Advanced Semiconductor Engineering, Inc. Reports Consolidated Year 2005 Fourth-Quarter and Full-Year Financial Results

TAIPEI, Taiwan, Feb. 8 /Xinhua-PRNewswire-FirstCall/ -- Advanced Semiconductor Engineering, Inc. ("We", ASE", or the "Company"), the world's largest independent provider of IC packaging and testing services, today reported unaudited consolidated net revenues* of NT$26,404 million for the fourth quarter of 2005 (4Q05), up 27% year-over-year and 21% sequentially**. Net income for the quarter totaled NT$2,915 million, up from net loss of NT$1,407 million in 4Q04 and from net income of NT$1,588 million in 3Q05. Earnings per share for the quarter was NT$0.64 (or US$0.095, per ADS), compared to loss per share of NT$0.32 for 4Q04 and earnings per share of NT$0.35 for 3Q05.

      *  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.

     **  In September 2005, the Company disposed of its camera module
         assembly operation in Malaysia.  Accordingly, the historical
         consolidated financial information presented in this press release
         has been retroactively adjusted to net out the results of these
         discontinued operations, which will be presented as a separate line
         item in our consolidated statement of operations.  The consolidated
         financial information presented herein represents the results of
         continuing operations only.

For the full year of 2005, the Company's revenues were NT$84,036 million, up 12% compared to 2004. Net loss was NT$4,718 million, compared to net income of NT$4,210 million in 2004. Loss per share was NT$1.08, or US$0.168 per ADS, compared to earning per share of NT$0.96 for 2004.

    RESULTS OF OPERATIONS
    4Q05 Results

     -- Net revenues amounted to NT$26,404 million, up 21% sequentially and
        27% year-over-year.  The revenue contribution from IC packaging
        operations, testing operations, module assembly, and others was
        NT$18,730 million, NT$5,267 million, NT$2,054 million and NT$353
        million, respectively, and each represented approximately 71%, 20%
        and 8%, respectively, of total net revenues for the quarter.
     -- Cost of revenues was NT$19,869 million, up 12% sequentially and 15%
        year-over-year.

         -- As a percentage of net revenues, cost of revenues was 75% in 4Q05,
            down from 81% in 3Q05 and from 83% in 4Q04.
         -- Depreciation, amortization and rental expenses totaled NT$3,877
            million during the quarter, up 3% sequentially and down 5% year-
            over-year.  As a percentage of net revenues, depreciation,
            amortization and rental expenses were 15% during the quarter, down
            from 17% in 3Q05 and from 20% in 4Q04.

     -- Gross profit for 4Q05 was NT$6,535 million, up 60% from NT$4,088
        million in 3Q05 and up 88% from NT$3,473 million in 4Q04.  Gross
        margin was 25% for the quarter, which increased from 19% in the
        previous quarter and from 17% in 4Q04.
     -- Total operating expenses during 4Q05 were NT$2,298 million including
        NT$769 million in R&D and NT$1,529 million in SG&A.  Total operating
        expenses as a percentage of net revenues for the current quarter was
        at 9%, down from 10% in 3Q05 and 11% in 4Q04.
     -- Operating income for 4Q05 was NT$4,237 million, compared to income
        of NT$1,954 million and NT$1,157 million for 3Q05 and 4Q04,
        respectively.  Operating margin was 16% in 4Q05, which increased
        from 9% in 3Q05 and from 6% in 4Q04.
     -- We recorded net non-operating expenses of NT$966 million in 4Q05,
        which increased by NT$704 million sequentially, and decreased by
        NT$2,306 million year-over-year.

         -- The net exchange loss of NT$105 million was mainly attributable
            to the effect of US dollars depreciation on our net assets
            position denominated in US dollars.
         -- Gain on long-term investment was NT$48 million, consisting of
            NT$75 million investment income from minority-owned affiliates and
            NT$27 million of goodwill amortization expense related to such
            minority-owned affiliates.  The NT$75 million investment income
            from minority-owned affiliates mainly included NT$88 million of
            investment income from Universal Scientific Industrial Co.
            ("USI"), NT$13 million of investment loss from Hung Ching
            Construction.
         -- Other non-operating expenses were primarily related to equipment
            provision associated with the discontinuation of leadframe
            manufacturing operation, inventory provision adjustment and
            other miscellaneous expenses.

