Advanced Semiconductor Engineering, Inc. Reports Consolidated Year
2004 Fourth-Quarter and Full-Year Financial Results TAIPEI, Taiwan,
Feb. 3 /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$22,202 million for the fourth
quarter of 2004 (4Q04), up 20% year-over-year and up 1%
sequentially. Net income for the quarter totaled NT$680 million,
down 68% year-over-year and down 65% sequentially. Earnings per
share for the quarter was NT$0.16, or US$0.023, per ADS, down 72%
year-over-year and down 67% sequentially. (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. For the full year of 2004, the Company's revenues
were NT$81,735 million, up 43% compared to 2003. Net income was
NT$6,297 million, compared to NT$2,743 million in 2003. EPS was
NT$1.58, or US$0.232 per ADS, grew 116% compared with 2003 results.
"2004 is definitely the best year ever in ASE's history. Our
revenue grew 43% year over year, making us the undisputable leader
in our industry. We completed the merger of ASE Chung Li and ASE
Material, which greatly improved our overall operation efficiency.
The acquisition of NEC's IC packaging and testing operation in
Japan provided us with a strategic beachhead to further penetrate
into the Japanese market. We are very pleased with our overall
performance in 2004," commented Mr. Jason Chang, chairman of ASE.
"We still hold a very positive view moving into 2005. Despite that
the semiconductor industry growth may decelerate this year, ASE is
still very confident to out-grow the overall industry and our peer
group. We will continue to improve our efficiency, strengthen our
management depth and enhance our quality system to further
differentiate ourselves from our competitors. As we grow our
business, the management will continue to focus on improving
shareholders' return and generate free cash flow from our core
operation. As the industry goes through a mild growth stage, we
shall take advantage of this window to further strengthen our
fundamentals and prepare ourselves for the next industry upturn."
RESULTS OF OPERATIONS 4Q04 Results -- Net revenues amounted to
NT$22,202 million, up 1% sequentially and 20% year-over-year. The
revenue contribution from IC packaging operations, testing
operations, module assembly, and others were NT$14,695 million,
NT$4,380 million, NT$2,916 million and NT$211 million,
respectively. -- Costs of revenues were NT$18,553 million,
representing an increase of 5% compared to 3Q04 and an increase of
34% compared to 4Q03. -- As a percentage of net revenues, cost of
revenues was 84% in 4Q04, up from 80% in 3Q04 and 75% in 4Q03. --
Depreciation expense totaled NT$3,691 million during the quarter,
an increase of 3% compared with 3Q04 and an increase of 20% year-
over-year, due to increased capital expenditures. Depreciation
expense was NT$3,204 million, NT$3,410 million, and NT$3,599
million, for 1Q04, 2Q04 and 3Q04, respectively. As a percentage of
net revenues, depreciation expense was 17% during the quarter,
slightly up from 16% in 3Q04 and constant from 17% in 4Q03. --
Gross profit for 4Q04 was NT$3,649 million, down 18% from NT$4,436
million in 3Q04. Gross margin was 16% for the quarter, which
decreased from 20% in the previous quarter and decreased from 25%
in 4Q03. The decrease in the gross margin was mainly due to lower
gross margin of our material operation and the negative foreign
exchange impact as a result of US dollar weakening. -- Total
operating expenses during 4Q04 were NT$2,302 million, which
decreased by NT$12 million from the previous quarter. Total R&D
and SG&A expenses as a percentage of net revenues improved by
1% sequentially and year-over-year. -- Operating profit for 4Q04
reached NT$1,347 million, which decreased by NT$775 million or 37%
from the previous quarter, and decreased by NT$1,140 million or 46%
year-over-year. Operating margin was 6% in 4Q04, which declined
from 10% in 3Q04 and 13% in 4Q03. -- We recorded net non-operating
expenses of NT$835 million in 4Q04, which increased by NT$630
million or 307% sequentially, and increased by NT$273 million or
49% year-over-year. The sequential increase was mainly because of
the increased in net exchange loss of about NT$307 million in 4Q04,
the increase in loss on long-term investment of NT$323 million, and
the decrease of other non-operating income by NT$37 million, which
were offset by the decrease of loss on disposal of assets of NT$9
million and the decrease of net interest expense of NT$28 million.
