — Interim / Quarterly Report 2015

Feb 23, 2016

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CHROMA ATE INC.

2015.4Q Investor Conference

Paul Ying, CFO Leo Huang, Chairman & CEO

23[rd] February, 2016

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Disclaimer

This presentation contains some forward-looking statements that are subject to substantial risks and uncertainties. Typically, these statements contain words such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “plan”, “forecast”, “project”, “predict”, “potential”, “continue”, “may”, “should”, “will”, and “would” or similar words. You should consider these forward-looking statements carefully because such statements are only our expectations or projections about future events, and actual results may differ materially from those expressed or implied by such statements. The forward-looking statements in this presentation include, but are not limited to, growth rates for various markets estimated by third party sources, future products and technology development, widespread market acceptance of the hosted delivery model, future revenue growth and profitability. You should be cautioned that the forwardlooking statements are no guarantee of our future performance. The forward-looking statements contained in this presentation are made only as of the date of this presentation and we undertake no obligation to update the forward-looking statements to reflect subsequent events or circumstances, except as required by law. This presentation and the information contained herein are the property of Chroma Ate Inc.

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Agenda

• Corporate Profile

• • Financial Review

• • Operation Highlights

• • Q&A

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CORPORATE PROFILE

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Corporate Profile

• Chroma Group founded in 1984, a world leading

own brand turnkey test & automation solution provider, specialized in electronics test and measurement instruments and ATS (auto test system). Businesses cover test and measurement instruments and ATS for various industries, and a turnkey solution as an integration of Test and Measurement , Automation and MES (manufacturing execution system).

• Key success: Precision, Reliability, Innovation

• Chroma group encompass business unit of

Chroma Ate Inc., Modular Assembly System (MAS) and Chroma New Material Corp (CNMC).

• 2015 Consolidated Sales : NT$ 9.69 billion

• 2015 Net Income: NT$1.24 billion

• Chroma Group total of 2,310 employees (as Dec,

2015)

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Consolidated Chroma Ate Sales Others Consolidated CNMC Sales Consolidated MAS Sales

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14,148
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8%
11,644
5%
10,171 10,307
9,692
7%
48%
15%
13%
48% 29%
24%
34%
41% 44% 47% 60% 58%
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2011

2012

2013

2014 2015

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Financial Performance

Consolidated Sales

Gross Margin

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Sales Revenues Gross Margin R&D Expenses

R&D Expenses in % of Sales Revenues

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Parent Only
Consolidated
56%
55%
54% 54%
14,148
5,338
5,135
52%
44%
4,539
11,644 37% 39%
4,174
3,926
10,307
10,171
28% 29% 9,692
17%
16%
15% 15%
12%
784
755
630 637 631
Chroma Employees ： 1,447  (R&D 38%)
2011 2012 2013 2014 2015 2011 2012 2013 2014 2015
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Financial Performance

ROE

Dividend

EPS Cash dividend Stock dividend Payout ratio

4.06

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19%
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3.51
3.28
3.21
15%
14%
13% 2.52 2.60
2.50 2.50
12% 2.40
2.00
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2011 2012 2013 2014 2015
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2011 2012 2013 2014 2015
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*** The dividend will be paid out after the resolutions of Annual General Shareholders meeting.**

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Chroma Global Network

Global Employees ： 2,310  , Branch Offices x17, Distributors x68

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US :
Irvine/ Santa Clara/
Foothill Ranch, CA
Hong Kong : Neworld Tempe, AZ
Europe : Netherlands
SE Asia: Singapore Japan: Yokohama
China : Beijing / Nanjing / Shanghai / Suzhou
Chongqing / Xiamen / Shenzhen / Dongguan
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FINANCIAL REVIEW

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Year 2015 Condensed Consolidated Income Statement

