* All financial information presented in this press release is unaudited,
consolidated and prepared in accordance with generally accepted
accounting principles in the Republic of China, or ROC GAAP. Such
financial information is generated internally by us, and has not been
subjected to the same review and scrutiny, including internal auditing
procedures and review by independent auditors, to which we subject our
audited consolidated financial statements, and may vary materially from
the audited consolidated financial information for the same period.
Any evaluation of the financial information presented in this press
release should also take into account our published audited
consolidated financial statements and the notes to those statements.
In addition, the financial information presented is not necessarily
indicative of our results for any future period.
"With the support from our customers, vendors, employees and management team, we have been able to successfully implement our recovery plan to greatly reduce the impact of the fire accident on May 1st. By mobilizing our internal resources, we were able to quickly resume majority of the business impacted by the fire and maintain our strong relationships with our business partners. Although the fire loss had a significant impact on our 2Q financial result, our business momentum remains solid as we go into second half of the year. Going forward, while continuing our recovery effort and insurance claim process, we will also continue to focus on our management initiatives including streamlining our capacity planning, resource allocation, pricing strategy and technology development," commented Mr. Jason Chang, the Chairman.
RESULTS OF OPERATIONS
2Q05 Results
-- Net revenues amounted to NT$18,819 million, up 1% sequentially and down
7% year-over-year. The revenue contribution from IC packaging
operations, testing operations, module assembly, and others was
NT$12,693 million, NT$3,752 million, NT$2,283 million and NT$91
million, respectively.
-- IC packaging, testing and module assembly represent approximately 67%,
20% and 12%, respectively, of net revenues for the quarter.
-- Cost of revenues was NT$16,679 million, consistent with the prior
quarter and up 5% year-over-year.
-- As a percentage of net revenues, cost of revenues was 89% in 2Q05, down
from 90% in 1Q05 and up from 78% in 2Q04.
-- Raw material costs as a percentage of net revenues increased to 34%,
one percentage point higher than 1Q05 due to higher material price and
decreased substrate output as a result of the fire accident in our
Chungli factory.
-- Depreciation expense totaled NT$3,456 million during the quarter, down
9% sequentially and up slightly by 1% year-over-year. We stopped
recording approximately NT$339 million of depreciation expense for
those assets that were impacted by the fire. (See more details in the
non-operating expenses section below.) As a percentage of net
revenues, depreciation expense was 18% during the quarter, down from
20% in 1Q05 and up from 17% in 2Q04.
-- Gross profit for 2Q05 was NT$2,140 million, up 14% from NT$1,883
million in 1Q05 and down 52% from NT$4,469 million in 2Q04. Gross
margin was 11% for the quarter, which increased from 10% in the
previous quarter and decreased from 22% in 2Q04.
-- Total operating expenses during 2Q05 were NT$2,245 million including
NT$672 million in R&D and NT$1,573 million in SG&A. Total operating
expenses as a percentage of net revenues for the current quarter was at
12%, up from 11% in 1Q05 and 10% in 2Q04.
-- Operating loss for 2Q05 was NT$105 million, compared to loss of NT$166
million and income of NT$2,359 million for 1Q05 and 2Q04, respectively.
Operating margin was negative 0.6% in 2Q05, which improved slightly
from 1Q05 but decreased from 12% in 2Q04 due to gross margin decline.
-- We recorded net non-operating expenses of NT$9,968 million in 2Q05,
which increased by NT$9,626 million sequentially, and by NT$9,667
million year-over-year.
-- The Company recorded fire loss of NT $8.7 billion. Such loss
amount assumed total loss on all fire-impacted assets with net
book value of NT$13.2 billion, and labor & rental cost totaling
NT$151 million that were idled in May and June, netted by
insurance receivable of NT$4.6 billion. The insurance
receivables of NT$4.6 billion were based on certain assets with
their damage amount currently assessed by the Company and
adjusted for the insurance deductibles. Beyond 2Q05, the
Company will continue its damage-assessment and insurance-claim
process with the insurance companies and expects to further
reduce the fire loss amount as the process continues. The
Company stopped recording May and June's depreciation expenses
for a total of NT$339 million for the assets that were written
off as a result of the fire accident.
-- Net interest expense increase was mainly due to higher
outstanding loan balances and interest rate, plus transaction
cost associated with the partial buy-back of our Euro
Convertible Bond.
-- Loss on long-term investment was NT$2 million, consisting of
NT$25 million investment income from minority-owned affiliates
and NT$27 million of goodwill amortization related to such
minority-owned affiliates. The NT$25 million investment income
from minority-owned affiliates included NT$28 million of
investment income from Universal Scientific Industrial Co.