-- Net interest expense decrease was mainly due to the drop of
interest rate. -- As a result of Korean Won and Japanese Yen
appreciation, we had net exchange loss on the payables denominated
in such currencies. We also had next exchange loss on the USD-based
revenues due to US dollar depreciation. We have entered into
certain hedging transactions to lower the negative impact of
exchange rate movement. -- Loss on long-term investment was NT$327
million, consisting of NT$272 million investment loss from
minority-owned affiliates, NT$55 million of goodwill amortization
related to such minority- owned affiliates. The investment loss
from minority-owned subsidiaries included NT$60 million of
investment income from Universal Scientific Industrial Co. ("USI"),
NT$259 million of investment loss from Hung Ching Construction,
NT$64 million of investment loss from Hung Ching Kwan Co., NT$7
million of investment loss from Inprocomm, Inc. ('IPCM'), and NT$2
million of investment loss from other invested companies. -- Income
before tax was NT$512 million for 4Q04. We recognized an income tax
benefit of NT$184 million during the quarter. Minority interest
adjustment for the quarter decreased by NT$289 million to NT$16
million, primarily due to the decreased earnings contributed by ASE
Test Limited. -- In 4Q04, net income was to NT$680 million, down by
NT$1,280 million or 65% sequentially and down by NT$1,468 million
or 68% year-over-year. -- Our total shares outstanding at the end
of the quarter were 3,932,050,750. Our earnings per share for the
fourth quarter of 2004 was NT$0.16, or US$0.023 per ADS, based on
4,155,231,081 weighted average number of shares outstanding during
the fourth quarter. 2004 Full-year Results -- Net revenues amounted
to NT$81,735 million, up 43% from 2003. The revenue contribution
from IC packaging operations, testing operations, module assembly,
and others were NT$53,545 million, NT$16,497 million, NT$11,192
million and NT$501 million, respectively. -- Costs of revenues were
NT$65,413 million, representing an increase of 41% compared to
2003. -- As a percentage of net revenues, cost of revenues was 80%
in 2004, slightly down from 81% in 2003. -- Depreciation expense
totaled NT$13,903 million during the year, an increase of 17%
compared with 2003, due to increased capital expenditures. As a
percentage of net revenues, depreciation expense was 17% during the
year, down from 21% in 2003, primarily due to higher equipment
utilization and increase in revenues from advanced processes that
translated into higher average selling price. -- Gross profit for
the year was NT$16,322 million, up 50% compared to NT$10,846
million in 2003. Gross margin was 20% for the year, up from 19% in
2003. -- Total operating expenses during 2004 were NT$8,681
million, which increased by NT$1,106 million or 15% from the
previous year. On a year-over-year basis, R&D and SG&A
expenses as a percentage of net revenues decreased by 1% and 2%
respectively, due to expanded revenue base and our effort in
controlling operating expenses. -- Operating profit for the year
reached NT$7,641 million, which increased by NT$4,370 million or
134% from the previous year. Operating margin was 9% in 2004, which
increased from 6% in 2003. -- We recorded net non-operating
expenses of NT$1,585 million in 2004, which decreased by NT$274
million or 15% from 2003. The sequential decrease was mainly
because of the increase in loss on long-term investment of NT$154
million, the increase in loss on disposal of assets of NT$204
million, and the decrease of other non-operating income by NT$15
million, which were offset by the decrease of net interest expense
of NT$406 million and the decreased of net exchange loss of about
NT$241 million in 2004. -- The decrease in net interest expense is
mainly due to lower interest rate. -- The net exchange loss
decreased as a result of our effort to replace the non-USD based
accounts payable balances with USD balances during the period over
which USD depreciated in value. -- Loss on long-term investment was
