(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.
"Despite the disruption on our operations in Taiwan as a result of the typhoon, we still managed to end the 3rd quarter with respectable growth rate and reached new high in revenue. We believe our fundamental business model remains solid and with our effective strategy implementation, we will continue to widen our lead against the competitors," commented Mr. Jason Chang, Chairman of ASE. "Looking forward, we continue to expect sequential growth in our revenue in the 4th quarter and should close the year 2004 with significant annual revenue growth."
"Despite some recent concerns over the visibility of the semiconductor foundry business in the short-term, we believe the fundamentals of the IC assembly and testing subcontracting business remain growing in the longer term and our business model remain solid. We completed the merger of ASE Chung Li and ASE Material with the parent company on August 1st to further streamline
Results of Operations
3Q04 Results
-- Net revenues amounted to NT$22,023 million, up 9% sequentially and 52%
year-over-year. The revenue contribution from IC packaging operations,
testing operations, module assembly, and others were NT$14,318 million,
NT$4,597 million, NT$2,932 million and NT$176 million, respectively.
-- Gross profit for 3Q04 was NT$4,436 million, down 1% compared to
NT$4,469 million in 2Q04. Gross margin of 20% for the quarter
decreased from 22% in the previous quarter, while it increased from
19% in 3Q03.
-- Total operating expenses during 3Q04 were NT$2,314 million, which
increased by NT$204 million or 10% from the previous quarter. On a
sequential basis, total R&D and SG&A expenses as a percentage of net
revenues remained relatively flat. 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 3Q04 reached NT$2,122 million, which decreased by
NT$237 million or 10% from the previous quarter, and grew by NT$1,296
million or 157% year-over-year. Operating margin was 10% in 3Q04,
which declined from 12% in 2Q04 and improved from 6% in 3Q03.
-- We recorded net non-operating expenses of NT$205 million in 3Q04, which
decreased by NT$96 million or 32% sequentially, and decreased by NT$284
million or 58% year-over-year. The sequential decrease was mainly
because of the higher net exchange gain of about NT$32 million in 3Q04,
the decrease in loss on long-term investment of NT$25 million, the
decrease in loss on disposal of assets of NT$9 million, and the
increase of other non-operating income by NT$85 million, which were
offset by the increase of net interest expense of NT$55 million.
-- The increase in net interest expense is mainly due to loan balance
increase.
-- The net exchange gain increase was mainly attributable to
the significant decrease of exchange loss in Korean Won -- based
loans and payables and the exchange gain in Japanese Yen-based
loans and payables, due to the respective currency exchange rate
changes.
-- Loss on long-term investment was NT$4 million, consisting of NT$51
million investment gain from minority-owned affiliates and NT$55
million of goodwill amortization related to such minority-owned
affiliates. The investment gain from minority-owned shareholders
included NT$75 million of investment income from Universal
Scientific Industrial Co. ("USI"), NT$11 million of investment
loss from Hung Ching Construction, NT$11 million of investment
loss from Inprocomm, Inc. ("IPCM"), and NT$2 million of
investment loss from other invested companies.
-- Other non-operating income for 3Q04 mainly consisted of tooling
charge and scrap sales. There were severance related costs
recorded in 2Q04 while none recorded in 3Q04.
-- Income before tax was NT$1,917 million for 3Q04. We recognized an
income tax benefit of NT$348 million during the quarter. Minority
interest adjustment for the quarter decreased by NT$300 million to
NT$305 million, primarily due to the decreased earnings
contributed by ASE Test Limited and the elimination of minority
interest adjustment associated with ASE Material and ASE Chung Li
due to their merger with ASE Inc.
-- In 3Q04, net income amounted to NT$1,960 million, down by NT$60
million or 3% sequentially and up by NT$1,377 million or 236% year-
over-year. For the first nine months of 2004, the Company's net
income totaled NT$5,617 million, compared with NT$595 million in the
first nine months of 2003.
-- Our total shares outstanding at the end of the quarter were
3,932,050,750. Our earnings per share for the third quarter of 2004
was NT$0.49, or US$0.069 per ADS, based on 4,105,329,267 weighted
average number of shares outstanding during the third quarter. For
the first nine months of 2004, the Company's earnings per share were
NT$1.42, compared with NT$0.16 in the first nine months of 2003.
Liquidity and Capital Resources
-- Capital expenditures in 3Q04 totaled US$231 million, of which US$118
million was for IC packaging, US$17 million for module assembly, US$66
million for testing and US$30 million for interconnect materials.
Capital expenditures in the first nine months of 2004 totaled US$604
million, of which US$283 million was for IC packaging, US$45 million
for module assembly, US$191 million for testing and US$85 million for
interconnect materials.
-- EBITDA for the quarter totaled NT$6,247 million, up 51% year-over-year
and up 2% sequentially. The year-over-year increase was mainly a
result of the increase in pre-tax income.
