TAIPEI, Taiwan, Oct. 26 /Xinhua-PRNewswire-FirstCall/ -- 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
consolidated net revenues(1) of NT$22,340 million for the third
quarter of 2005 (3Q05), up 1% year-over-year and 19% sequentially.
Net income for the quarter totaled NT$1,588 million, down from net
income of NT$1,960 million in 3Q04 and up from net loss of NT$9,094
million in 2Q05. Earnings per share for the quarter was NT$0.35 (or
US$0.054, per ADS), compared to earnings per share of NT$0.44 for
3Q04 and loss per share of NT$2.08 for 2Q05. (1) 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. "We are very pleased with our operating results in
the third quarter", commented Mr. Jason Chang, the Chairman. "After
the fire accident at our facilities in Chungli in May 2005, the
management team has taken a series of initiatives aimed at not only
recovering the loss of business momentum caused by the accident,
but also improving our business efficiency. The production
interruption due to the accident was predominantly contained within
one quarter and now production has already exceeded pre-fire level
output. We have reviewed and adjusted our pricing structure to
better align with the tightened industry capacity and increased
materials cost. At the same time, we continue to improve our
production efficiency and adjust on capacity allocation to meet our
customers' demand without aggressively adding new capacity. The
ramp up of our PBGA substrate capacity has progressed very smoothly
such that as of the end of October our capacity has also resumed to
pre-fire level." RESULTS OF OPERATIONS 3Q05 Results -- Net revenues
amounted to NT$22,340 million, up 19% sequentially and 1%
year-over-year. The revenue contribution from IC packaging
operations, testing operations, module assembly, and others was
NT$15,266 million, NT$4,410 million, NT$2,413 million and NT$251
million, respectively. -- IC packaging, testing and module assembly
represent approximately 68%, 20% and 11%, respectively, of total
net revenues for the quarter. -- Cost of revenues was NT$18,191
million, up 9% sequentially and 3% year-over-year. -- As a
percentage of net revenues, cost of revenues was 81% in 3Q05, down
from 89% in 2Q05 and up from 80% in 3Q04. -- Depreciation,
amortization and rental expenses totaled NT$3,786 million during
the quarter, down 3% sequentially and 6% year-over-year. As a
percentage of net revenues, depreciation, amortization and rental
expenses were 17% during the quarter, down from 21% in 2Q05 and
from 18% in 3Q04. -- Gross profit for 3Q05 was NT$4,149 million, up
94% from NT$2,140 million in 2Q05 and down 6% from NT$4,436 million
in 3Q04. Gross margin was 19% for the quarter, which increased from
11% in the previous quarter and decreased from 20% in 3Q04. --
Total operating expenses during 3Q05 were NT$2,144 million
including NT$679 million in R&D and NT$1,465 million in
SG&A. Total operating expenses as a percentage of net revenues
for the current quarter was at 10%, down from 12% in 2Q05 and 11%
in 3Q04. -- Operating income for 3Q05 was NT$2,005 million,
compared to loss of NT$105 million and income of NT$2,122 million
for 2Q05 and 3Q04, respectively. Operating margin was 9% in 3Q05,
which improved from negative 0.6% in 2Q05 but decreased from 10% in
3Q04. -- We recorded net non-operating expenses of NT$271 million
in 3Q05, which decreased by NT$9,697 million sequentially, and
increased by NT$66 million year-over-year. -- Net interest expense
decrease was mainly due to reduced US dollar denominated bank debt
with higher interest rate than that of NT dollar denominated bank
debt, partially off-set by transaction costs associated with the
partial buy-back of our Euro Convertible Bond in 2Q. -- The net
exchange gain of NT$267 million was mainly attributable to the
effect of US Dollars appreciation on our net asset position
denominated in US dollars. -- Income on long-term investment was
NT$12 million, consisting of NT$39 million investment income from
minority-owned affiliates and NT$27 million of goodwill
amortization expense related to such minority-owned affiliates. The
NT$39 million investment income from minority-owned affiliates
