TAIPEI, Taiwan, Aug. 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* of NT$18,819 million for the second
quarter of 2005 (2Q05), down 7% year-over- year and up 1%
sequentially. Net loss for the quarter totaled NT$9,094 million,
down from net income of NT$2,020 million in 2Q04 and down from net
loss of NT$128 million in 1Q05. Loss per share for the quarter was
NT$2.31 (or US$0.368, per ADS), compared to EPS of NT$0.51 for 2Q04
and loss per share of NT$0.03 for 1Q05. * 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. "With the support from our customers, vendors,
employees and management team, we have been able to successfully
implement our recovery plan to greatly reduce the impact of the
fire accident on May 1st. By mobilizing our internal resources, we
were able to quickly resume majority of the business impacted by
the fire and maintain our strong relationships with our business
partners. Although the fire loss had a significant impact on our 2Q
financial result, our business momentum remains solid as we go into
second half of the year. Going forward, while continuing our
recovery effort and insurance claim process, we will also continue
to focus on our management initiatives including streamlining our
capacity planning, resource allocation, pricing strategy and
technology development," commented Mr. Jason Chang, the Chairman.
RESULTS OF OPERATIONS 2Q05 Results -- Net revenues amounted to
NT$18,819 million, up 1% sequentially and down 7% year-over-year.
The revenue contribution from IC packaging operations, testing
operations, module assembly, and others was NT$12,693 million,
NT$3,752 million, NT$2,283 million and NT$91 million, respectively.
-- IC packaging, testing and module assembly represent
approximately 67%, 20% and 12%, respectively, of net revenues for
the quarter. -- Cost of revenues was NT$16,679 million, consistent
with the prior quarter and up 5% year-over-year. -- As a percentage
of net revenues, cost of revenues was 89% in 2Q05, down from 90% in
1Q05 and up from 78% in 2Q04. -- Raw material costs as a percentage
of net revenues increased to 34%, one percentage point higher than
1Q05 due to higher material price and decreased substrate output as
a result of the fire accident in our Chungli factory. --
Depreciation expense totaled NT$3,456 million during the quarter,
down 9% sequentially and up slightly by 1% year-over-year. We
stopped recording approximately NT$339 million of depreciation
expense for those assets that were impacted by the fire. (See more
details in the non-operating expenses section below.) As a
percentage of net revenues, depreciation expense was 18% during the
quarter, down from 20% in 1Q05 and up from 17% in 2Q04. -- Gross
profit for 2Q05 was NT$2,140 million, up 14% from NT$1,883 million
in 1Q05 and down 52% from NT$4,469 million in 2Q04. Gross margin
was 11% for the quarter, which increased from 10% in the previous
quarter and decreased from 22% in 2Q04. -- Total operating expenses
during 2Q05 were NT$2,245 million including NT$672 million in
R&D and NT$1,573 million in SG&A. Total operating expenses
as a percentage of net revenues for the current quarter was at 12%,
up from 11% in 1Q05 and 10% in 2Q04. -- Operating loss for 2Q05 was
NT$105 million, compared to loss of NT$166 million and income of
NT$2,359 million for 1Q05 and 2Q04, respectively. Operating margin
was negative 0.6% in 2Q05, which improved slightly from 1Q05 but
decreased from 12% in 2Q04 due to gross margin decline. -- We
recorded net non-operating expenses of NT$9,968 million in 2Q05,
which increased by NT$9,626 million sequentially, and by NT$9,667
million year-over-year. -- The Company recorded fire loss of NT
$8.7 billion. Such loss amount assumed total loss on all
fire-impacted assets with net book value of NT$13.2 billion, and
labor & rental cost totaling NT$151 million that were idled in