NT$395 million, consisting of NT$174 million investment loss from
minority-owned affiliates, NT$221 million of goodwill amortization
related to such minority- owned affiliates. The investment loss
from minority-owned subsidiaries included NT$236 million of
investment income from USI, NT$302 million of investment loss from
Hung Ching Construction, NT$38 million of investment loss from
Inprocomm, Inc. ('IPCM'), NT$61 million of investment loss from
Hung Ching Kwan Co., and NT$9 million of investment loss from other
invested companies. -- Income before tax was NT$6,056 million for
2004. We recognized an income tax benefit of NT$1,371 million
during the year. Minority interest adjustment for the year
increased by NT$1,183 million to NT$1,130 million, primarily due to
the increased earnings contributed by ASE Test Limited and ASE
Material (prior to its merger with ASE Inc). -- In 2004, net income
amounted to NT$6,297 million, up by NT$3,554 million from 2003. --
Our total shares outstanding at the end of the year were
3,932,050,750. Our earnings per share for 2004 was NT$1.58, or
US$0.232 per ADS, based on 4,109,494,302 weighted average number of
shares outstanding. -- The new R.O.C. GAAP No. 35 (effective
January 1st, 2005) requires that fixed assets and goodwill be
assessed for impairment loss. Impairment loss is measured as the
difference by which the carrying book value is higher than the
recoverable amount, when there is an indication for impairment. The
Company is affected by this GAAP as it has NT$1,810 million,
NT$1,663 million and NT$990 million of unamortized goodwill of ASE
Test Ltd. (owning 51%), ISE Labs, Inc. (owning 51%) and USI (owning
23%), respectively. The Company is in the process of evaluating
whether or not this goodwill was impaired. A preliminary assessment
has indicated that there may be an impairment of NT$1,096 million,
NT$854 million (NT$435 million impact on Net Income; NT$419 million
impact on Minority Interest) and NT$512 million of ASE Test Ltd.,
ISE Labs, Inc. and USI, respectively. The Company expects to
complete its assessment by the end of 1Q05. The Company has elected
to adopt this Statement for 4Q04. With such impairment losses, the
2004 net income would be NT$4,254 million and the 2004 EPS would be
NT$1.05, or US$0.155 per ADS. LIQUIDITY AND CAPITAL RESOURCES --
Capital expenditures in 4Q04 totaled US$177 million, of which US$83
million was for IC packaging, US$10 million for module assembly,
US$28 million for testing and US$56 million for interconnect
materials. Capital expenditures for the full year 2004 totaled
US$781 million, of which US$367 million was for IC packaging, US$55
million for module assembly, US$218 million for testing and US$141
million for interconnect materials. -- EBITDA for the quarter
totaled NT$5,251 million, down 9% year-over-year and down 16%
sequentially. The year-over-year decrease was mainly a result of
the decrease in pre-tax income. Full-year EBITDA totaled NT$23,111
million, representing an increase of 39% from the prior year. -- As
of the end of year 2004, we had cash on hand plus short-term
investment of NT$9,185 million, which decreased by NT$963 million
when compared to the end of 3Q04. -- As of December 31, 2004, we
had total bank debt of NT$53,383 million, consisting of NT$4,642
million of revolving working capital loans, NT$2,211 million of
current portion of long-term debt, NT$37,089 million of long-term
debt and NT$9,441 million of long-term bonds payable. Total unused
banking facilities amounted to NT$14,009 million. -- Total number
of employees reached 34,649 as of December 31, 2004. Business
Review IC Packaging Services -- Revenues generated from our IC
packaging operations were NT$14,695 million during the quarter, up
NT$377 million or 3% sequentially and up NT$1,660 million or 13%
year-over-year. On a sequential basis, the increase in packaging
revenue was primarily due to volume increase, partially offset by
lower average selling price. -- Revenues from advanced substrate
and leadframe-based packaging accounted for 88% of total IC