included NT$37 million of investment income from Universal
Scientific Industrial Co. ("USI"), NT$5 million of investment loss
from Hung Ching Construction, NT$54 million of investment income
from Taiwan Fixed Network Co.,Ltd., NT$48 million of investment
loss from Digital Communication International Inc. ("DCI"), and
NT$1 million of investment income from other invested companies. --
Other non-operating expenses were primarily related to the
manufacturing cost incurred for the camera module in Malaysia in
September, inventory provision adjustment and other miscellaneous
expenses. -- Income before tax was NT$1,734 million for 3Q05. We
recognized an income tax benefit of NT$39 million during the
quarter. Minority interest adjustment was NT$185 million. -- In
3Q05, net income was NT$1,588 million, compared to net loss of
NT$9,094 million for 2Q05 and net income of NT$1,960 million for
3Q04. -- Our total shares outstanding at the end of the quarter
were 4,373,033,528. Our EPS for 3Q05 was NT$0.35, or US$0.054 per
ADS, based on 4,580,884,041 weighted average number of shares
outstanding during the third quarter. LIQUIDITY AND CAPITAL
RESOURCES -- Capital expenditures in 3Q05 totaled US$61 million, of
which US$32 million was for IC packaging, US$3 million was for
module assembly, and US$26 million was for testing. --
Year-to-September capital expenditures totaled US$149 million,
including US$78 million for IC packaging, US$4 million for module
assembly, US$51 million for testing and US$16 million for
interconnect materials. -- EBITDA for the quarter totaled NT$5,872
million, down 6% year-over-year and up 115% sequentially. The
EBITDA number has been adjusted for the fire loss number in 2Q05.
-- As of the end of 3Q05, we had cash on hand plus short-term
investments of NT$13,502 million, which increased by NT$960 million
from the end of 2Q05. -- As of the end of 3Q05, we had total bank
debt of NT$57,619 million, consisting of NT$6,400 million of
revolving working capital loans, NT$6,523 million of current
portion of long-term debt, NT$35,338 million of long-term debt and
NT$9,358 million of long-term bonds payable. Total unused banking
facilities were NT$23,374 million. -- Total number of employees was
29,042 as of September 30, 2005. Business Review IC Packaging
Services -- Revenues generated from our IC packaging operations
were NT$15,266 million during the quarter, up NT$2,573 million or
20% sequentially and NT$948 million or 7% 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 87% of total IC packaging revenues during
the quarter, unchanged compared with the previous quarter. -- Gross
margin for our IC packaging operations was 16%, up by five
percentage points sequentially and down three percentage points
year-over-year. -- Capital expenditure for our IC packaging
operations amounted to US$32 million during the quarter, of which
US$22 million was for wirebonding packaging capacity, and US$10
million was for wafer bumping and flip chip packaging equipment. --
As of September 30, 2005, there were 6,236 wirebonders in
operation, of which 142 wirebonders were added during the quarter.
Testing Services -- Revenues generated from our testing operations
were NT$4,410 million, up NT$658 million or 18% sequentially and
down NT$187 million or 4% year-over-year. -- Final testing
contributed 81% to total testing revenues, up by one percentage
point from the previous quarter. Wafer sort contributed 16% to
total testing revenues, consistent with the previous quarter.
Engineering testing contributed 3% to total testing revenues, down
by one percentage point from the previous quarter. -- In 3Q05,
gross margin for our testing operations was 30%, up by fourteen
percentage points sequentially and by two percentage points
year-over-year. The increase in gross margin was mainly due to
higher utilization, lower depreciation expenses and rental
expenses, plus favorable revenue mix changes. -- Capital spending
on our testing operations amounted to US$26 million during the
quarter. -- As of September 30, 2005, there were 1,330 testers in
operation, of which 47 testers were added during the quarter.