May and June, netted by insurance receivable of NT$4.6 billion. The
insurance receivables of NT$4.6 billion were based on certain
assets with their damage amount currently assessed by the Company
and adjusted for the insurance deductibles. Beyond 2Q05, the
Company will continue its damage-assessment and insurance-claim
process with the insurance companies and expects to further reduce
the fire loss amount as the process continues. The Company stopped
recording May and June's depreciation expenses for a total of
NT$339 million for the assets that were written off as a result of
the fire accident. -- Net interest expense increase was mainly due
to higher outstanding loan balances and interest rate, plus
transaction cost associated with the partial buy-back of our Euro
Convertible Bond. -- Loss on long-term investment was NT$2 million,
consisting of NT$25 million investment income from minority-owned
affiliates and NT$27 million of goodwill amortization related to
such minority-owned affiliates. The NT$25 million investment income
from minority-owned affiliates included NT$28 million of investment
income from Universal Scientific Industrial Co. ("USI"), NT$2
million of investment loss from Hung Ching Construction, NT$1
million of investment loss from Hung Ching Kwan Co., NT$1 million
of investment loss from Inprocomm, Inc.'s ("IPCM"), and NT$1
million of investment income from other invested companies. -- The
remaining non-operating expenses were primarily related to
inventory provision adjustment and other miscellaneous expenses. --
Loss before tax was NT$10,073 million for 2Q05. We recognized an
income tax expense of NT$22 million during the quarter. Minority
interest adjustment was NT$1,001 million. -- In 2Q05, net loss was
NT$9,094 million, compared to net loss of NT$128 million for 1Q05
and net income of NT$2,020 for 2Q04. -- Our total shares
outstanding at the end of the quarter were 3,945,235,664. Our loss
per share for the second quarter of 2005 was NT$2.31, or US$0.368
per ADS, based on 3,945,235,664 weighted average number of shares
outstanding during the first quarter. LIQUIDITY AND CAPITAL
RESOURCES -- Capital expenditures in 2Q05 totaled US$48 million, of
which US$24 million was for IC packaging, US$1.2 million for module
assembly, US$13 million for testing and US$10 million for
interconnect materials. -- EBITDA for the quarter totaled NT$2,736
million, down 64% year-over- year and down 44% sequentially. The
EBITDA number has been adjusted for the fire loss number. -- As of
the end of 2Q05, we had cash on hand plus short-term investment of
NT$12,542 million, which increased by NT$1,880 million from the end
of 1Q05. -- As of the end of 2Q05, we had total bank debt of
NT$57,975 million, consisting of NT$6,204 million of revolving
working capital loans, NT$4,461 million of current portion of
long-term debt, NT$38,311 million of long-term debt and NT$8,999
million of long-term bonds payable. Total unused banking facilities
were NT$24,415 million. -- Total number of employees was 28,948 as
of June 30, 2005. BUSINESS REVIEW IC Packaging Services -- Revenues
generated from our IC packaging operations were NT$12,693 million
during the quarter, down NT$62 million or 1% sequentially and NT$60
million or 1% year-over-year. On a sequential basis, the decrease
in packaging revenue was primarily due to volume decrease caused by
the fire accident. ASP remained relatively stable in 2Q. --
Revenues from advanced substrate and leadframe-based packaging
accounted for 87% of total IC packaging revenues during the
quarter, down slightly from 88% in 1Q05 and up from 85% in 2Q04. --
Gross margin for our IC packaging operations was 10%, consistent
with the prior quarter and down 12 percentage points
year-over-year. -- Capital expenditure for our IC packaging