	Condensed Consolidated P&L (In Million NTD, except for EPS in NTD)		2015 %		2014 % YoY %
	Net Sales		9,692 100%		10,307 100% (6%)
	Consolidated Sales of Testing Equipment Business		5,666 58%		6,175 60% (8%)
	Consolidated Sales of MAS		1,261 13%		680 7% 85%
	Consolidated Sales of New Material		2,328 24%		2,983 29% (22%)
	Others		437 5%		469 4% (7%)
	Cost of Goods Sold		(5,471) (56%)		(6,261) (61%) (13%)
	Gross Profit		4,221 44%		4,046 39% 4%
	Operating Expenses: General & Administration Research & Development		(2,128) (22%) (873) (9%)		(1,995) (19%) 7% (830) (8%) 5%
	Operating Income		1,220 13%		1,221 12% -
	Non-Operating Income (Expenses), net		263 2%		302 3% (13%)
	Income (Loss) Before Tax Income Tax		1,483 15% (288) (3%)		1,523 15% (3%) (227) (2%) 27%
	Net Income		1,195 12%		1,296 13% (8%)
	Other Comprehensive Income (Losses)		(132) (1%)		5 - n/a
	Comprehensive Income		$ 1,063 11%		$ 1,301 13% (18%)
	Net Income (Losses) Attributable To: Shareholders of the Parent Noncontrolling Interests		1,237 13% (42) (1%)		1,318 13% (6%) (22) - 91%
			$ 1,195 12%		$ 1,296 13% (8%)
	EPS (Basic)		$ 3.28		$ 3.51 (7%)
	EPS (Diluted)		$ 3.10		$ 3.30 (6%)
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Balance Sheet Highlights & Financial Ratio

	Consolidated (In Million NTD) Balance Sheet Highlights Cash & Short Term Investments Inventory Short Term Debt Long Term Debt Shareholders Equity		2015. Dec 5,116 1,636 333 3,142 9,531	2015. Dec 5,116 1,636 333 3,142 9,531	2014. Dec + / - % 4,129 24% 1,605 2% 425 - 22% 2,488 26% 9,373 2%
	Total Assets			16,060	14,970 7%
	Inventory Turnover (Day) AR Turnover (Day) AP Turnover (Day) Net Debt to Equity (%)			108 108 91 -	91 108 76 -
	ROE (%)			13%	14%
	ROA (%)			8%	9%
	Cash Position EBITDA Cash Flow from Operation	2015 1,853 2,269		2014 1,856 1,228	YoY - 85%
	Free Cash Flow	1,101		(407)	n/a

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All ROE + ROA has been annualized.

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Free Cash Flow = Net Cash Provided by Operating Activities + (Net Cash used by Investing Activities)

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Quarterly Highlights

Sales Revenues Gross Margin Operating Margin

2015.4Q Key Points

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1,604
1,345 1,356
1,193
1,249
57% 1,126 57%
56% 55%
55% 53% 51% 53%
937
864
24%
23%
22%
18% 20%
16% 16%
13%
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• Sales Revenue: $ 1,193 million,

down 12% QoQ, down 11% YoY

• Gross Margin: 57%

• Operating Margin: 20% 55%

• Net Income: NT$ 250 million,

• down 48% QoQ, down 22% YoY • 2015.4Q Highlights:

• In the low season of fourth

quarter, the Semiconductor

testing solutions is major growth driver, presented a 14% growth

QoQ.

2014.1Q 2014.2Q 2014.3Q 2014.4Q 2015.1Q 2015.2Q 2015.3Q 2015.4Q

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Year 2015.4Q Condensed Income Statement

	Condensed P&L– Parent Only (In Million NTD, except for EPS in NTD)		2015.4Q %		2015.3Q % QoQ %	2014.4Q % YoY %
	Net Sales		1,193 100%		1,356 100% (12%)	1,345 100% (11%)
	Cost of Goods Sold		(515) (43%)		(610) (45%) (16%)	(664) (49%) (22%)
	Gross Profit		678 57%		746 55% (9%)	681 51% -
	Operating Expenses: General & Administration Research & Development		(237) (20%) (204) (17%)		(235) (17%) 1% (207) (16%) (1%)	(259) (19%) (8%) (213) (16%) (4%)
	Operating Income		237 20%		304 22% (22%)	209 16% 13%
	Non-Operating Income (Expenses), net		50 4%		243 18% (79%)	142 10% (65%)
	Income (Loss) Before Tax		287 24%		547 40% (48%)	351 26% (18%)
	Income Tax		(37) (3%)		(65) (4%) (43%)	(32) (2%) 16%
	Net Income		$ 250 21%		$ 482 36% (48%)	$ 319 24% (22%)
	Other Comprehensive Income		(101) (9%)		141 10% n/a	103 7% n/a
	Comprehensive Income		$ 149 12%		$ 623 46% n/a	$ 422 31% (65%)
	EPS (Basic)		$ 0.66		$ 1.28 (48%)	$ 0.86 (23%)
	EPS (Diluted)		$ 0.62		$ 1.20 (48%)	$ 0.84 (26%)

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Non-operating Income included 100% owned subsidiaries’ income - New Material: 11m (QoQ ↓ 42%, YoY ↓ 42%), MAS: 15m

(QoQ ↓ 29%, YoY ↓ 52%, ).

