TAIPEI, Taiwan, Oct. 30 /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$26,726 million for the third
quarter of 2006 (3Q06), up 22% year-over-year and up 2%
sequentially(2). Net income for the quarter totaled NT$4,181
million, up from NT$1,588 million in 3Q05 and down from NT$7,319
million in 2Q06. Diluted earnings per share for the quarter was
NT$0.91 (or US$0.139, per ADS), compared to NT$0.35 for 3Q05 and
NT$1.58 for 2Q06. (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. (2) In
October 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 nine months ended September 30, 2006, the
Company reported net revenues of NT$77,850 million and net income
of NT$14,682 million. Diluted earnings per share for the first nine
months of 2006 was NT$3.18, or US$0.491 per ADS. RESULTS OF
OPERATIONS 3Q06 Results Highlights -- Net revenues contribution
from IC packaging operations (including module assembly), testing
operations, and others were NT$20,374 million, NT$5,810 million and
NT$542 million, respectively, and each represented approximately
76%, 22% and 2% respectively, of total net revenues for the
quarter. -- Cost of revenues was NT$18,451 million, up 4%
year-over-year and down 2% sequentially. -- As a percentage of
total net revenues, cost of revenues was 69% in 3Q06, down from 81%
in 3Q05 and from 71% in 2Q06. -- Raw material cost totaled NT$7,612
million during the quarter, representing 28% of total net revenues;
compared with NT$8,137 million and 31% of revenues in the previous
quarter. -- Depreciation, amortization and rental expenses totaled
NT$3,805 million during the quarter, up 1% year-over-year and up 2%
sequentially. -- Total operating expenses during 3Q06 were NT$2,155
million, including NT$663 million in R&D and NT$1,492 million
in SG&A. Total operating expenses as a percentage of net
revenues for the current quarter were 8%, down from 10% in 3Q05 and
relatively unchanged from the previous quarter. -- Operating profit
for the quarter totaled NT$6,120 million, up from NT$5,446 million
in the previous quarter. Operating margin improved from 21% in 2Q06
to 23% in 3Q06. -- In terms of non-operating items, -- Net interest
expense was NT$303 million, down from NT$338 million a quarter ago
primarily due to decrease in total bank loan. -- Net exchange loss
of NT$89 million was mainly attributable to the exchange loss in
U.S. based loans and payables due to appreciated US dollars against
New Taiwan dollars, partially offset by the exchange gain from
stronger Renminbi against U.S. dollars. -- Gain on long-term
investment was NT$219 million relating to investment income from
minority-owned affiliates, including NT$88 million of investment
income from Universal Scientific Industrial Co. ("USI"), NT$105
million of investment income from InveStar Burgeon Venture Capital,
Inc., NT$31 million of investment income from Taiwan Fixed Network
Co., Ltd., NT$4 million of investment loss from Hung Ching
Construction, and NT$1 million of investment loss from Hung Ching
Kwan Co. -- Other non-operating expenses were primarily related to
inventory provision adjustment and other miscellaneous expenses.
Together with other non-operating expenses, total non-operating
expenses for the quarter was NT$581 million, compared to NT$262
million for 3Q05 and non-operating income of NT$3,146 million for
2Q06. -- Income before tax was NT$5,539 million for 3Q06, compared
with NT$8,592 million in the previous quarter. The decrease in
pre-tax income was primarily attributed to the non-operating income
of NT$3,427 related to the fire insurance settlement recorded in
the previous quarter. -- We recorded an income tax expense of
NT$751 million during the quarter. Minority interest adjustment was
NT$607 million. -- In 3Q06, net income was NT$4,181 million,
compared to net income of NT$1,588 million for 3Q05 and NT$7,319
million for 2Q06. For the nine months ended September 30, 2006, the
company reported net income of NT$14,682 million, compared with a
net loss of NT$7,634 million in the same period 2005. -- Our total
number of shares outstanding at the end of the quarter was
4,408,252,447. Our fully-diluted EPS for 3Q06 was NT$0.91, or
US$0.139 per ADS, based on 4,673,917,628 weighted average number of
shares outstanding during the third quarter. EPS for the nine
months ended September 30, 2006 was NT$3.18, or US$0.491 per ADS.
LIQUIDITY AND CAPITAL RESOURCES -- As of end of September 2006, our
cash and other financial assets totaled NT$30,476 million, up from
NT$22,360 million as of June end 2006. -- Capital expenditures in
3Q06 totaled US$91 million, of which US$47 million was for IC
packaging, US$28 million was for testing, and US$16 million was for
interconnect materials. -- For the nine months ended September 30,
2006, the company spent US$290 million of capital expenditures,
including US$127 million for IC packaging, US$100 million for
testing, and US$63 million for IC substrate. -- As of the end of
3Q06, we had total bank debts of NT$47,348 million, decreased from
NT$50,038 million as of end of 2Q06. Total bank debts consisted of
NT$7,526 million of revolving working capital loans, NT$3,974
million of current portion of long-term debts, NT$26,260 million of
long-term debts and NT$9,588 million of long-term bonds payable.
