Advanced Semiconductor Engineering, Inc. Reports Unaudited Consolidated Financial Results For The First Quarter Of 2015

TAIPEI, April 30, 2015 /PRNewswire/ -- Advanced Semiconductor Engineering, Inc. (TAIEX: 2311, NYSE: ASX) ("We", "ASE", or the "Company"), the world's largest independent provider of packaging and testing services, today reported unaudited net revenues[1] of NT$64,662 million for the first quarter of 2015 (1Q15), up by 18% year-over-year and down by 16% sequentially.  Net income attributable to shareholders of the parent for the quarter totaled NT$4,469 million, up from a net income attributable to shareholders of the parent of NT$3,450 million in 1Q14 and down from a net income attributable to shareholders of the parent of NT$7,864 million in 4Q14.  Basic earnings per share for the quarter were NT$0.58 (or US$0.092 per ADS), compared to basic earnings per share of NT$0.45 for 1Q14 and NT$1.02 for 4Q14. Diluted earnings per share for the quarter were NT$0.56 (or US$0.089 per ADS), compared to diluted earnings per share of NT$0.44 for 1Q14 and NT$0.99 for 4Q14.

RESULTS OF OPERATIONS

1Q15 Results Highlights – Consolidated

• Net revenue contribution from packaging operations, testing operations, EMS operations, substrates sold to third parties and others each represented approximately 45%, 10%, 44%, 1% and 0%, respectively, of total net revenues for the quarter.
• Cost of revenue was NT$52,349 million for the quarter, up by 18% year-over-year and down from NT$60,233 million in the previous quarter.
  • Raw material cost totaled NT$30,185 million during the quarter, representing 47% of total net revenues, compared with NT$36,981 million and 48% of total net revenues in 4Q14.
  • Labor cost totaled NT$8,695 million during the quarter, representing 13% of total net revenues, compared with NT$8,922 million and 12% of total net revenues in 4Q14.
  • Depreciation, amortization and rental expenses totaled NT$7,106 million during the quarter, up by 16% year-over-year and up by 4% sequentially.
• Gross margin decreased 2.4 percentage points to 19.0% in 1Q15 from 21.4% in 4Q14.
• Total operating expenses during 1Q15 were NT$6,021 million, including NT$2,547 million in R&D and NT$3,474 million in SG&A, compared with total operating expenses of NT$6,565 million in 4Q14.  Total operating expenses as a percentage of net revenues were 9% in 1Q15, down from 10% in 1Q14 and remained the same as 4Q14.
• Operating income for the quarter totaled NT$6,292 million, down from NT$9,846 million in 4Q14.  Operating margin was 9.7% in 1Q15 compared to 12.8% in 4Q14.
• In terms of non-operating items:
  • Net interest expense was NT$526 million, down from NT$546 million in 4Q14.
  • Net foreign exchange gain of NT$540 million was primarily attributable to the depreciation of the U.S. dollar against the NT dollar.
  • Loss on valuation of financial assets and liabilities was NT$969 million.
  • Other net non-operating income of NT$165 million was primarily related to miscellaneous income.  Total non-operating expenses for the quarter were NT$786 million, compared to total non-operating expenses of NT$786 million for 1Q14 and total non-operating expenses of NT$267 million for 4Q14.
• Income before tax was NT$5,506 million for 1Q15, compared to NT$9,579 million in 4Q14.  We recorded income tax expenses of NT$856 million during the quarter, compared to NT$1,475 million in 4Q14.
• In 1Q15, net income attributable to shareholders of the parent was NT$4,469 million, compared to net income attributable to shareholders of the parent of NT$3,450 million for 1Q14 and net income attributable to shareholders of the parent of NT$7,864 million for 4Q14.
• Our total number of shares outstanding at the end of the quarter was 7,887,881,546, including treasury stock owned by our subsidiaries.  Our 1Q15 basic earnings per share of NT$0.58 (or US$0.092 per ADS) were based on 7,706,554,578 weighted average number of shares outstanding in 1Q15. Our 1Q15 diluted earnings per share of NT$0.56 (or US$0.089 per ADS) were based on 7,868,151,106 weighted average number of shares outstanding in 1Q15.