("USI"), NT$2 million of investment loss from Hung Ching
Construction, NT$1 million of investment loss from Hung Ching
Kwan Co., NT$1 million of investment loss from Inprocomm, Inc.'s
("IPCM"), and NT$1 million of investment income from other
invested companies.
-- The remaining non-operating expenses were primarily related to
inventory provision adjustment and other miscellaneous expenses.
-- Loss before tax was NT$10,073 million for 2Q05. We recognized an
income tax expense of NT$22 million during the quarter. Minority
interest adjustment was NT$1,001 million.
-- In 2Q05, net loss was NT$9,094 million, compared to net loss of NT$128
million for 1Q05 and net income of NT$2,020 for 2Q04.
-- Our total shares outstanding at the end of the quarter were
3,945,235,664. Our loss per share for the second quarter of 2005 was
NT$2.31, or US$0.368 per ADS, based on 3,945,235,664 weighted average
number of shares outstanding during the first quarter.
LIQUIDITY AND CAPITAL RESOURCES
-- Capital expenditures in 2Q05 totaled US$48 million, of which US$24
million was for IC packaging, US$1.2 million for module assembly, US$13
million for testing and US$10 million for interconnect materials.
-- EBITDA for the quarter totaled NT$2,736 million, down 64% year-over-
year and down 44% sequentially. The EBITDA number has been adjusted
for the fire loss number.
-- As of the end of 2Q05, we had cash on hand plus short-term investment
of NT$12,542 million, which increased by NT$1,880 million from the end
of 1Q05.
-- As of the end of 2Q05, we had total bank debt of NT$57,975 million,
consisting of NT$6,204 million of revolving working capital loans,
NT$4,461 million of current portion of long-term debt, NT$38,311
million of long-term debt and NT$8,999 million of long-term bonds
payable. Total unused banking facilities were NT$24,415 million.
-- Total number of employees was 28,948 as of June 30, 2005.
BUSINESS REVIEW
IC Packaging Services
-- Revenues generated from our IC packaging operations were NT$12,693
million during the quarter, down NT$62 million or 1% sequentially and
NT$60 million or 1% year-over-year. On a sequential basis, the
decrease in packaging revenue was primarily due to volume decrease
caused by the fire accident. ASP remained relatively stable in 2Q.
-- Revenues from advanced substrate and leadframe-based packaging
accounted for 87% of total IC packaging revenues during the quarter,
down slightly from 88% in 1Q05 and up from 85% in 2Q04.
-- Gross margin for our IC packaging operations was 10%, consistent with
the prior quarter and down 12 percentage points year-over-year.
-- Capital expenditure for our IC packaging operations amounted to US$24
million during the quarter, of which US$10 million was for wirebonding
packaging capacity, and US$14 million was for wafer bumping and flip
chip packaging equipment.
-- During the quarter, 16 wirebonders were added and 493 wirebonders were
damaged by the fire accident and therefore no longer in operation. As
of June 30, 2005, we operated a total of 6,136 wirebonders.
Testing Services
-- Revenues generated from our testing operations were NT$3,752 million,
up NT$59 million or 2% sequentially and down NT$350 million or 9%
year-over-year.
-- Final testing contributed 80% to total testing revenues, up by 2
percentage points from the previous quarter. Wafer sort contributed
16% to total testing revenues, down by 1 percentage points from the
previous quarter, mainly affected by the loss of our wafer probing
capacity in Chungli. Engineering testing contributed 4% to total
testing revenues, down by 1 percentage points from the previous
quarter.
-- 2Q05 gross margin for our testing operations was 16%, up by 6
percentage points sequentially and down by 13 percentage points
year-over-year. The increase in gross margin was mainly due to higher
utilization, lower depreciation expenses, rental expenses and labor
costs.
-- Capital spending on our testing operations amounted to US$13 million
during the quarter.
-- During the quarter, 41 testers were added and 109 testers were damaged
by the fire accident and therefore no longer in operation. As of June
30, 2005, we operated a total of 1,350 testers.
Module Assembly Services
-- Revenues generated from our module assembly operations were NT$2,283
million, up NT$358 million or 19% sequentially, and down NT$1,096
million or 32% year-over-year mainly due to volume changes and
increased ASP.
-- Camera module assembly revenue accounted for 61% of the total module
assembly revenues, while RF and baseband module assembly accounted for
39%.
-- The increase in gross margin from 11% in the previous quarter to 12% in
the current quarter was primarily attributed to volume increases.
