UMC Reports 2008 Fourth Quarter Results

Depreciation and amortization expenses totaled NT$9.15 billion in 4Q08, compared to NT$9.22 billion in 3Q08. Depreciation within COGS decreased by 5% to NT$7.68 billion. General & administration and R&D expenses decreased largely because of expense control activities in 4Q08. The increase on sales & marketing expenses was mainly due to increase in IP amortization. As a result, total operating expenses decreased 10.2% to NT$3.07 billion. The total R&D expense was 10.6% of revenue in 4Q08.



    Non-operating Income (Expenses)
    (Amount: NT$ million)                          4Q08      3Q08       4Q07
    Net Non-operating Income (Exp.)             (21,784)   (2,105)     1,097
     Net Interest Income (Expense)                  115       108        143
     Net Investment Income (Loss)               (15,465)   (2,860)    (1,124)
     Gain on Disposal of Investment                  52       611      2,025
     Exchange Gain (Loss)                           345       735        108
     Others                                      (6,831)     (699)       (55)


Net non-operating losses during 4Q08 were NT$21.78 billion. Net investment losses were NT$15.47 billion, including NT$12.32 billion of investment losses accounted for under the equity method, NT$2.82 billion of other-than-temporary impairment losses on financial assets pursuant to ROC GAAP SFAS No.34, and a NT$387 million loss from valuation of ProMos shares. Gains on the disposal of investments were NT$52 million, mainly coming from the sale of ITE shares. Other losses included NT$4.07 billion impairment loss on goodwill and idle assets pursuant to SFAS No.35, and NT$2.68 billion loss from decline in market value of inventories pursuant to SFAS No.10.



    Cash Flow Summary
                                     For the 3-Month     For the 3-Month
    (Amount: NT$ million)            Period Ended        Period Ended
                                     Dec. 31, 2008       Sep. 30, 2008
    Cash Flow from Operations                12,729              13,792
      Net Income (Loss)                     (23,510)             (1,413)
      Depreciation & Amortization             9,154               9,224
      Changes in working capital              4,601                 865
      Others                                 22,484               5,116
    Cash Flow from Investing                 (2,330)             (2,143)
      Capital Expenditures                   (1,471)             (1,778)
      Others                                   (859)               (365)
    Cash Flow from Financing                    508             (12,225)
      Long term loan                            700                  --
      Cash Dividend                              --              (9,383)
      Purchase of treasury stock               (191)             (2,087)
      Others                                     (1)               (755)
    Effect of exchange rate                      23                 352
    Net Cash Flow                            10,930                (224)


Net cash inflow was NT$10.93 billion in 4Q08. Operating cash inflow was NT$12.73 billion. Most of the non-operating losses during 4Q08 were non-cash charges; they did not have any impact on the cash flow. Free cash flow (Note 2) for 4Q08 was NT$11.26 billion. Free cash flow for entire 2008 was NT$33.35 billion. Over the next 12 months, UMC expects to repay NT$66.7 million in term loans.

    Note 2: Free cash flow = Operating cash flow - Capital expenditures



    Current Assets
    (Amount: NT$ billion)                        4Q08       3Q08       4Q07
    Cash & Cash Equivalents                     36.12      25.19      37.45
    Notes & Accounts Receivable                                    7.80            14.12            13.62
            Days  Sales  Outstanding                                              54                  53                  51
        Inventory                                                                        7.77            11.76            11.33
            Avg.  Inventory  Turnover                                            55                  55                  47
        Total  Current  Assets                                                54.61            54.89            68.25



        Cash  and  cash  equivalents  increased  NT$10.93  billion  to  NT$36.12  billion.
The  decrease  in  notes  &  accounts  receivable  and  inventory  primarily  reflected
the  downward  trend  of  the  business.    Average  inventory  turnover  remained  at  55
days  at  the  end  of  4Q08.



        Liabilities
        (Amount:  NT$  billion)                                              4Q08              3Q08              4Q07
        Total  Current  Liabilities                                    11.43            14.64            43.06
            Accounts  Payable                                                    2.05              3.84              4.80
            Short-term  Credit  /  Bonds                                  0.07              0.00            22.89
            Others                                                                        9.31            10.80            15.37
        Long-term  Liabilities                                              8.13              7.50              7.60
        Total  Liabilities                                                    23.31            25.85            54.30
        Debt  to  Equity                                                              13%                13%                23%


 


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