Advanced Semiconductor Engineering, Inc. Reports Unaudited Consolidated Financial Results for the Second-Quarter of 2008

2008-08-05 01:04:00

Advanced Semiconductor Engineering, Inc. Reports Unaudited Consolidated Financial Results for the Second-Quarter of 2008

    TAIPEI, Taiwan, Aug. 5 /Xinhua-EMWNews/ -- Advanced

Semiconductor Engineering, Inc. (TAIEX: 2311; NYSE: ASX) ("We", "ASE", or

the "Company"), the world's largest independent provider of IC packaging

and testing services, today reported unaudited net revenues (Note 1) of

NT$25,610 million for the second quarter of 2008 (2Q08), up 10%

year-over-year and up 4% sequentially. Net income for the quarter totaled

NT$2,412 million, down from NT$2,575 million in 2Q07 and up from NT$2,337

million in 1Q08. Diluted earnings per share for the quarter was NT$0.44 (or

US$0.072 per ADS), compared to NT$0.48 for 2Q07 and NT$0.43 for 1Q08.



    Note 1:



    All financial information presented in this press release is unaudited,

consolidated and prepared in accordance with accounting principles

generally accepted 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 our 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.




RESULTS OF OPERATIONS 2Q08 Results Highlights -- Net revenue contribution from IC packaging operations (including module assembly), testing operations, and substrates sold to third parties was NT$20,033 million, NT$5,102 million and NT$475 million, respectively, and each represented approximately 78%, 20% and 2% respectively, of total net revenues for the quarter. -- Cost of revenues was NT$19,098 million, up 13% year-over-year and up 3% sequentially. -- As a percentage of total net revenues, cost of revenues was 75% in 2Q08, up from 73% in 2Q07 and relatively unchanged compared to 1Q08. -- Raw material cost totaled NT$7,695 million during the quarter, representing 30% of total net revenues, compared with NT$7,301 million and 30% of net revenues in the previous quarter. -- Depreciation, amortization and rental expenses totaled NT$3,972 million during the quarter, down 4% year-over-year and up 1% sequentially. -- Total operating expenses during 2Q08 were NT$2,928 million, including NT$980 million in R&D and NT$1,948 million in SG&A. Compared with operating expenses of NT$2,836 million in 1Q08, the sequential increase was primarily attributable to bonuses paid to employees and compensation to directors and supervisors of one of our subsidiaries in 2Q08. Total operating expenses as a percentage of net revenues for the current quarter were 11%, relatively unchanged compared with 2Q07 and 1Q08. -- Operating profit for the quarter totaled NT$3,584 million, up from NT$3,352 million in the previous quarter. Operating margin was 14% in 2Q08 and remained unchanged compared with the previous quarter. -- In terms of non-operating items: -- Net interest expense was NT$268 million, down from NT$275 million a quarter ago. -- Net exchange gain of NT$294 million was primarily attributable to exchange gains from the appreciation of the Renminbi against the U.S. dollar. -- Gain on long-term investment of NT$28 million was primarily attributable to investment income of NT$32 million from USI and investment loss of NT$3 million from Hung Ching Construction. -- Other non-operating expenses of NT$76 million were primarily related to loss from inventory provision adjustment and other miscellaneous expenses. Together with other non-operating expenses, total non- operating expenses for the quarter were NT$22 million, compared to NT$292 million for 2Q07 and NT$69 million for 1Q08. -- Income before tax was NT$3,562 million for 2Q08, compared with NT$3,283 million in the previous quarter. We recorded an income tax expense of NT$779 million during the quarter, compared with an income tax expense of NT$411 million in 1Q08. The sequential increase of the income tax expense was primarily due to the undistributed earnings tax of one of our subsidiaries in 2Q08. Minority interest was NT$371 million for 2Q08, down from NT$535 million in the previous quarter, primarily due to the completion of the ASE Test privatization transaction at the end of May. -- In 2Q08, net income was NT$2,412 million, compared to net income of NT$2,575 million for 2Q07 and NT$2,337 million for 1Q08. -- Our total number of shares outstanding at the end of the quarter was 5,476,949,209, excluding treasury stock. Our diluted EPS for 2Q08 was NT$0.44, or US$0.072 per ADS, based on 5,494,051,808 weighted average number of shares outstanding in 2Q08. LIQUIDITY AND CAPITAL RESOURCES -- As of June 30, 2008, our cash and other financial assets totaled NT$32,648 million, compared to NT$29,127 million on March 