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Year 2015 Condensed Income Statement

	Condensed P&L– Parent Only (In Million NTD, except for EPS in NTD)		2015 %		2014 % YoY %
	Net Sales		4,539 100%		5,135 100% (12%)
	Cost of Goods Sold		(2,019) (44%)		(2,382) (46%) (15%)
	Gross Profit		2,520 56%		2,753 54% (8%)
	Operating Expenses: General & Administration Research & Development		(910) (20%) (784) (18%)		(947) (18%) (4%) (754) (15%) 4%
	Operating Income		826 18%		1,052 20% (21%)
	Non-Operating Income (Expenses), net		548 12%		432 9% 27%
	Income (Loss) Before Tax		1,374 30%		1,484 29% (7%)
	Income Tax		(137) (3%)		(166) (3%) (17%)
	Net Income		$ 1,237 27%		$ 1,318 26% (6%)
	Other Comprehensive Income		(134) (3%)		2 - n/a
	Comprehensive Income		$ 1,103 24%		$ 1,320 26% (16%)
	EPS (Basic)		$ 3.28		$ 3.52 (7%)
	EPS (Diluted)		$ 3.10		$ 3.31 (6%)

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Non-operating Income included 100% owned subsidiaries’ income - New Material: 50m (YoY ↓ 22%), MAS: 232m (YoY ↑ 102%).

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Balance Sheet Highlights & Financial Ratio

	Parent Only (In Million NTD) Balance Sheet Highlights Cash & Short Term Investment Inventory Short Term Debt Long Term Debt Shareholders Equity		2015. Dec 2,703 1,301 101 2,988 9,410	2014. Dec 2,168 1,257 151 2,361 9,271	+ / - % 25% 4% - 33% 27% 1%
	Total Assets		13,965	13,290	5%
	Inventory Turnover (Day) AR Turnover (Day) AP Turnover (Day) Net Debt to Equity (%)		231 159 101 4%	186 141 71 5%
	ROE (%)		13%	15%
	ROA (%)		9%	11%
	Cash Position EBITDA Cash Flow from Operation	2015.4Q 333 718	2015.3Q 595 198	QoQ (44%) 263%	2015.A YoY 1,561 (6%) 1,523 85%
	Free Cash Flow	423	254	67%	896 n/a

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All ROE + ROA has been annualized.

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Free Cash Flow = Net Cash Provided by Operating Activities + (Net Cash used by Investing Activities)

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OPERATION HIGHLIGHT

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Chroma Ate Inc. Sales Breakdown by Testing Solutions

(Unit: Million NTD) Test Instruments & ATS Semiconductor Test Solutions Turnkey Solutions Service & Others		2015.4Q % QoQ 756 63% (10%) 225 19% 14% 142 12% (45%) 70 6% 13%		2014.4Q % YoY 810 60% (7%) 291 22% (23%) 179 13% (21%) 65 5% 8%		2015 % 3,029 67% 759 17% 532 12% 219 4%		2014 % YoY 2,919 57% 4% 1,085 21% (30%) 935 18% (43%) 196 4% 12%
Total		1,193 100% (12%)		1,345 100% (11%)		4,539 100%		5,135 100% (12%)

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Chroma Ate. Inc. Sales Mix Breakdown (YTD)

A Turnkey Solution and Intelligent Automation Line Provider

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Parent Only 5,338 4,174 3,926 5,135 4,539
7% 6% 5% 4% 4%
9% 12%
10% 18%
Others
21%
17% 21% 17%
Turnkey Solutions 9% 21%
Semiconductor Test Solutions
Test Instruments & ATS
63% 67% 65% 57% 67%
2011 2012 2013 2014 2015
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Sales Breakdown by Consolidated Entities

(Unit: Million NTD) Chroma Ate. Inc. included overseas affiliates MAS New Material Others		2015.4Q % QoQ 1,561 61% (7%) 309 12% 143% 583 23% - 108 4% (4%)		2014.4Q % 1,667 64% 201 8% 623 24% 116 4%	YoY (6%) 54% (6%) (7%)		2015 % 5,666 58% 1,261 13% 2,328 24% 437 5%		2014 % YoY 6,175 60% (8%) 680 7% 85% 2,983 29% (22%) 469 4% (7%)
Consolidated Sales		2,561 100% 3%		2,607 100%	(2%)		9,692 100%		10,307 100% (6%)

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Year 2016 Guidance

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Due to sluggish economy and low capex sentiment, the Chroma parent sales revenues in year 2015 presented a decline of 12% compared to year 2014. The major decline is coming from Turnkey Solutions, which declined by 43% YoY. However, the core business of Test Instruments & ATS still presented a steady growth of 4% YoY, despite difficult market conditions.