Total unused banking facilities were NT$38,819 million. -- Current
ratio as of end of 3Q06 was 1.66, compared to 1.71 as of end of
2Q06, and net debt to equity ratio was 0.23 as of end of September
2006. -- Total number of employees was 27,177 as of September 30,
2006. Business Review IC Packaging Services(3) (3) IC packaging
services include module assembly services. -- Net revenues
generated from our IC packaging operations were NT$20,374 million
during the quarter, up NT$3,213 million or 19% year-over-year and
up NT$419 million or 2% sequentially. On a sequential basis, the
increase in packaging revenue was primarily due to favorable
product mix changes and volume increase. -- Revenues from advanced
substrate and leadframe-based packaging accounted for 84% of total
IC packaging revenues during the quarter, relatively unchanged from
the previous quarter. -- Gross margin for our IC packaging
operations was 25%, up by nine percentage points year-over-year and
up by two percentage points sequentially. The sequential increase
in gross margin was primarily due to lower raw material cost in
3Q06. -- Capital expenditure for our IC packaging operations
amounted to US$47 million during the quarter, of which US$43
million was for wirebonding packaging capacity, and US$4 million
was for wafer bumping and flip chip packaging equipment. -- As of
September 30, 2006, there were 6,544 wirebonders in operation, of
which 50 wirebonders were added and 23 wirebonders were disposed of
during the quarter. -- Revenues from flip chip packages and wafer
bumping services accounted for 14% of total packaging revenue,
relatively unchanged from the previous quarter. Testing Services --
Net revenues generated from our testing operations were NT$5,810
million, up NT$1,400 million or 32% year-over-year and up NT$110
million or 2% sequentially. Testing ASP remained relatively
unchanged compared to 2Q06. -- Final testing, wafer sort and
engineering testing contributed 76%, 19% and 5% to total testing
revenues, relatively unchanged from the previous quarter. --
Depreciation, amortization and rental expense associated with
testing operation amounted to NT$1,597 million, down from NT$1,724
million in 3Q05 and up from NT$1,585 million in 2Q06. -- In 3Q06,
gross margin for our testing operations was 44%, up by fourteen
percentage points year-over-year and up by one percentage point
sequentially. -- Capital spending on our testing operations
amounted to US$28 million during the quarter. -- As of September
30, 2006, there were 1,296 testers in operation, of which 43
testers were added and 61 testers were disposed of during the
quarter. Substrate Operations -- PBGA substrate manufactured by ASE
amounted NT$2,173 million for the quarter, up by NT$986 million or
83% from a year-ago quarter, and up by NT$164 million or 8% from
the previous quarter. Of the total output of NT$2,173 million,
NT$542 million was from sales to external customers. -- Gross
margin for substrate operation was 23% during the quarter, up by
sixteen percentage points compared with a year-ago quarter, and
down by one percentage point compared with previous quarter. -- In
3Q06, the Company's internal substrate manufacturing operations
supplied 42% (by value) of our total substrate requirements. -- As
of end of September 30, 2006, the Company's PBGA capacity was at 48
million units per month. Customers -- Our five largest customers
together accounted for approximately 28% of our net revenues in
3Q06, decreased from 30% in 3Q05 and increased from 27% in 2Q06. No
single customer accounted for more than 10% of our total net
revenues. -- Our top 10 customers contributed 44% of our net
revenues during the quarter, decreased from 46% in 3Q05 and
relatively unchanged compared to 2Q06. -- Our customers that are
integrated device manufacturers, or IDMs, accounted for 44% of our
revenues in 3Q06, compared to 42% in 3Q05 and 41% in 2Q06. 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;
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 2005 Annual
Report on Form 20-F filed on June 19, 2006. Supplemental Financial
Information Consolidated Operations Amounts in NT$ Millions 3Q/06
2Q/06 3Q/05 Net Revenues 26,726 26,287 21,822 Revenues by End
Application Communication 38 % 36 % 36 % Computer 21 % 25 % 28 %
Automotive and Consumers 40 % 38 % 33 % Others 1 % 1 % 3 % Revenues