31, 2008. -- Capital expenditures in 2Q08 totaled US$130 million, of which US$71 million was used for IC packaging, US$56 million was used for testing, and US$3 million was used for interconnect materials. -- As of June 30, 2008, we had total bank debts of NT$64,687 million, compared to NT$38,794 million as of March 31, 2008. The increase in our bank debt was mainly attributable to the financing of the ASE Test privatization. Total bank debts consisted of NT$12,456 million of revolving working capital loans, NT$6,162 million of the current portion of long-term debts, NT$1,375 million of current portion of bonds payable, NT$40,663 million of long-term debts and NT$4,031 million of long-term bonds payable. Total unused credit lines were NT$69,692 million. -- Current ratio as of June 30, 2008 was 1.24, compared to 1.57 as of March 31, 2008. Net debt to equity ratio was 0.57 as of June 30, 2008. -- Total number of employees was approximately 30,363 as of June 30, 2008. Business Review IC Packaging Services (Note 2) -- Net revenues generated from our IC packaging operations were NT$20,033 million during the quarter, up by NT$2,004 million or 11% year-over- year and up by NT$806 million or 4% sequentially. On a sequential basis, the increase in packaging net revenue was primarily due to an increase in sales volume. -- Net revenues from advanced substrate and leadframe-based packaging accounted for 84% of total IC packaging net revenues during the quarter, which equaled the previous quarter. -- Gross margin for our IC packaging operations was 21%, down by 3% year- over-year and unchanged sequentially. -- Capital expenditures for our IC packaging operations amounted to US$71 million during the quarter, of which US$61 million was used for wirebonding packaging capacity, and US$10 million was used for wafer bumping and flip chip packaging equipment. -- As of June 30, 2008, there were 8,426 wirebonders in operation. 358 wirebonders were added, of which 119 wirebonders were obtained from the acquisition of ASE Weihai Inc. and 58 wirebonders were disposed of during the quarter. -- Net revenues from flip chip packages and wafer bumping services accounted for 10% of total packaging net revenues, up by 1 percentage point from the previous quarter. Note 2: IC packaging services include module assembly services. Testing Services -- Net revenues generated from our testing operations were NT$5,102 million, up by NT$377 million or 8% year-over-year and up by NT$207 million or 4% sequentially. -- Final testing contributed 77% to total testing net revenues, and stay unchanged versus previous quarter. Wafer sort contributed 20% to total testing net revenues, up by 1 percentage points from the previous quarter. Engineering testing contributed 3% to total testing net revenues, down by 1 percentage point from the previous quarter. -- Depreciation, amortization and rental expense associated with our testing operations amounted to NT$1,475 million, down from NT$1,574 million in 2Q07 and up from NT$1,455 million in 1Q08. -- In 2Q08, gross margin for our testing operations was 38%, up by 3 percentage points year-over-year and up by 1 percentage point sequentially. -- Capital spending on our testing operations amounted to US$56 million during the quarter. -- As of June 30, 2008, there were 1,622 testers in operations. 130 testers were added, of which 52 testers were obtained from the acquisition of ASE Weihai Inc. and 63 testers were disposed of during the quarter. Substrate Operations -- PBGA substrate manufactured by ASE amounted to NT$2,161 million for the quarter, up by NT$114 million or 6% from a year-ago quarter, and up by NT$93 million or 5% from the previous quarter. Of the total output of NT$2,161 million, NT$475 million was from sales to external customers. -- Gross margin for substrate operations was 15% during the quarter, down by 6 percentage points from a year ago quarter and unchanged from the previous quarter. -- In 2Q08, the Company's internal substrate manufacturing operations supplied 58% (by value) of our total substrate requirements. -- As of June 30, 2008, the Company's PBGA capacity was at 52 million units per month. Customers -- Our five largest customers together accounted for approximately 28% of our total net revenues in 2Q08, compared to 27% in 2Q07 and in 1Q08. No single customer accounted for more than 10% of our total net revenues. -- Our top 10 customers contributed 46% of our total net revenues during the quarter, compared to 44% in 2Q07 and 1Q08. -- Our customers that are integrated device manufacturers, or IDMs, accounted for 40% of our total net revenues during the quarter, compared to 39% in 2Q07 and 42% in 1Q08.