Interconnect Materials
-- The materials output manufactured by ASE was about NT$1,238 million for
the quarter, down by NT$362 million or 23% sequentially and by NT$840
million or 40% year-over-year, mainly due to the loss of capacity in
Chungli. Gross margin for material was negative 10% during the
quarter, which decreased from 0% in 1Q05 and 23% in 2Q04 due to a
decline in production volume during the current quarter. Certain
startup costs in China operations were also incurred. In 2Q05, ASE
Material supplied 25% (by value) of our total PBGA substrate
requirements.
Customers
-- Our five largest customers together accounted for approximately 34% of
our net revenues in 2Q05, decreased slightly from 35% in 1Q05 and from
36% in 2Q04. Only one customer accounted for more than 10% of our
total revenues.
-- Our top 10 customers contributed 49% of our net revenues during the
quarter, decreased from 51% in 1Q05 and from 50% 2Q04.
-- Our customers that are integrated device manufacturers, or IDMs,
accounted for 44% of our revenues in 2Q05, compared to 49% in 1Q05 and
52% in 2Q04.
About ASE, Inc.
ASE, Inc. is the world's largest independent provider of IC packaging services and, together with its subsidiary ASE Test Limited (NASDAQ: ASTSF), the world's largest independent provider of IC testing services, including front-end engineering testing, wafer probing and final testing services. ASE, Inc.'s international customer base of more than 200 customers include such leading names as ATI Technologies Inc., IBM Corporation, Freescale Semiconductor, Inc., NVIDIA Corporation, Koninklijke Philips Electronics N.V., Qualcomm Incorporated, STMicroelectronics N.V. and VIA Technologies, Inc. With advanced technological capabilities and a global presence spanning Taiwan, Korea, Japan, Singapore, Malaysia and the United States, ASE, Inc. has established a reputation for reliable, high quality products and services. For more information, visit our website at http://www.aseglobal.com .
Safe Harbor Notice
This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Although these forward-looking statements, which may include statements regarding our future results of operations, financial condition or business prospects, are based on our own information and information from other sources we believe to be reliable, you should not place undue reliance on these forward-looking statements, which apply only as of the date of this press release. The words "anticipate", "believe", "estimate", "expect", "intend", "plan" and similar expressions, as they relate to us, are intended to identify these forward- looking statements in this press release. Our actual results of operations, financial condition or business prospects may differ materially from those expressed or implied in these forward-looking statements for a variety of reasons, including risks associated with cyclicality and market conditions in the semiconductor industry; demand for the outsourced semiconductor packaging and testing services we offer and for such outsourced services generally; the highly competitive semiconductor industry; our ability to introduce new packaging, interconnect materials and testing technologies in order to remain competitive; our ability to successfully integrate pending and future mergers and acquisitions; international business activities; our business strategy; general economic and political conditions; possible disruptions in commercial activities caused by natural or human-induced disasters, including terrorist activity and armed conflict; our future expansion plans and capital expenditures; the strained relationship between the Republic of China and the People's Republic of China; fluctuations in foreign currency exchange rates; and other factors. For a discussion of these risks and other factors, please see the documents we file from time to time with the Securities and Exchange Commission, including our 2004 Annual Report on Form 20-F filed on June 23, 2005.
Supplemental Financial Information
Consolidated Operations
Amounts in NT$ Millions 2Q/05 1Q/05 2Q/04
Net Revenues 18,819 18,569 20,290
Revenues by End Application
Communication 38% 40% 43%
Computer 30% 31% 31%
Automotive and Consumers 28% 26% 23%
Others 4% 3% 3%
Revenues by Region
North America 56% 56% 62%
Europe 11% 10% 8%
Taiwan 13% 20% 20%
Japan 10% 11% 5%
Other Asia 10% 3% 5%
IC Packaging Services
Amounts in NT$ Millions 2Q/05 1Q/05 2Q/04
Net Revenues 12,693 12,755 12,753
Revenues by End Application
Communication 28% 31% 30%
Computer 37% 38% 42%
Automotive and Consumers 30% 27% 26%
Others 5% 3% 2%
Revenues by Packaging Type
Advanced substrate & leadframe
based 87% 88% 85%
Traditional leadframe based 8% 8% 10%
Others 5% 4% 5%
Capacity CapEx (US$ Millions)* 24 22 106
Number of Wirebonders 6,136 6,672 6,322
Testing Services
Amounts in NT$ Millions 2Q/05 1Q/05 2Q/04
Net Revenues 3,752 3,693 4,102
Revenues by End Application
Communication 39% 40% 39%
Computer 21% 21% 20%
Automotive and Consumers 35% 36% 33%
Others 5% 3% 8%
Revenues by Testing Type
Final test 80% 78% 74%
Wafer sort 16% 17% 22%
Engineering test 4% 5% 4%
Capacity
CapEx (US$ Millions)* 13 12 65
Number of Testers 1,350 1,493 1,492
* Capital expenditure amounts exclude building construction cost.