     -- Income before tax was NT$3,271 million for 4Q05.  We recorded an
        income tax expenses of NT$46 million during the quarter.  Income from
        discontinuing operations related to our camera module assembly
        operation in Penang was NT$230 million.  Minority interest adjustment
        was NT$540 million.
     -- In 4Q05, net income was NT$2,915 million, compared to net income of
        NT$1,588 million for 3Q05 and net loss of NT$1,407 million for 4Q04.
     -- Our total shares outstanding at the end of the quarter were
        4,382,238,648.  Our EPS for 4Q05 was NT$0.64, or US$0.095 per ADS,
        based on 4,615,663,939 weighted average number of shares outstanding
              during  the  fourth  quarter.

        2005  Full-year  Results
          --  Net  revenues  for  the  full  year  of  2005  amounted  to  NT$84,036  million,
                up  12%  from  2004.    The  revenue  contribution  from  IC  packaging
                operations,  testing  operations,  module  assembly,  and  others  were
                NT$59,443  million,  NT$17,122  million,  NT$6,580  million  and  NT$891
                million,  respectively.
          --  IC  packaging,  testing  and  module  assembly  represent  approximately
                71%,  20%  and  8%,  respectively,  of  total  net  revenues  for  the  year.
          --  Costs  of  revenues  for  the  full  year  of  2005  were  NT$69,538  million,
                up  17%  compared  to  2004.

                  --  As  a  percentage  of  net  revenues,  cost  of  revenues  was  83%  in
                        2005,  up  from  79%  in  2004.
                  --  Depreciation,  amortization  and  rental  expenses  totaled
                        NT$15,647  million  during  the  year,  up  4%  compared  to  2004.    As
                        a  percentage  of  net  revenues,  Depreciation,  amortization  and
                        rental  expenses  were  19%  during  the  year,  down  from  20%  in
                        2004.    The  increase  in  depreciation,  amortization  and  rental
                        expense  was  primarily  due  to  our  capacity  expansion  in  our
                        Shanghai  operation  and  the  full-year  effect  of  our  acquisition
                        of  ASE  Japan.

          --  Gross  profit  for  the  year  was  NT$14,498  million,  down  7%  compared  to
                NT$15,597  million  in  2004.    Gross  margin  was  17%  for  the  year,  down
                from  21%  in  2004.
          --  Total  operating  expenses  during  2005  were  NT$8,693  million
                including  NT$2,788  million  in  R&D  and  NT$5,905  million  in  SG&A.
                Total  operating  expenses  as  a  percentage  of  net  revenues  was  10%  in
                2005,  down  from  12%  in  2004.
          --  Operating  income  for  the  year  was  NT$5,805  million,  compared  to
                income  of  NT$6,957  for  the  previous  year.    Operating  margin  was  7%
                in  2005,  which  decreased  from  9%  in  2004.
          --  We  recorded  net  non-operating  expenses  of  NT$11,506  million  in
                2005,  which  increased  by  NT$7,485  million  from  the  previous  year.

                  --  The  Company  recorded  fire  loss  of  NT  $8.8  billion.    Such  loss
                        amount  assumed  total  loss  on  all  fire-impacted  assets  with  net
                        book  value  of  NT$13.0  billion,  labor  &  rental  cost  totaling  NT$228
                        million  that  were  idled  from  May  to  December  2005,  and  other
                        miscellaneous  NT$172  million,  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.    NT$2.3  billion  of  total  NT$  4.6  billion  insurance
                        receivable  was  received  in  October  2005.
                  --  The  increase  in  net  interest  expense  is  mainly  due  to  higher
                        outstanding  loan  balances  and  interest  rate.
                  --  The  net  exchange  gain  of  NT$175  million  was  mainly  attributable
                        to  the  effect  of  US  dollars  appreciation  on  our  net  assets
                        position  denominated  in  US  dollars.
                  --  Gain  on  long-term  investment  was  NT$80  million,  consisting  of
                        NT$187  million  investment  income  from  minority-owned  affiliates,
                        NT$107  million  of  goodwill  amortization  related  to  such  minority-
                        owned  affiliates.    The  NT$187  million  investment  income  from
                        minority-owned  subsidiaries  included  NT$151  million  of  investment
                        income  from  Universal  Scientific  Industrial  Co.  ("USI"),  NT$29
                        million  of  investment  loss  from  Hung  Ching  Construction,  NT$61
                        million  of  investment  income  from  Inprocomm,  Inc.  ("IPCM"),  and
                        NT$4  million  of  investment  income  from  other  invested  companies.

