Lite-On Semiconductor Company Reports Third Quarter 2005 Earnings

Third quarter revenues of NT $2.9 billion, up 11.6%; Third quarter net income of NT $674.0 million, up 94.3%

TAIPEI, Taiwan—(BUSINESS WIRE)—Oct. 27, 2005— Lite-On Semiconductor Company (Taiwan: 5305), a leading manufacturer and supplier of high-quality image and discrete semiconductor components and the largest global supplier of contact image sensors (CIS) today reported financial results for the third quarter and nine months ended September 30, 2005.

Revenues for the third quarter of 2005 were NT $2.9 billion, an increase of 11.6% from the third quarter of 2004.

Gross profit and margin for the third quarter of 2005 were NT $356.5 million and 12.4%, respectively, compared to NT $558.2 million and 21.7% in the third quarter of 2004. The decline in margins was primarily attributable to the operating inefficiencies at the Antek Semiconductor 6-inch wafer fab, which was acquired in June 2005 and is expected to break even in mid 2006.

Operating income and margin for the third quarter of 2005 were NT $63.6 million and 2.2%, respectively, compared to NT $354.8 million and 13.8% in the third quarter of 2004.

Net income for the third quarter of 2005 was NT $674.0 million, an increase of 94.3%, compared to NT $346.8 million for the third quarter of 2004. Third quarter net income includes a $444 million after tax gain on the sale of 750,000 shares Diodes, Inc (NASDAQ:DIOD) stock. Basic earnings per share were NT $1.70, compared to NT $1.07 for the third quarter of 2004.

"In the third quarter of 2005, we showed continued growth in revenues and profitability. We are making progress integrating Antek Semiconductor's operations and have increased utilization, but some short term inefficiencies are pressuring margins," commented M.K. Lu, President of Lite-On Semiconductor. "Going forward, Antek will play a vital role in our business strategy, as it provides us the platform to move into the growing power management market and allows us to produce higher margin analog products."

For the nine months ended September 30, 2005, total revenues were NT $7.1 billion, an increase of 7.1% from the comparable period of 2004. Gross profit and margin were NT $1.1 billion and 15.6%, respectively, compared to NT $1.4 billion and 21.6% in the comparable period of 2004. Operating income and margin were NT $362.2 million and 5.1%, respectively, compared to NT $844.4 million and 12.8% in the comparable period of 2004. Including the previously mentioned gain on the sale of Diodes, Inc. stock, net income was NT $1.0 billion, or NT $2.80 per basic share, compared to NT $797.7 million, or NT $2.44 per basic share in the first three quarters of 2004.

Cash flow from operations for the nine months ended September 30, 2005 was NT $444.0 million compared to NT $532.0 million for the nine months ended September 30, 2004.

Year-to-date, the image, discrete and foundry divisions accounted for 56%, 38% and 6% of total revenues, respectively.

"Despite the decline in our margins, the fundamentals of our business remain strong. We achieved another quarter of revenue growth, and we are pleased with the early results from our new products. In particular, our CMOS camera modules are gaining traction, with shipments increasing to 1.5 million units during the third quarter. We have several new products in development, including a new color laser MFP application and the LV MOSFET, both of which we expect to ship in the second quarter of next year," concluded M.K. Lu.

About Lite-On Semiconductor

Lite-On Semiconductor, a subsidiary of Lite-On Group, is a leading manufacturer of opto-electronic device components and semiconductor solutions. Based in Taipei, Taiwan, the Company operates in three major business divisions -- image, discrete components and foundry. The image division produces monochrome contact image sensors (CIS) used primarily in fax machines, color CIS which are used in scanners and multifunctional printers, and CMOS camera modules (CCM) which are components of handset cameras. The discrete division manufactures and sells rectifiers, Surface Mounted Device (SMD) diodes, thrysistors, and metal oxide semiconductor field effect transistors (MOSFET), which are used in telecomm equipment, monitors, power supply devices and automobile parts. The foundry division manufactures analog integrated circuits (IC) and other power management ICs. Lite-On Semiconductor owns 23.5% of Diodes, Inc, a discrete semiconductor manufacturer based in the U.S.