operations amounted to US$24 million during the quarter, of which
US$10 million was for wirebonding packaging capacity, and US$14
million was for wafer bumping and flip chip packaging equipment. --
During the quarter, 16 wirebonders were added and 493 wirebonders
were damaged by the fire accident and therefore no longer in
operation. As of June 30, 2005, we operated a total of 6,136
wirebonders. Testing Services -- Revenues generated from our
testing operations were NT$3,752 million, up NT$59 million or 2%
sequentially and down NT$350 million or 9% year-over-year. -- Final
testing contributed 80% to total testing revenues, up by 2
percentage points from the previous quarter. Wafer sort contributed
16% to total testing revenues, down by 1 percentage points from the
previous quarter, mainly affected by the loss of our wafer probing
capacity in Chungli. Engineering testing contributed 4% to total
testing revenues, down by 1 percentage points from the previous
quarter. -- 2Q05 gross margin for our testing operations was 16%,
up by 6 percentage points sequentially and down by 13 percentage
points year-over-year. The increase in gross margin was mainly due
to higher utilization, lower depreciation expenses, rental expenses
and labor costs. -- Capital spending on our testing operations
amounted to US$13 million during the quarter. -- During the
quarter, 41 testers were added and 109 testers were damaged by the
fire accident and therefore no longer in operation. As of June 30,
2005, we operated a total of 1,350 testers. Module Assembly
Services -- Revenues generated from our module assembly operations
were NT$2,283 million, up NT$358 million or 19% sequentially, and
down NT$1,096 million or 32% year-over-year mainly due to volume
changes and increased ASP. -- Camera module assembly revenue
accounted for 61% of the total module assembly revenues, while RF
and baseband module assembly accounted for 39%. -- The increase in
gross margin from 11% in the previous quarter to 12% in the current
quarter was primarily attributed to volume increases. Interconnect
Materials -- The materials output manufactured by ASE was about
NT$1,238 million for the quarter, down by NT$362 million or 23%
sequentially and by NT$840 million or 40% year-over-year, mainly
due to the loss of capacity in Chungli. Gross margin for material
was negative 10% during the quarter, which decreased from 0% in
1Q05 and 23% in 2Q04 due to a decline in production volume during
the current quarter. Certain startup costs in China operations were
also incurred. In 2Q05, ASE Material supplied 25% (by value) of our
total PBGA substrate requirements. Customers -- Our five largest
customers together accounted for approximately 34% of our net
revenues in 2Q05, decreased slightly from 35% in 1Q05 and from 36%
in 2Q04. Only one customer accounted for more than 10% of our total
revenues. -- Our top 10 customers contributed 49% of our net
revenues during the quarter, decreased from 51% in 1Q05 and from
50% 2Q04. -- Our customers that are integrated device
manufacturers, or IDMs, accounted for 44% of our revenues in 2Q05,
compared to 49% in 1Q05 and 52% in 2Q04. 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., IBM Corporation, Freescale Semiconductor,
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
2004 Annual Report on Form 20-F filed on June 23, 2005.
Supplemental Financial Information Consolidated Operations Amounts
in NT$ Millions 2Q/05 1Q/05 2Q/04 Net Revenues 18,819 18,569 20,290
Revenues by End Application Communication 38% 40% 43% Computer 30%
31% 31% Automotive and Consumers 28% 26% 23% Others 4% 3% 3%
Revenues by Region North America 56% 56% 62% Europe 11% 10% 8%
Taiwan 13% 20% 20% Japan 10% 11% 5% Other Asia 10% 3% 5% IC
Packaging Services Amounts in NT$ Millions 2Q/05 1Q/05 2Q/04 Net
Revenues 12,693 12,755 12,753 Revenues by End Application