Module Assembly Services -- Revenues generated from our module
assembly operations were NT$2,413 million, up NT$130 million or 6%
sequentially, and down NT$519 million or 18% year-over-year mainly
due to volume changes, increased ASP and discontinuation of the
camera module assembly operation in Malaysia. -- The Company sold
its camera module assembly operation in Penang, Malaysia to
Flextronics in early October 2005 for $18.7 million, which covers
the book value of the equipment and inventory transferred to
Flextronics, plus an acquisition premium that reflects certain
intangibles. As agreed with Flextronics, the Company will not
invoice Flextronics for the normal selling price of the camera
modules shipped during the month of September 2005. Instead,
Flextronics will reimburse the Company the actual costs incurred in
the assembly of camera modules during this period. As a result, the
Company will not recognize revenues from the assembly of camera
modules shipped to Flextronics in September. -- Camera module
assembly revenue accounted for 53% of the total module assembly
revenues, while RF and baseband module assembly accounted for 47%.
-- The increase in gross margin from 12% in the previous quarter to
16% in the current quarter was primarily due to decrease in camera
module revenue that had lower profit margin. Interconnect Materials
-- The materials output manufactured by ASE was about NT$1,366
million for the quarter, up by NT$257 million or 23% sequentially
and down by NT$498 million or 27% year-over-year. -- Gross margin
for material was 6% during the quarter, which increased from
negative 12% in 2Q05 and decreased from 18% in 3Q04. The gross
margin improved sequentially mainly due to increase in sales volume
during the current quarter. -- In 3Q05, the Company's internal
material operation supplied 23% (by value) of our total PBGA
substrate requirements. -- As of end of September 2005, the Company
had recovered its PBGA capacity lost in the fire accident, with
monthly capacity reaching 24 million units. Customers -- Our five
largest customers together accounted for approximately 31% of our
net revenues in 3Q05, decreased slightly from 33% in 2Q05 and from
36% in 3Q04. No customer accounted for more than 10% of our total
revenues. -- Our top 10 customers contributed 48% of our net
revenues during the quarter, decreased from 49% in 2Q05 and from
52% 3Q04. -- Our customers that are integrated device
manufacturers, or IDMs, accounted for 44% of our revenues in 3Q05,
compared to 44% in 2Q05 and 50% in 3Q04. 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., CSR plc, Freescale Semiconductor, Inc.,
IBM Corporation, NVIDIA Corporation, Koninklijke Philips
Electronics N.V., 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 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 3Q/05 2Q/05 3Q/04
Net Revenues 22,340 18,819 22,023 Revenues by End Application
Communication 37 % 38 % 44 % Computer 29 % 30 % 27 % Automotive and
Consumers 32 % 28 % 25 % Others 2 % 4 % 4 % Revenues by Region
North America 50 % 55 % 56 % Europe 13 % 12 % 8 % Taiwan 20 % 17 %
22 % Japan 11 % 10 % 9 % Other Asia 6 % 6 % 5 % IC Packaging
Services Amounts in NT$ Millions 3Q/05 2Q/05 3Q/04 Net Revenues
15,266 12,693 14,318 Revenues by End Application Communication 27 %
28 % 33 % Computer 36 % 37 % 36 % Automotive and Consumers 35 % 30
% 27 % Others 2 % 5 % 4 % Revenues by Packaging Type Advanced
substrate & leadframe based 87 % 87 % 87 % Traditional
leadframe based 8 % 8 % 10 % Others 5 % 5 % 3 % Capacity CapEx (US$
Millions) * 32 24 118 Number of Wirebonders 6,236 6,136 6,578
Testing Services Amounts in NT$ Millions 3Q/05 2Q/05 3Q/04 Net
Revenues 4,410 3,752 4,597 Revenues by End Application