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In January 2016, Chroma has acquired a 60% stake of Quantel, a Singapore incorporated test and measuring equipment distribution company. This further expands the Chroma’s market penetration to Southeast Asia, after US, Europe and Japan markets.

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Moving into future, Chroma sees two industries as future growth opportunities – Semiconductor, an increasing demand for SLT and RF function tester due to more IoT and Auto IC applications and clean tech industries, a rising clean energy investment, particularly from EV related applications (Battery, motor and controller) and solar industry . The Company expected this will bring a sales growth to Semiconductor test solutions and tripling the sales to Turnkey Solutions in year 2016.

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Test Instruments & ATS (1/2)

TECHNOLOGY

System Integration, GB/T 18487.1 System Integration Automated AC Type: 1~40KW, USB Power Delivery Emulator Testing DC Type: 10~200KW Power/Comm./Protection Test High Voltage Solar Array Simulator High Transient Linear Load: 10us Power/Battery Voc :1000 – 1500V , Isc: Up to 150A High Power Density: 6kW@4U Testing Power Rating: 22kW – 225kW Passive Impedance Measurement Impulse & Hi-pot test with Vacuum Comp. Testing Wide Freq. range: 30MHz 7 in 1 (ACW/DCW/IR/IWT/DCR/L/Q Phase) ’15 ‘16 EVSE/ Battery/ PV/ USB PD/ Monitor/3C Adapter & Charger/Portable & Wearable Device/ Motor MARKET USB PD USB PD AC/DC EVSE ATS Emulator ATS 8020 8000 High Power DC Load 150~1200V,4~24kW 1500V Solar Array 632XXA Simulator HF LCR Meter Motor Stator SOLUTION 11050-30M

Motor Stator Test System

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Test Instruments & ATS (2/2)

TECHNOLOGY

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5K x 3K@60Hz
FPD Testing 8K x 4K@60Hz
5.4Gbps lane rate
High Capacity Burn-in High Temperature Uniformity
Optical Testing
Max. 1,280 DUT, up to 120 ℃ ± 0.5 ℃ temperature stability
High Precision PXI DPS High Precision PXI SMU/CMU
PXI SMU/CMU
4 CH/Slot, 600k sampling rate Ultra high resolution
’15 ‘16
MARKET HD Display/ Fiber Communication/ Mobile Phone/ Component Manufacturing/ Semiconductor/ LED
FPD Tester 27014 8K FPD Tester
TO-CAN/CoC TOSA/BOSA
Burn In System Temp. Control
58603 System
58691
PXIe
PXI e SMU
SMU/CMU
52304
SOLUTION 52XXX
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Semiconductor Test Solutions

TECHNOLOGY

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High Parallel Sites Testing High Multi-site Testing
Logic Testing
1024 digital pins, 200Mbps 512 sites supported
High parallel sites for ADC/DAC testing
Analog Testing
16 bits 32 CH, 32 CH DIG, per card
IC Testing Thermal Engine
Handler Nitro-TEC (Liquid Nitrogen)
’15 ‘16
MARKET IC – SoC/ MCU/ PMIC/ Sensors (touch-screen, fingerprint) / Connectivity (WiFi, BT)
SoC Test System
High Density Instrument 3650-EX
HDADDA
Full Range Active
Thermal Control
Handler 3160-F
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SOLUTION

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Turnkey Solutions

TECHNOLOGY

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Integrated System
Automation
Automation
Collaborative Robotic Application
Battery Regenerative CH/DCH System ,
Formation Negative Pressure Formation
MES Intelligent Process System
’15
‘16
MARKET Industry 4.0 – Battery Cell Formation/ Battery Pack Auto Assembly/ IT/ICT Auto Test Line/ Smart Factory
Battery Pack Automatic
Automated Optical
Assembly Line
Measurement System
Smart Conveyer
Battery Cell Formation
5703
System 17000
Intelligent Battery
SOLUTION Process System
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www.chromaate.com

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let’s make a better world.

Thank You!

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