Communication 28% 31% 30% Computer 37% 38% 42% Automotive and
Consumers 30% 27% 26% Others 5% 3% 2% Revenues by Packaging Type
Advanced substrate & leadframe based 87% 88% 85% Traditional
leadframe based 8% 8% 10% Others 5% 4% 5% Capacity CapEx (US$
Millions)* 24 22 106 Number of Wirebonders 6,136 6,672 6,322
Testing Services Amounts in NT$ Millions 2Q/05 1Q/05 2Q/04 Net
Revenues 3,752 3,693 4,102 Revenues by End Application
Communication 39% 40% 39% Computer 21% 21% 20% Automotive and
Consumers 35% 36% 33% Others 5% 3% 8% Revenues by Testing Type
Final test 80% 78% 74% Wafer sort 16% 17% 22% Engineering test 4%
5% 4% Capacity CapEx (US$ Millions)* 13 12 65 Number of Testers
1,350 1,493 1,492 * 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
period ended ended Jun. 30 Mar. 31 Jun. 30 Jun. 30 Jun. 30 2005
2005 2004 2005 2004 Net revenues: IC Packaging 12,693 12,755 12,753
25,448 24,533 Testing 3,752 3,693 4,102 7,445 7,521 Module Assembly
2,283 1,925 3,379 4,208 5,344 Others 91 196 56 287 113 Total net
revenues 18,819 18,569 20,290 37,388 37,511 Cost of revenues 16,679
16,686 15,821 33,365 29,273 Gross Profit 2,140 1,883 4,469 4,023
8,238 Operating expenses: Research and development 672 671 595
1,343 1,179 Selling, general and administrative 1,573 1,378 1,515
2,951 2,887 Total operating expenses 2,245 2,049 2,110 4,294 4,066
Operating income (loss) (105) (166) 2,359 (271) 4,172 Net
non-operating (income) expenses: Interest expenses - net 361 294
197 655 422 Foreign exchange loss - net 0 (14) (5) (14) (87) Loss
(gain) on long-term investment 2 (22) 29 (20) 64 Loss on disposal
of assets 76 5 44 81 84 Goodwill impairment -- -- -- -- -- Others
9,529 79 36 9,608 63 Total non-operating expenses 9,968 342 301
10,310 546 Income (loss) before tax (10,073) (508) 2,058 (10,581)
3,626 Income tax expense (benefit) 22 (146) (567) (124) (840) Net
income (loss) before minority interest (10,095) (362) 2,625
(10,457) 4,466 Minority interest (1,001) (234) 605 1,235 809 Net
income (loss) (9,094) (128) 2,020 (9,222) 3,657 Per share data:
Earnings (loss) per common share - Basic NT$(2.31) NT$(0.03)
NT$0.53 NT$(2.34) NT$0.96 - Diluted NT$(2.31) NT$(0.03) NT$0.51
NT$(2.34) NT$0.93 Earnings (loss) per pro forma equivalent ADS -
Basic US$(0.368) US$(0.005) US$0.080 US$(0.371) US$0.144 - Diluted
US$(0.368) US$(0.005) US$0.074 US$(0.371) US$0.140 Number of
weighted average shares used in diluted EPS calculation (in
thousands) 3,945,236 3,943,780 4,041,732 3,944,512 4,060,305 Forex
(NT$ per US$1) 31.36 31.54 33.30 31.45 33.40 Advanced Semiconductor
Engineering, Inc. Consolidated Summary Balance Sheet Data (In NT$
millions) (Unaudited) As of Jun. As of Mar. 30, 2005 31, 2005
Current assets: Cash and cash equivalents 9,086 7,093 Short-term
investments 3,456 3,569 Notes and accounts receivable 14,020 13,328
Inventories 7,770 9,177 Others 6,798 2,690 Total 41,130 35,857
Long-term investments 4,816 4,872 Properties - net 67,707 81,056
Other assets 11,852 11,492 Total assets 125,505 133,277 Current
liabilities: Short-term debts - revolving credit 6,204 6,607
Short-term debts - current portion of long-term debts 4,461 3,511
Notes and accounts payable 7,857 7,117 Others 8,286 7,490 Total
26,808 24,725 Long-term debts 38,311 37,323 Long-term bonds payable
8,999 9,421 Other liabilities 2,584 2,576 Total liabilities 76,702
74,045 Minority interest 7,175 8,178 Shareholders' equity 41,628
51,054 Total liabilities & shareholders' equity 125,505 133,277
Contact: ASE, Inc. Room 1901, No. 333, Section 1 Keelung Road,
Taipei, Taiwan, 110 Tel: +886-2-8780-5489 Fax: +886-2-2757-6121
http://www.aseglobal.com/ Joseph Tung, CFO / Vice President Freddie
Liu, Financial Controller Clare Lin, Director (US Contact) Tel:
+1-408-986-6524 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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