Safe Harbor Statement

Except for statements in respect of historical matters, the statements contained in this Release are "forward-looking statements" within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. These forward- looking statements were based on our management's expectations, projections and beliefs at the time regarding matters including, among other things, future revenues and costs, financial performance, technology changes, capacity, utilization rates, yields, process and geographical diversification, future expansion plans and business strategy. Such forward looking statements are subject to a number of known and unknown risks and uncertainties that can cause actual results to differ materially from those expressed or implied by such statements. Our release of financial forecasts and forward- looking statements at any particular time does not create any duty of disclosure beyond that which is imposed by law, and we expressly disclaim any obligation to publicly update or revise any forecasts or forward-looking statements, whether as a result of new information, future events or otherwise.

In addition, any financial information contained here within is presented in conformity with accounting principles generally accepted in the Republic of China ("ROC GAAP"). Readers should be cautioned that these accounting principles differ in many material respects from accounting principles generally accepted in the United States of America ("US GAAP"). The unaudited financial information mentioned herein is not necessarily indicative of our future financial results.

                         Lite-On Semiconductor
                    Condensed Statements of Income
           For the three and nine months ended September 30

                              3 Months Ended           9 Months Ended
NT$ (in thousands)             September 30,           September 30,
                         ---------------------------------------------
                               2005       2004        2005       2004
                         ---------------------------------------------
                                    (unaudited)            (unaudited)
Revenue                  $2,865,894 $2,569,189  $7,061,642 $6,592,753
COGS                      2,509,413  2,010,965   5,962,373  5,168,767
Gross Profit                356,481    558,223   1,099,269  1,423,986
Operating income             63,599    354,806     362,183    844,418
Income Before Tax           795,658    431,623   1,206,332    977,744
Income Tax Expense          121,463     84,783     170,499    180,021
Net Income                  673,957    346,840   1,035,833    797,723
Earnings per Share            $1.70      $1.07       $2.80      $2.44


                                     Lite-On  Semiconductor
                                                    Balance  Sheet  Data
                              September  30,  2005  and  December  31,  2004


                                                                                              September        December
                                                                                                      30,                  31,
$NT  (in  thousands)                                                                2005                2004

Cash                                                                                        1,551,733        $829,992
Working  Capital                                                                    (223,724)  $1,719,203
Total  Assets                                                                      13,691,742    $8,994,951
Total  Debt                                                                            7,509,877    $4,439,769
Shareholders'  Equity                                                        6,181,864    $4,555,182


                                            Lite-On  Semiconductor,  Inc.
                                        Condensed  Statements  of  Income
        For  the  three  and  nine  months  ended  September  30,  2004  and  2005


                                                                    3  Months  Ended          9  Months  Ended
US$  (in  thousands)  -  (a)                      September  30,            September  30,
                                                                --------------------------------------
                                                                      2005            2004            2005            2004
                                                                --------------------------------------
                                                                                (unadited)                    (unadited)
Revenue                                                  $86,374      $77,432    $212,828    $198,697
COGS                                                          75,630        60,608      179,698      155,780
Gross  Profit                                          10,744        16,824        33,130        42,917
Operating  income  (Loss)                      1,917        10,693        10,916        25,450
Income  Before  Tax                                23,980        13,009        36,357        29,468
Income  Tax  Expense                                3,661          2,555          5,139          5,426
Net  Income                                              20,312        10,453        31,219        24,042
Earnings  per  Share                                $0.05          $0.03          $0.08          $0.07



                                                  Lite-On  Semiconductor
                                                    Balance  Sheet  Data
                              September  30,  2005  and  December  31,  2004


                                                                                                      September    December
                                                                                                            30,                31,
$US  (in  thousands)  -  (a)                                                          2005              2004

Cash                                                                                                $46,767      $17,024
Working  Capital                                                                          $(6,743)    $46,059
Total  Assets                                                                              $412,650    $257,707
Total  Debt                                                                                  $226,337    $133,045
Shareholders'  Equity                                                              $186,313    $124,662


(a)  -  converted  to  US$  using  exchange  rate  of  US$/NT$  =  .03014  on
September  30,  2005.

 


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