packaging revenues during the quarter, slightly up from 87% in 3Q04
and 4Q03. -- Gross margin for our IC packaging operations was 15%,
down 4% sequentially and down 8% year-over-year. The sequential
decrease in gross margin was mainly due to lower gross margin of
our material operation and the negative foreign exchange impact as
a result of US dollar weakening. -- Capital expenditure on our IC
packaging operations amounted to US$83 million during the quarter,
of which US$51 million was for wirebonding packaging capacity, and
US$32 million was for wafer bumping and flip chip packaging
equipment. -- As of December 31, 2004, there were 6,684 wirebonders
in operation. A total of 141 wirebonders were added during the
fourth quarter of 2004. Testing Services -- Revenues generated from
our testing operations were NT$4,380 million, down NT$217 million
or 5% sequentially and up NT$590 million or 16% year-over-year,
mainly due to volume decrease. ASP has remained relatively stable
from the previous quarter. -- Final testing contributed 76% to
total testing revenues, up by 2% from the previous quarter. Wafer
sort contributed 21% to total testing revenues, down by 2% from the
previous quarter. Engineering testing contributed 3% to total
testing revenues, remaining flat from the previous quarter. --
Gross margin for our testing operations was 23%, slightly down by
5% sequentially and down 9% year-over-year. The decrease in gross
margin was mainly due to higher machinery rental and depreciation
expenses as a percentage of net revenues. -- Capital spending on
our testing operations amounted to US$28 million during the
quarter. -- As of December 31, 2004, we operated a total of 1,515
testers, of which 51 testers were added during the quarter. Module
Assembly Services -- Revenues generated from our module assembly
operations were NT$2,916 million, down NT$16 million or 1%
sequentially and up NT$1,353 million or 87% year-over-year mainly
due to volume changes. -- Camera module assembly revenue accounted
for 56% of the total module assembly revenues, while RF and
baseband module assembly accounted for 44%. In the previous
quarter, camera module assembly was roughly 63% of module assembly
revenues, while RF and baseband module assembly was about 37%. --
The increase in gross margin from 11% in the previous quarter to
13% in the current quarter was primarily attributed to the increase
in sales volume and favorable product mix change. Interconnect
Materials -- ASE completed the merger with ASE Material on August
1. The materials output manufactured by ASE was about NT$1,838
million for the quarter, down by NT$21 million or 1% sequentially
and up by NT$67 million or 4% year-over-year. Gross margin for
material was 7% during the quarter, which decreased from 19% from
3Q04 and 4Q03. In the fourth quarter of 2004, ASE Material supplied
38% (by value) of our total PBGA substrate requirements. Customers
-- Our five largest customers together accounted for approximately
36% of our net revenues in 4Q04, constant from 3Q04 and increased
from 35% in 4Q03. Only one customer accounted for more than 10% of
our total revenues. -- Our top 10 customers contributed 53% of our
revenues during the quarter, constant from 3Q04 and increased from
52% in 4Q03. -- Our customers that are integrated device
manufacturers, or IDMs, accounted for 51% of our revenues in 4Q04,
compared to 53% in 3Q04 and 48% in 4Q03. 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., Cirrus Logic International Ltd., IBM
Corporation, Motorola, Inc., NVIDIA Corporation, Koninklijke
Philips Electronics N.V., Qualcomm Incorporated, 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 2003 Annual Report on Form 20-F
filed on June 30, 2004. Supplemental Financial Information
Consolidated Operations Amounts in NT$ Millions 4Q/04 3Q/04 4Q/03
Net Revenues 22,202 22,023 18,430 Revenues by End Application
Communication 42 % 44 % 35 % Computer 30 % 27 % 35 % Automotive and
Consumers 25 % 25 % 28 % Others 3 % 4 % 2 % Revenues by Region
North America 56 % 56 % 60 % Europe 8 % 8 % 9 % Taiwan 21 % 22 % 28