    About ASE, Inc.



    ASE, Inc. is the world's largest independent provider of IC packaging

services and, together with its subsidiary ASE Test Limited, 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 includes such

leading names as ATI Technologies Inc., CSR plc, Freescale Semiconductor,

Inc., MediaTek Inc., NEC Corporation, NVIDIA Corporation, NXP

Semiconductors, Qualcomm Incorporated, RF Micro Devices Inc.,

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 United States Securities Act of 1933, as

amended, and Section 21E of the United States Securities Exchange Act of

1934, as amended, including statements regarding our future results of

operations and business prospects. 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. We were not involved

in the preparation of these projections. 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; international business activities; our business

strategy; our future expansion plans and capital expenditures; the strained

relationship between the ROC and the PRC; general economic and political

conditions; possible disruptions in commercial activities caused by natural

or human-induced disasters; 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 2007 Annual Report on

Form 20-F filed on June 30, 2008, as amended.




-- Tables to Follow -- Supplemental Financial Information Consolidated Operations Amounts in NT$ Millions 2Q/08 1Q/08 2Q/07 Net Revenues 25,610 24,695 23,362 Revenues by End Application Communication 45% 45% 46% Computer 24% 25% 22% Automotive and Consumers 31% 30% 32% Others 0% 0% 0% Revenues by Region North America 50% 50% 48% Europe 9% 11% 12% Taiwan 21% 23% 23% Japan 9% 8% 9% Other Asia 11% 8% 8% IC Packaging Services Amounts in NT$ Millions 2Q/08 1Q/08 2Q/07 Net Revenues 20,033 19,227 18,029 Revenues by Packaging Type Advanced substrate & leadframe based 84% 84% 85% Traditional leadframe based 4% 4% 5% Module assembly 4% 5% 6% Others 8% 7% 4% Capacity CapEx (US$ Millions)* 71 78 49 Number of Wirebonders 8,426 8,126 7,040 Testing Services Amounts in NT$ Millions 2Q/08 1Q/08 2Q/07 Net Revenues 5,102 4,895 4,724 Revenues by Testing Type Final test 77% 77% 76% Wafer sort 20% 19% 20% Engineering test 3% 4% 4% Capacity CapEx (US$ Millions)* 56 44 20 Number of Testers 1,622 1,555 1,385 * Capital expenditure amounts exclude building construction costs. Advanced Semiconductor Engineering, Inc. Summary of Consolidated Income Statements Data (In NT$ millions, except per share data) (Unaudited) For the three months ended For the period ended Jun. 30 Mar. 31 Jun. 30 Jun. 30 Jun. 30 2008 2008 2007 2008 2007 Net revenues: IC Packaging 20,033 19,227 18,029 39,260 34,312 Testing 5,102 4,895 4,724 9,997 9,049 Others 475 573 609 1,048 1,094 Total net revenues 25,610 24,695 23,362 50,305 44,455 Cost of revenues 19,098 18,507 16,958 37,605 33,055 Gross profit 6,512 6,188 6,404 12,700 11,400 Operating expenses: Research and development 980 1,096 720 2,076 1,409 Selling, general and administrative 1,948 1,740 1,795 3,688 3,332 Total operating expenses 2,928 2,836 2,515 5,764 4,741 Operating income 3,584 3,352 3,889 6,936 6,659 Net non-operating (income) expenses: Interest expenses -- net 268 275 306 543 659 Foreign exchange gain (294) (301) (147) (595) (165) Gain on long-term investment (28) (104) (65) (133) (141) Others 76 199 198 276 439 Total non-operating expenses 22 69 292 91 792 Income before tax 3,562 3,283 3,597 6,845 5,867 Income tax expense 779 411 866 1,191 1,185 Income from continuing operations and before minor interest 2,783 2,872 2,731 5,654 4,682 Minority interest 371 535 156 906 446 Net income 2,412 2,337 2,575 4,748 4,236 Per share data: Earnings (loss) per share --Basic NT$0.46 NT$0.44 NT$0.50 NT$0.90 NT$0.82 --Diluted NT$0.44 NT$0.43 NT$0.48 NT$0.86 NT$0.79 Earnings (loss) per equivalent ADS --Basic US$0.075 US$0.070 US$0.075 US$0.146 US$0.125 --Diluted US$0.072 US$0.067 US$0.073 US$0.138 US$0.120 Number of weighted average shares used in diluted EPS calculation (in thousands) 5,494,052 5,460,822 5,433,905 5,479,984 5,463,437 Exchange rate (NT$ per US$1) 30.36 31.74 33.11 31.05 32.94 Advanced Semiconductor Engineering, Inc. Summary of Consolidated Balance Sheet Data (In NT$ millions) (Unaudited) As of Jun. 30, As of Mar. 31, 2008 2008 Current assets: Cash and cash equivalents 23,305 16,589 Financial assets -- current 9,343 12,538 Notes and accounts receivable 17,633 16,994 Inventories 5,598 5,439 Others 3,232 4,312 Total current assets 59,111 55,872 Financial assets -- non current 4,568 4,818 Properties -- net 83,209 81,297 Others 17,432 9,118 Total assets 164,320 151,105 Current liabilities: Short-term debts -- revolving credit 12,456 10,573 Short-term debts -- current portion of long-term debts 6,162 6,060 Short-term debts -- current portion of bonds payable 1,375 1,375 Notes and accounts payable 8,339 7,762 Others 19,492 9,785 Total current liabilities 47,824 35,555 Long-term debts 40,663 16,602 Long-term bonds payable 4,031 4,184 Other liabilities 2,808 2,949 Total liabilities 95,326 59,290 Minority interest 2,980 14,958 Shareholders' equity 66,014 76,857 Total liabilities & shareholders' equity 164,320 151,105 Current Ratio 1.24 1.57 Net Debt to Equity 0.57 0.11 Contact: ASE, Inc. Joseph Tung, CFO or Vice President Freddie Liu, Vice President Allen Kan, Manager Tel: +886-2-8780-5489 Fax: +886-2-2757-6121 Email: ir@aseglobal.com Website: http://www.aseglobal.com US contact: Clare Lin, Director Tel: +1-408-986-6524 Email: clare.lin@aseus.com

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