-- As of September 30, 2004, we had cash on hand plus short-term
investment of NT$10,148 million, which decreased by NT$3,037 million
when compared to the end of 2Q04. The decrease in cash balance was
mainly due to the final payment made to Motorola in relation to ASE's
acquisition of Motorola's assembly and test operations in Chung Li,
Taiwan, and Paju, South Korea (now ASE Chung Li and Korea) and capital
expenditures.
-- As of September 30, 2004, we had total bank debt of NT$53,953 million,
consisting of NT$9,111 million of revolving working capital loans,
NT$7,733 million of current portion of long-term debt, NT$27,301
million of long-term debt and NT$9,808 million long-term bonds payable.
Total unused banking facilities amounted to NT$13,645 million.
-- Total number of employees reached 31,663 as of September 30, 2004.
Business Review
IC Packaging Services
-- Revenues generated from our IC packaging operations were NT$14,318
million during the quarter, up NT$1,562 million or 12% sequentially and
up NT$3,952 million or 38% year-over-year. On a sequential basis, the
significant increase in packaging revenue was primarily due to volume
increase, partially offset by slightly lower average selling price.
-- Revenues from advanced substrate and leadframe-based packaging
accounted for 87% of total IC packaging revenues during the quarter,
slightly up from 85% in 2Q04 and 86% in 3Q03.
-- Gross margin for our IC packaging operations was 19%, down 3%
sequentially and up 2% year-over-year. The sequential decrease in
gross margin was mainly due to lower internal material supply and
higher labor cost as a result of salary adjustment.
-- Capital expenditure on our IC packaging operations amounted to US$118
million during the quarter, of which US$83 million was for wirebonding
packaging capacity, and US$35 million was for wafer bumping and flip
chip packaging equipment.
-- As of September 30, 2004, there were 6,578 wirebonders in operation. A
total of 292 wirebonders were added during the third quarter of 2004.
Testing Services
-- Revenues generated from our testing operations were NT$4,597 million,
up NT$495 million or 12% sequentially and up NT$1,531 million or 50%
year-over-year, mainly due to volume increase. ASP has been slightly
up from the previous quarter.
-- Final testing contributed 74% to total testing revenues, remaining
flat from the previous quarter. Wafer sort contributed 23% to total
testing revenues, up by 1% from the previous quarter. Engineering
testing contributed 3% to total testing revenues, down by 1%.
-- Gross margin for our testing operations was 28%, slightly down by 1%
sequentially and up 3% year-over-year. The main reason for the slight
decrease in gross margin is the higher machinery rental due to more
leased machines and higher utility cost due to seasonal rate increase.
-- Capital spending on our testing operations amounted to US$66 million
during the quarter.
-- As of September 30, 2004, we operated a total of 1,510 testers, of
which 87 testers were added during the quarter.
Module Assembly Services
-- Revenues generated from our module assembly operations were NT$2,932
million, down NT$444 million or 13% sequentially and up NT$1,878
million or 178% year-over-year mainly due to volume changes.
-- Camera module assembly revenue accounted for 63% of the total module
assembly revenues, while RF and baseband module assembly accounted for
37%. In the previous quarter, camera module assembly was roughly 67%
of module assembly revenues, while RF and baseband module assembly was
about 33%.
-- The decline in gross margin was primarily attributed to the decrease in
production volume and the increase of turnkey business.
Interconnect Materials
-- ASE completed the merger with ASE Material on August 1. The materials
output manufactured by ASE was about NT$1,859 million for the quarter,
down by NT$218 million or 11% sequentially and up by NT$395 million or
27% year-over-year. Gross margin for material was 19% during the
quarter, which decreased from 24% from 2Q04 and increased from 16% in
3Q03. In the third quarter of 2004, ASE Material supplied 53% (by
value) of our total PBGA substrate requirements.
Customers
-- Our five largest customers together accounted for approximately 36% of
our net revenues in 3Q04, constant from 2Q04 and in 3Q03. No customer
accounted for more than 10% of our total revenues.
-- Our top 10 customers contributed 53% of our revenues during the quarter,
compared to 50% in 2Q04 and 53% in 3Q03.
-- Our customers that are integrated device manufacturers, or IDMs,
accounted for 53% of our revenues in 3Q04, compared to 51% in 2Q04 and
48% in 3Q03.