          --  Loss  before  tax  was  NT$5,701  million  for  2005.    We  recognized  an
                income  tax  benefit  of  NT$119  million  during  the  year.    Income  from
                discontinuing  operations  related  to  our  camera  module  assembly
                operation  in  Penang  was  NT$354  million.    Minority  interest  adjustment
                was  NT$510  million.
          --  In  2005,  net  loss  amounted  to  NT$4,718  million,  compared  to  net
                income  of  NT$4,210  for  2004.
          --  Our  total  shares  outstanding  at  the  end  of  the  year  were
                4,382,238,648.    Our  loss  per  share  for  2005  was  NT$1.08,  or
                US$0.168  per  ADS,  based  on  4,370,513,685  weighted  average  number
                of  shares  outstanding.

        LIQUIDITY  AND  CAPITAL  RESOURCES

          --  Capital  expenditures  in  4Q05  totaled  US$113  million,  of  which  US$31
                million  was  for  IC  packaging,  US$13  million  was  for  module  assembly,
                US$21  million  was  for  testing,  and  US$48  million  was  for  interconnect
                materials.    Capital  expenditures  for  the  full  year  2005  totaled
                US$262  million,  including  US$108  million  for  IC  packaging,  US$17
                million  for  module  assembly,  US$71  million  for  testing  and  US$66
                million  for  interconnect  materials.
          --  EBITDA  for  the  quarter  totaled  NT$7,753  million,  up  51%
                year-over-year  and  32%  sequentially.    Full-year  EBITDA  totaled
                NT$20,303  million,  down  12%  from  the  prior  year.
          --  As  of  the  end  of  4Q05,  we  had  cash  on  hand  plus  short-term
                investments  of  NT$17,698  million,  which  increased  by  NT$4,196
                million  from  the  end  of  3Q05.
          --  As  of  the  end  of  4Q05,  we  had  total  bank  debts  of  NT$53,385  million,
                decreased  from  NT$57,619  million  as  of  end  of  3Q05.    Total  bank
                debts  were  consisting  of  NT$5,085  million  of  revolving  working
                capital  loans,  NT$5,438  million  of  current  portion  of  long-term
                debts,  NT$33,500  million  of  long-term  debts  and  NT$9,362  million  of
                long-term  bonds  payable.    Total  unused  banking  facilities  were
                NT$21,480  million.
          --  Current  ratio  improved  from  1.45  as  of  end  of  3Q05  to  1.54  as  of
                year  end  2005,  and  net  debt  to  equity  ratio  also  improved  from
                0.86  to  0.65.
          --  Total  number  of  employees  was  29,039  as  of  December  31,  2005.

        Business  Review
        IC  Packaging  Services
          --  Revenues  generated  from  our  IC  packaging  operations  were  NT$18,730
                million  during  the  quarter,  up  NT$3,465  million  or  23%  sequentially
                and  NT$4,035  million  or  27%  year-over-year.    On  a  sequential  basis,
                the  increase  in  packaging  revenue  was  primarily  due  to  volume
                increase  with  slight  increase  in  average  selling  price.
          --  Revenues  from  advanced  substrate  and  leadframe-based  packaging
                accounted  for  90%  of  total  IC  packaging  revenues  during  the  quarter,
                up  by  three  percentage  points  from  the  previous  quarter.
          --  Gross  margin  for  our  IC  packaging  operations  was  21%,  up  by  five
                percentage  points  sequentially  and  up  by  six  percentage  points
                year-over-year  as  a  result  of  increased  utilization  and  favorable
                product  mix  changes.
          --  Capital  expenditure  for  our  IC  packaging  operations  amounted  to  US$31
                million  during  the  quarter,  of  which  US$25  million  was  for  wirebonding
                packaging  capacity,  and  US$6  million  was  for  wafer  bumping  and  flip
                chip  packaging  equipment.
          --  As  of  December  31,  2005,  there  were  6,366  wirebonders  in  operation,
                of  which  229    wirebonders  were  added  and  99  wirebonders  were
                disposed  of  during  the  quarter.
          --  Revenues  from  flip  chip  packages  and  wafer  bumping  services  accounted
                for  19%  of  total  packaging  revenue,  up  from  14%  in  3Q05.