Communication 39 % 39 % 43 % Computer 22 % 21 % 17 % Automotive and
Consumers 36 % 35 % 33 % Others 3 % 5 % 7 % Revenues by Testing
Type Final test 81 % 80 % 74 % Wafer sort 16 % 16 % 23 %
Engineering test 3 % 4 % 3 % Capacity CapEx (US$ Millions) * 26 13
66 Number of Testers 1,330 1,350 1,510 * 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 ended For the period ended Sep. 30 Jun. 30 Sep. 30 Sep. 30
Sep. 30 2005 2005 2004 2005 2004 Net revenues: IC Packaging 15,266
12,693 14,318 40,713 38,850 Testing 4,410 3,752 4,597 11,855 12,117
Module Assembly 2,413 2,283 2,932 6,622 8,276 Others 251 91 176 538
291 Total net revenues 22,340 18,819 22,023 59,728 59,534 Cost of
revenues 18,191 16,679 17,587 51,556 46,861 Gross Profit 4,149
2,140 4,436 8,172 12,673 Operating expenses: Research and
development 679 672 675 2,022 1,855 Selling, general and
administrative 1,465 1,573 1,639 4,417 4,525 Total operating
expenses 2,144 2,245 2,314 6,439 6,380 Operating income (loss)
2,005 (105) 2,122 1,733 6,293 Net non-operating (income) expenses:
Interest expenses - net 354 361 252 1,008 674 Foreign exchange loss
(gain) (267) 0 (37) (280) (124) Loss (gain) on long-term investment
(12) 2 4 (32) 68 Loss on disposal of assets 5 76 35 85 119 Goodwill
impairment - - - - - Others 191 9,529 (49) 9,799 12 Total
non-operating expenses 271 9,968 205 10,580 749 Income (loss)
before tax 1,734 (10,073) 1,917 (8,847) 5,544 Income tax expense
(benefit) (39) 22 (348) (163) (1,187) Net income (loss) before
minority interest 1,773 (10,095) 2,265 (8,684) 6,731 Minority
interest 185 (1,001) 305 (1,050) 1,114 Net income (loss) 1,588
(9,094) 1,960 (7,634) 5,617 Per share data: Earnings (loss) per
Common share - Basic NT$0.36 NT$(2.08) NT$0.46 NT$(1.75) NT$1.33 -
Diluted NT$0.35 NT$(2.08) NT$0.44 NT$(1.75) NT$1.27 Earnings (loss)
per pro forma equivalent ADS - Basic US$0.057 US$(0.332) US$0.067
US$(0.276) US$0.198 - Diluted US$0.054 US$(0.332) US$0.065
US$(0.276) US$0.191 Number of weighted average shares used in
diluted EPS calculation (in thousands) 4,580,884 4,364,563
4,541,008 4,366,562 4,508,735 Forex (NT$ per US$1) 32.00 31.36
33.88 31.63 33.56 Advanced Semiconductor Engineering, Inc.
Consolidated Summary Balance Sheet Data (In NT$ millions)
(Unaudited) As of Sep. 30, As of Jun. 30, 2005 2005 Current assets:
Cash and cash equivalents 9,988 9,086 Short-term investments 3,514
3,456 Notes and accounts receivable 16,200 14,020 Inventories 8,094
7,770 Others 7,912 6,798 Total 45,708 41,130 Long-term investments
4,802 4,816 Properties - net 67,830 67,438 Other assets 12,037
11,898 Total assets 130,377 125,282 Current liabilities: Short-term
debts - revolving credit 6,400 6,204 Short-term debts - current
portion of long-term debts 6,523 4,461 Notes and accounts payable
9,946 7,627 Others 8,760 8,292 Total 31,629 26,584 Long-term debts
35,338 38,311 Long-term bonds payable 9,358 8,999 Other liabilities
2,471 2,584 Total liabilities 78,796 76,748 Minority interest 7,369
7,175 Shareholders' equity 44,212 41,629 Total liabilities &
shareholders' equity 130,377 125,282 Contact: ASE, Inc. Room 1901,
No. 333, Section 1 Keelung Road, Taipei, Taiwan, 110 Joseph Tung,
CFO / Vice President Freddie Liu, Financial Controller Tel:
+886-2-8780-5489 Fax: +886-2-2757-6121 Email:
http://www.aseglobal.com/ US Contact: Clare Lin, Director Tel:
+1-408-986-6524 Email: DATASOURCE: Advanced Semiconductor
Engineering, Inc. CONTACT: Joseph Tung, CFO and Vice President, or
Freddie Liu, Financial Controller, +886-2-8780-5489, or fax,
+886-2-2757-6121, or , or Clare Lin, +1-408-986-6524, or , all of
ASE Web site: http://www.aseglobal.com/
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