Advanced Semiconductor Engineering, Inc. Reports Unaudited

Advanced Semiconductor Engineering, Inc. Reports Unaudited Consolidated Financial Results for the Second Quarter of 2017

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(PRNewswire) — Advanced Semiconductor Engineering, Inc. (TAIEX: 2311, NYSE: ASX) ("We", "ASE", or the "Company"), among the world's leading companies in semiconductor packaging and testing, today reported unaudited net revenues¹ of NT$66,026 million for the second quarter of 2017 (2Q17), up by 5% year-over-year and down by 1% sequentially. Net income attributable to shareholders of the parent for the quarter totaled NT$7,847 million, up from a net income attributable to shareholders of the parent of NT$4,302 million in 2Q16 and up from a net income attributable to shareholders of the parent of NT$2,559 million in 1Q17. Basic earnings per share for the quarter were NT$0.97 (or US$0.160 per ADS), compared to basic earnings per share of NT$0.56 for 2Q16 and NT$0.33 for 1Q17. Diluted earnings per share for the quarter were NT$0.89 (or US$0.148 per ADS), compared to diluted earnings per share of NT$0.47 for 2Q16 and NT$0.29 for 1Q17.

¹ All financial information presented in this press release is unaudited, consolidated and prepared in accordance with Taiwan-IFRS (International Financial Reporting Standards as endorsed for use in the R.O.C.). Such financial information is generated internally by us and has not been subjected to the same review and scrutiny, including internal auditing procedures and audit 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 of operations for any future period.

RESULTS OF OPERATIONS

2Q17 Results Highlights - Consolidated

Net revenue contribution from packaging operations, testing operations, EMS operations, substrates sold to third parties and others, each represented approximately 46%, 10%, 43%, 1% and 0%, respectively, of total net revenues for the quarter.
Cost of revenue was NT$53,910 million for the quarter, down from NT$54,576 million in 1Q17.

Raw material cost totaled NT$30,855 million for the quarter, representing 47% of total net revenues.
Labor cost totaled NT$8,871 million for the quarter, representing 13% of total net revenues.
Depreciation, amortization and rental expenses totaled NT$6,805 million for the quarter.

Gross margin increased 0.3 percentage points to 18.3% in 2Q17 from 18.0% in 1Q17.
Operating margin were both 7.9% in 2Q17 and 1Q17.
In terms of non-operating items:

Net interest expense was NT$365 million.
Net foreign exchange loss of NT$201 million was primarily attributable to the appreciation of the U.S. dollar against the NT dollar.
Gain on valuation of financial assets and liabilities was NT$800 million.
Net gain on equity-method investments was NT$253 million, including NT$356 million of the share of gain from our investment in Siliconware Precision Industries Co., Ltd.("SPIL").
Other net non-operating income of NT$5,684 million were primarily attributable to gain on disposal of subsidiary. Total non-operating income for the quarter was NT$6,171 million.

Income before tax was NT$11,390 million for 2Q17, compared to NT$3,845 million in 1Q17. We recorded income tax expenses of NT$3,207 million for the quarter, compared to NT$886 million in 1Q17.
In 2Q17, net income attributable to shareholders of the parent was NT$7,847 million, compared to net income attributable to shareholders of the parent of NT$4,302 million in 2Q16 and net income attributable to shareholders of the parent of NT$2,559 million in 1Q17.
Our total number of shares outstanding at the end of the quarter was 8,380,478,101, including treasury stock owned by our subsidiaries. Our 2Q17 basic earnings per share of NT$0.97 (or US$0.160 per ADS) were based on 8,114,881,837 weighted average number of shares outstanding in 2Q17. Our 2Q17 diluted earnings per share of NT$0.89 (or US$0.148 per ADS) were based on 8,604,623,206 weighted average number of shares outstanding in 2Q17.

2Q17 Results Highlights - IC ATM²

Cost of revenues was NT$30,021 million for the quarter, up by 2% sequentially.

Raw material cost totaled NT$9,148 million for the quarter, representing 23% of total net revenues.
Labor cost totaled NT$7,764 million for the quarter, representing 20% of total net revenues.
Depreciation, amortization and rental expenses totaled NT$6,382 million for the quarter.

Gross margin increased 0.1 percentage points to 23.1% in 2Q17 from 23.0% in 1Q17.
Operating margin was 10.5% in 2Q17 compared to 10.4% in 1Q17.

² ATM stands for Semiconductor Assembly, Testing and Material.

2Q17 Results Highlights - EMS

Cost of revenues for the quarter was NT$25,127 million, down by 4% sequentially.

Raw material cost totaled NT$21,739 million for the quarter, representing 77% of total net revenues.
Labor cost totaled NT$1,097 million for the quarter, representing 4% of total net revenues.
Depreciation, amortization and rental expenses totaled NT$437 million for the quarter.

Gross margin increased to 11.1% in 2Q17 from 10.6% in 1Q17.
Operating margin decreased to 4.0% in 2Q17 from 4.2% in 1Q17.

LIQUIDITY AND CAPITAL RESOURCES

Capital expenditures in 2Q17 totaled US$213 million, of which US$161 million were used in packaging operations, US$47 million in testing operations, US$4 million in EMS operations and US$1 million in interconnect materials operations.
As of June 30, 2017 , total unused credit lines amounted to NT$175,681 million .
Current ratio was 1.30 and net debt to equity ratio was 0.24 as of June 30, 2017 .
Total number of employees was 66,996 as of June 30, 2017 , compared to 66,164 as of March 31, 2017 .

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