Advanced Semiconductor Engineering, Inc.
Consolidated Summary Income Statements Data
(In NT$ millions, except per share data)
(Unaudited)
For the three months For the period
ended ended
Jun. 30 Mar. 31 Jun. 30 Jun. 30 Jun. 30
2005 2005 2004 2005 2004
Net revenues:
IC Packaging 12,693 12,755 12,753 25,448 24,533
Testing 3,752 3,693 4,102 7,445 7,521
Module Assembly 2,283 1,925 3,379 4,208 5,344
Others 91 196 56 287 113
Total net revenues 18,819 18,569 20,290 37,388 37,511
Cost of revenues 16,679 16,686 15,821 33,365 29,273
Gross Profit 2,140 1,883 4,469 4,023 8,238
Operating expenses:
Research and
development 672 671 595 1,343 1,179
Selling, general
and administrative 1,573 1,378 1,515 2,951 2,887
Total operating
expenses 2,245 2,049 2,110 4,294 4,066
Operating income (loss) (105) (166) 2,359 (271) 4,172
Net non-operating
(income) expenses:
Interest expenses
- net 361 294 197 655 422
Foreign exchange
loss - net 0 (14) (5) (14) (87)
Loss (gain) on
long-term
investment 2 (22) 29 (20) 64
Loss on disposal of
assets 76 5 44 81 84
Goodwill impairment -- -- -- -- --
Others 9,529 79 36 9,608 63
Total non-operating
expenses 9,968 342 301 10,310 546
Income (loss)
before tax (10,073) (508) 2,058 (10,581) 3,626
Income tax expense
(benefit) 22 (146) (567) (124) (840)
Net income (loss)
before
minority interest (10,095) (362) 2,625 (10,457) 4,466
Minority interest (1,001) (234) 605 1,235 809
Net income (loss) (9,094) (128) 2,020 (9,222) 3,657
Per share data:
Earnings (loss)
per common share
- Basic NT$(2.31) NT$(0.03) NT$0.53 NT$(2.34) NT$0.96
- Diluted NT$(2.31) NT$(0.03) NT$0.51 NT$(2.34) NT$0.93
Earnings (loss) per pro forma
equivalent ADS
- Basic US$(0.368) US$(0.005) US$0.080 US$(0.371) US$0.144
- Diluted US$(0.368) US$(0.005) US$0.074 US$(0.371) US$0.140
Number of weighted
average shares
used in diluted
EPS calculation
(in thousands) 3,945,236 3,943,780 4,041,732 3,944,512 4,060,305
Forex (NT$ per US$1) 31.36 31.54 33.30 31.45 33.40
Advanced Semiconductor Engineering, Inc.
Consolidated Summary Balance Sheet Data
(In NT$ millions)
(Unaudited)
As of Jun. As of Mar.
30, 2005 31, 2005
Current assets:
Cash and cash equivalents 9,086 7,093
Short-term investments 3,456 3,569
Notes and accounts receivable 14,020 13,328
Inventories 7,770 9,177
Others 6,798 2,690
Total 41,130 35,857
Long-term investments 4,816 4,872
Properties - net 67,707 81,056
Other assets 11,852 11,492
Total assets 125,505 133,277
Current liabilities:
Short-term debts - revolving
credit 6,204 6,607
Short-term debts - current
portion of long-term debts 4,461 3,511
Notes and accounts payable 7,857 7,117
Others 8,286 7,490
Total 26,808 24,725
Long-term debts 38,311 37,323
Long-term bonds payable 8,999 9,421
Other liabilities 2,584 2,576
Total liabilities 76,702 74,045
Minority interest 7,175 8,178
Shareholders' equity 41,628 51,054
Total liabilities &
shareholders' equity 125,505 133,277
Contact:
ASE, Inc.
Room 1901, No. 333, Section 1
Keelung Road, Taipei, Taiwan, 110
Tel: +886-2-8780-5489
Fax: +886-2-2757-6121
http://www.aseglobal.com
Joseph Tung, CFO / Vice President
Freddie Liu, Financial Controller
Email Contact
Clare Lin, Director (US Contact)
Email Contact
Tel: +1-408-986-6524
CONTACT: Joseph Tung, CFO and Vice President, or Freddie Liu, Financial
Controller, +886-2-8780-5489, or fax, +886-2-2757-6121, or
Email Contact, or Clare Lin, +1-408-986-6524, or
Email Contact,
all of ASE
Web site: http://www.aseglobal.com/