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 3Q/04 2Q/04 3Q/03
Net Revenues 22,023 20,290 14,525
Revenues by End Application
Communication 44 % 43 % 32 %
Computer 27 % 31 % 39 %
Automotive and Consumers 25 % 23 % 29 %
Others 4 % 3 % 0 %
Revenues by Region
North America 56 % 62 % 57 %
Europe 8 % 8 % 9 %
Taiwan 22 % 20 % 30 %
Japan 9 % 5 % 2 %
Other Asia 5 % 5 % 2 %
IC Packaging Services
Amounts in NT$ Millions 3Q/04 2Q/04 3Q/03
Net Revenues 14,318 12,756 10,366
Revenues by End Application
Communication 33 % 30 % 28 %
Computer 36 % 42 % 44 %
Automotive and Consumers 27 % 26 % 28 %
Others 4 % 2 % 0 %
Revenues by Packaging Type
Advanced substrate &
leadframe based 87 % 85 % 86 %
Traditional leadframe based 10 % 10 % 10 %
Others 3 % 5 % 4 %
Capacity
CapEx (US$ Millions) * 118 106 39
Number of Wirebonders 6,578 6,322 4,808
Testing Services
Amounts in NT$ Millions 3Q/04 2Q/04 3Q/03
Net Revenues 4,597 4,102 3,066
Revenues by End Application
Communication 43 % 39 % 35 %
Computer 17 % 20 % 27 %
Automotive and Consumers 33 % 33 % 35 %
Others 7 % 8 % 3 %
Revenues by Testing Type
Final test 74 % 74 % 78 %
Wafer sort 23 % 22 % 18 %
Engineering test 3 % 4 % 4 %
Capacity
CapEx (US$ Millions) * 66 65 36
Number of Testers 1,510 1,492 1,145
* 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 nine months
ended ended
Sep. 30 Jun. 30 Sep. 30 Sep. 30 Sep. 30
2004 2004 2003 2004 2003
Net revenues:
IC Packaging 14,318 12,756 10,366 38,863 27,959
Testing 4,597 4,102 3,066 12,117 8,353
Module Assembly 2,932 3,376 1,054 8,263 2,469
Others 176 56 39 291 101
Total net revenues 22,023 20,290 14,525 59,534 38,882
Cost of revenues 17,587 15,821 11,742 46,861 32,618
Gross Profit 4,436 4,469 2,783 12,673 6,264
Operating expenses:
Research and development 675 595 601 1,855 1,694
Selling, general and
administrative 1,639 1,515 1,356 4,525 3,786
Total operating expenses 2,314 2,110 1,957 6,380 5,480
Operating income (loss) 2,122 2,359 826 6,293 784
Net non-operating (income)
expenses:
Interest expenses (income)
- net 252 197 320 674 1,066
Foreign exchange loss
(gain) - net (37) (5) 155 (124) 195
Loss (income) on long-term
investment 4 29 42 68 200
Loss (gain) on disposal of
assets 35 44 (20) 119 (62)
Others (49) 36 (8) 12 (103)
Total non-operating
expenses 205 301 489 749 1,296
Income (loss) before tax 1,917 2,058 337 5,544 (512)
Income tax expense
(benefit) (348) (567) (235) (1,187) (747)
Net income (loss) before
minority interest 2,265 2,625 572 6,731 235
Minority interest 305 605 (11) 1,114 (360)
Net income (loss) 1,960 2,020 583 5,617 595
Per share data:
Earnings per common share
- Basic NT$0.51 NT$0.50 NT$0.15 NT$1.47 NT$0.16
- Diluted NT$0.49 NT$0.49 NT$0.15 NT$1.42 NT$0.16
Earnings per pro forma
equivalent ADS
- Basic US$0.074 US$0.080 US$0.022 US$0.218 US$0.023
- Diluted US$0.069 US$0.074 US$0.022 US$0.209 US$0.023
Number of weighted
average shares
used in diluted
EPS calculation
(in thousands) 4,105,329 4,026,604 3,840,485 4,076,530 3,712,139
Forex (NT$ per US$1) 33.88 33.30 34.27 33.56 34.54
Advanced Semiconductor Engineering, Inc.
Consolidated Summary Balance Sheet Data
(In NT$ millions)
(Unaudited)
As of Sep. 30, As of Jun. 30,
2004 2004
Current assets:
Cash and cash equivalents 6,996 10,045
Short-term investments 3,152 3,140
Notes and accounts receivable 17,014 16,656
Inventories 9,068 8,393
Others 3,317 3,116
Total 39,547 41,350
Long-term investments 5,981 6,211
Properties - net 79,602 75,377
Other assets 12,142 9,897
Total assets 137,272 132,835
Current liabilities:
Short-term debts - revolving credit 9,111 9,259
Short-term debts - current portion of
long-term debts 7,733 7,389
Short-term debts - current portion of
long-term bonds payable 0 0
Notes and accounts payable 7,589 7,916
Others 11,603 13,460
Total 36,036 38,024
Long-term debts 27,301 23,918
Long-term bonds payable 9,808 9,697
Other liabilities 1,649 1,634
Total liabilities 74,794 73,273
Minority interest 8,850 10,887
Shareholders' equity 53,628 48,675
Total liabilities & shareholders' equity 137,272 132,835
Contact:
Joseph Tung, CFO / Vice President,
Freddie Liu, Financial Controller,
ASE, Inc.
Tel: +886-2-8780-5489
Fax: +886-2-2757-6121
Email:
Email Contact
Web:
http://www.aseglobal.com/
Clare Lin, US Contact
Tel: +1-408-986-6524
Email:
Email Contact
CONTACT: Joseph Tung, CFO / Vice President, or Freddie Liu, Financial
Controller of ASE, Inc., +886-2-8780-5489, or fax, +886-2-2757-6121, or
Email Contact
Web Site: http://www.aseglobal.com/