        Testing  Services
          --  Revenues  generated  from  our  testing  operations  were  NT$5,267  million,
                up  NT$857  million  or  19%  sequentially  and  NT$910  million  or  21%
                year-over-year.
          --  Final  testing  contributed  80%  to  total  testing  revenues,  down  by  one
                percentage  point  from  the  previous  quarter.    Wafer  sort  contributed
                17%  to  total  testing  revenues,  up  by  one  percentage  point  from  the
                previous  quarter.    Engineering  testing  contributed  3%  to  total
                testing  revenues,  consistent  with  the  previous  quarter.
          --  In  4Q05,  gross  margin  for  our  testing  operations  was  40%,  up  by  ten
                percentage  points  sequentially  and  by  seventeen  percentage  points
                year-over-year.    The  increase  in  gross  margin  was  mainly  due  to  higher
                utilization,  lower  depreciation  expenses  and  rental  expenses,  slight
                increase  in  average  selling  price  and  favorable  revenue  mix  changes.
          --  Capital  spending  on  our  testing  operations  amounted  to  US$21  million
                during  the  quarter.
          --  As  of  December  31,  2005,  there  were  1,304  testers  in  operation,  of
                which  30  testers  were  added  and  56  testers  were  disposed  of  during
                the  quarter.

        Module  Assembly  Services
          --  Revenues  generated  from  our  module  assembly  operations  were  NT$2,054
                million,  up  NT$159  million  or  8%  sequentially,  and  up  NT$557  million
                or  32%  year-over-year  mainly  due  to  volume  increase  and  favorable
                product  mix  change.
          --  In  September  2005,  the  Company  disposed  of  its  camera  module  assembly
                operation  in  Malaysia.    Accordingly,  the  historical  consolidated
                financial  information  presented  in  this  press  release  has  been
                retroactively  adjusted  to  net  out  the  results  of  these  discontinued
                operations,  which  will  be  presented  as  a  separate  line  item  in  our
                consolidated  statement  of  operations.    The  consolidated  financial

                information  presented  herein  represents  the  results  of  continuing
                operations  only.
          --  Camera  module  assembly  revenue  accounted  for  37%  of  the  total
                module  assembly  revenues,  while  RF  and  baseband  module  assembly
                accounted  for  63%.
          --  In  4Q05,  gross  margin  for  our  module  assembly  operations  was  18%,  up
                by  one  percentage  points  sequentially  and  year-over-year.

        Interconnect  Materials
          --  The  materials  output  manufactured  by  ASE  was  about  NT$2,201  million
                for  the  quarter,  up  by  NT$835  million  or  61%  from  NT$1,366  million
                in  previous  quarter,  and  increased  by  NT$58  million  or  3%  from
                NT$2,143  million  in  a  year-ago  quarter.
          --  Gross  margin  for  material  was  25%  during  the  quarter,  which  increased
                from  6%  in  3Q05  and  from  8%  in  4Q04.    The  gross  margin  improved
                sequentially  mainly  due  to  increase  in  sales  volume  during  the
                current  quarter  and  yield  improvement
          --  In  4Q05,  the  Company's  internal  material  operation  supplied  33%
                (by  value)  of  our  total  PBGA  substrate  requirements.
          --  As  of  end  of  December  31,  2005,  the  Company  had  recovered  its  PBGA
                capacity  lost  in  the  fire  accident,  with  monthly  capacity  reaching
                36  million  units.

        Customers
          --  Our  five  largest  customers  together  accounted  for  approximately  30%
                of  our  net  revenues  in  4Q05,  consistent  with  the  previous  quarter
                and  decreased  from  36%  in  4Q04.    No  customer  accounted  for  more  than
                10%  of  our  total  revenues.
          --  Our  top  10  customers  contributed  46%  of  our  net  revenues  during  the
                quarter,  consistent  with  the  previous  quarter  and  decreased  from  52%
                4Q04.
          --  Our  customers  that  are  integrated  device  manufacturers,  or  IDMs,
                accounted  for  41%  of  our  revenues  in  4Q05,  compared  to  42%  in  3Q05
                and  45%  in  4Q04.

      About  ASE,  Inc. 


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