by Region North America 53 % 53 % 49 % Europe 14 % 13 % 14 % Taiwan
17 % 18 % 20 % Japan 11 % 9 % 11 % Other Asia 5 % 7 % 6 % IC
Packaging Services Amounts in NT$ Millions 3Q/06 2Q/06 3Q/05 Net
Revenues 20,374 19,955 17,161 Revenues by Packaging Type Advanced
substrate & leadframe based 84 % 84 % 78 % Traditional
leadframe based 5 % 5 % 7 % Module assembly 6 % 6 % 11 % Others 5 %
5 % 4 % Capacity CapEx (US$ Millions) * 47 53 35 Number of
Wirebonders 6,544 6,517 6,236 Wafer Bumping 8' (pcs/month) 80,000
78,000 50,000 Wafer Bumping 12' (pcs/month) 15,000 15,000 14,000
Testing Services Amounts in NT$ Millions 3Q/06 2Q/06 3Q/05 Net
Revenues 5,810 5,700 4,410 Revenues by Testing Type Final test 76 %
76 % 81 % Wafer sort 19 % 19 % 16 % Engineering test 5 % 5 % 3 %
Capacity CapEx (US$ Millions) * 28 58 26 Number of Testers 1,296
1,314 1,330 * 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 For the
nine months ended ended Sep. 30 Jun. 30 Sep. 30 Sep. 30 Sep. 30
2006 2006 2005 2006 2005 Net revenues: IC Packaging 20,374 19,955
17,161 59,635 45,239 Testing 5,810 5,700 4,410 16,633 11,855 Others
542 632 251 1,582 538 Total net revenues 26,726 26,287 21,822
77,850 57,632 Cost of revenues 18,451 18,787 17,734 55,440 49,669
Gross profit 8,275 7,500 4,088 22,410 7,963 Operating expenses:
Research and development 663 645 678 1,942 2,019 Selling, general
and administrative 1,492 1,409 1,456 4,217 4,377 Total operating
expenses 2,155 2,054 2,134 6,159 6,396 Operating income (loss)
6,120 5,446 1,954 16,251 1,567 Net non-operating (income) expenses:
Interest expenses - net 303 338 354 1,000 1,008 Foreign exchange
loss (gain) 89 20 (267) 66 (280) Loss (gain) on long-term
investment (219) (83) (12) (363) (32) Loss (gain) on disposal of
assets 33 41 5 65 85 Others 375 (3,462) 182 (2,730) 9,758 Total
non-operating (income) expenses 581 (3,146) 262 (1,962) 10,539
Income (loss) before tax 5,539 8,592 1,692 18,213 (8,972) Income
tax expense (benefit) 751 435 (40) 1,204 (165) Income (loss) from
continuing operations 4,788 8,157 1,732 17,009 (8,807) Loss
(Income) from discontinued operations -- -- (41) -- (123)
Cumulative effect of change in accounting principle -- -- -- 457 --
Income (loss) before minority interest 4,788 8,157 1,773 16,552
(8,684) Minority interest 607 838 185 1,870 (1,050) Net income
(loss) 4,181 7,319 1,588 14,682 (7,634) Per share data: Earnings
(loss) per share - Basic NT$0.95 NT$1.67 NT$0.36 NT$3.34 NT$(1.75)
- Diluted NT$0.91 NT$1.58 NT$0.35 NT$3.18 NT$(1.75) Earnings (loss)
per pro Forma equivalent ADS - Basic US$0.145 US$0.259 US$0.057
US$0.516 US$(0.276) - Diluted US$0.139 US$0.245 US$0.055 US$0.491
US$(0.276) Number of weighted Average shares used in diluted EPS
calculation (in thousands) 4,673,918 4,673,421 4,580,884 4,661,961
4,366,562 Exchange rate (NT$ per US$1) 32.70 32.12 32.00 32.36
31.63 Advanced Semiconductor Engineering, Inc. Summary of
Consolidated Balance Sheet Data (In NT$ millions) (Unaudited) As of
Sep. 30, As of Jun. 30, 2006 2006 Current assets: Cash and cash
equivalents 22,980 17,038 Financial assets - current 7,496 5,322
Notes and accounts receivable 14,134 13,471 Inventories 5,893 6,528
Others 3,672 9,471 Total current assets 54,175 51,830 Financial
assets - non current 5,612 5,238 Properties - net 73,123 73,294
Other assets 11,611 10,909 Total assets 144,521 141,271 Current
liabilities: Short-term debts - revolving credit 7,526 5,482
Short-term debts - current portion of long-term debts 3,974 3,512
Notes and accounts payable 8,978 9,402 Others 12,118 12,008 Total
current liabilities 32,596 30,372 Long-term debts 26,260 31,640
Long-term bonds payable 9,588 9,404 Other liabilities 2,481 2,497
Total liabilities 70,925 73,913 Minority interest 10,545 9,280
Shareholders' equity 63,051 58,078 Total liabilities &
shareholders' equity 144,521 141,271 Current Ratio 1.66 1.71 Net
Debt to Equity 0.23 0.41 Contact: ASE, Inc. Joseph Tung, CFO / Vice
President Room 1901, No. 333, Section 1 Freddie Liu, Vice President
Keelung Road, Taipei, Taiwan, 110 Tel: + 886.2.8780.5489 Clare Lin,
Director (US Contact) Fax: + 886.2.2757.6121
http://www.aseglobal.com/ Tel: + 1.408.986.6524 DATASOURCE: ASE,
Inc. CONTACT: Joseph Tung, CFO or Freddie Liu, Vice President,
+886-2-8780-5489, or fax, +886-2-2757-6121, or , or Clare Lin,
Director, +1-408-986-6524, or , all of ASE Web Site:
http://www.aseglobal.com/
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