% Japan 10 % 9 % 2 % Other Asia 5 % 5 % 1 % IC Packaging Services
Amounts in NT$ Millions 4Q/04 3Q/04 4Q/03 Net Revenues 14,695
14,318 13,035 Revenues by End Application Communication 30 % 33 %
27 % Computer 39 % 36 % 42 % Automotive and Consumers 29 % 27 % 30
% Others 2 % 4 % 1 % Revenues by Packaging Type Advanced substrate
& leadframe based 88 % 87 % 87 % Traditional leadframe based 8
% 10 % 9 % Others 4 % 3 % 4 % Capacity CapEx (US$ Millions) * 83
118 52 Number of Wirebonders 6,684 6,578 5,230 Testing Services
Amounts in NT$ Millions 4Q/04 3Q/04 4Q/03 Net Revenues 4,380 4,597
3,790 Revenues by End Application Communication 43 % 43 % 38 %
Computer 20 % 17 % 23 % Automotive and Consumers 31 % 33 % 35 %
Others 6 % 7 % 4 % Revenues by Testing Type Final test 76 % 74 % 81
% Wafer sort 21 % 23 % 16 % Engineering test 3 % 3 % 3 % Capacity
CapEx (US$ Millions) * 28 66 81 Number of Testers 1,515 1,510 1,263
* 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 For the year ended ended Dec. 31
Sep. 30 Dec. 31 Dec. 31 Dec. 31 2004 2004 2003 2004 2003 Net
revenues: IC Packaging 14,695 14,318 13,035 53,545 40,994 Testing
4,380 4,597 3,790 16,497 12,142 Module Assembly 2,916 2,932 1,563
11,192 4,033 Others 211 176 42 501 143 Total net revenues 22,202
22,023 18,430 81,735 57,312 Cost of revenues 18,553 17,587 13,849
65,413 46,466 Gross Profit 3,649 4,436 4,581 16,322 10,846
Operating expenses: Research and development 730 675 660 2,584
2,354 Selling, general and administrative 1,572 1,639 1,434 6,097
5,221 Total operating expenses 2,302 2,314 2,094 8,681 7,575
Operating income 1,347 2,122 2,487 7,641 3,271 Net non-operating
(income) expenses: Interest expenses - net 224 252 238 899 1,305
Foreign exchange loss (gain) - net 270 (37) 192 146 387 Loss on
long-term investment 327 4 40 395 241 Loss (gain) on disposal of
assets 26 35 3 145 (59) Others (12) (49) 89 0 (15) Total
non-operating expenses 835 205 562 1,585 1,859 Income before tax
512 1,917 1,925 6,056 1,412 Income tax expense (benefit) (184)
(348) (531) (1,371) (1,278) Net income before minority interest 696
2,265 2,456 7,427 2,690 Minority interest 16 305 308 1,130 (53) Net
income 680 1,960 2,148 6,297 2,743 Per share data: Earnings per
common share -- Basic NT$0.16 NT$0.51 NT$0.58 NT$1.63 NT$0.74 --
Diluted NT$0.16 NT$0.49 NT$0.57 NT$1.58 NT$0.73 Earnings per pro
forma equivalent ADS -- Basic US$0.025 US$0.074 US$0.084 US$0.244
US$0.107 -- Diluted US$0.023 US$0.069 US$0.083 US$0.232 US$0.106
Number of weighted average shares used in diluted EPS calculation
(in thousands) 4,155,231 4,105,329 3,754,445 4,109,494 3,754,445
Forex (NT$ per US$1) 33.08 33.88 33.90 33.44 34.38 Advanced
Semiconductor Engineering, Inc. Consolidated Summary Balance Sheet
Data (In NT$ millions) (Unaudited) As of Dec. 31, As of Sep. 30,
2004 2004 Current assets: Cash and cash equivalents 5,976 6,996
Short-term investments 3,209 3,152 Notes and accounts receivable
13,747 17,014 Inventories 9,485 9,068 Others 3,602 3,317 Total
36,019 39,547 Long-term investments 5,419 5,981 Properties - net
82,373 79,602 Other assets 12,683 12,142 Total assets 136,494
137,272 Current liabilities: Short-term debts - revolving credit
4,642 9,111 Short-term debts - current portion of long-term debts
2,211 7,733 Short-term debts - current portion of long-term bonds
payable 0 0 Notes and accounts payable 8,309 7,589 Others 10,042
11,603 Total 25,204 36,036 Long-term debts 37,089 27,301 Long-term
bonds payable 9,441 9,808 Other liabilities 2,535 1,649 Total
liabilities 74,269 74,794 Minority interest 8,839 8,850
Shareholders' equity 53,386 53,628 Total liabilities &
shareholders' equity 136,494 137,272 Contact: Joseph Tung, CFO /
Vice President, or Freddie Liu, Financial Controller Tel:
+886-2-8780-5489 Fax: +886-2-2757-6121 Email: Web:
http://www.aseglobal.com/ US Contact: Clare Lin, Director Tel:
+1-408-986-6524 Email: DATASOURCE: Advanced Semiconductor
Engineering, Inc. CONTACT: Clare Lin of ASE, +1-408-986-6524, or
Web Site: http://www.aseglobal.com/
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