1Q15 Results Highlights – IC ATM[2]

• Net revenue contribution from IC ATM operations was NT$38,605 million for the quarter, up by 12% year-over-year and down by 12% sequentially.  Net revenue contribution from packaging operations, testing operations, substrates sold to third parties and others was NT$31,546 million, NT$6,180 million, NT$861 million, and NT$18 million, respectively, and each represented approximately 82%, 16%, 2%, and 0%, respectively, of total net revenues for the quarter.
• Cost of revenues was NT$28,610 million for the quarter, up by 10% year-over-year and down by 5% sequentially.
  • Raw material cost totaled NT$8,585 million during the quarter, representing 22% of total net revenues, compared with NT$9,137 million and 21% of total net revenues in 4Q14.
  • Labor cost totaled NT$7,386 million during the quarter, representing 19% of total net revenues, compared with NT$7,804 million and 18% of total net revenues in 4Q14.
  • Depreciation, amortization and rental expenses totaled NT$6,581 million during the quarter, up by 13% year-over-year and up by 2% sequentially.
• Gross margin decreased 5.5 percentage points to 25.9% in 1Q15 from 31.4% in 4Q14.
• Total operating expenses during 1Q15 were NT$4,449 million, including NT$1,909 million in R&D and NT$2,540 million in SG&A, compared with total operating expenses of NT$4,841 million in 4Q14.  Total operating expenses as a percentage of net revenues were 12% in 1Q15, remained the same as 1Q14 and up from 11% in 4Q14.
• Operating income for the quarter totaled NT$5,546 million, down from NT$8,931 million in 4Q14.  Operating margin was 14.4% in 1Q15 compared to 20.4% in 4Q14.

1Q15 Results Highlights – EMS

• Net revenue contribution from EMS operations for the quarter was NT$28,344 million, up by 33% year-over-year and down by 24% sequentially.
• Cost of revenues for the quarter was NT$26,079 million, up by 35% year-over-year and down by 24% sequentially.
  • Raw material cost totaled NT$21,610 million during the quarter, representing 76% of total net revenues, compared with NT$27,855 million and 75% of total net revenues in 4Q14.
  • Labor cost totaled NT$1,310 million during the quarter, representing 5% of total net revenues, compared with NT$1,118 million and 3% of total net revenues in 4Q14.
  • Depreciation, amortization and rental expenses totaled NT$553 million during the quarter, up by 106% year-over-year and up by 49% sequentially.
• Gross margin increased to 8.0% in 1Q15 from 7.9% in 4Q14.
• Total operating expenses during 1Q15 were NT$1,575 million, including NT$661 million in R&D and NT$914 million in SG&A, compared with total operating expenses of NT$1,700 million in 4Q14.  Total operating expenses as a percentage of net revenues were 6% in 1Q15, remained the same as in 1Q14 and up from 5% in 4Q14.
• Operating income for the quarter totaled NT$690 million, down from NT$1,227 million in 4Q14.  Operating margin decreased to 2.4% in 1Q15 from 3.3% in 4Q14.

LIQUIDITY AND CAPITAL RESOURCES

• As of March 31, 2015, our cash and current financial assets totaled NT$54,924 million, compared to NT$58,216 million as of December 31, 2014.
• Capital expenditures in 1Q15 totaled US$138 million, of which US$67 million were used for packaging, US$52 million for testing, US$16 million for EMS and US$3 million for interconnect materials.
• As of March 31, 2015, we had total debt of NT$93,656 million, compared to NT$99,387 million as of December 31, 2014.  Total debt consisted of NT$36,661 million of short-term borrowings, NT$1,151 million of the current portion of long-term borrowings and capital lease obligations and NT$55,844 million of bonds payable, long-term borrowings and capital lease obligations.  Total unused credit lines amounted to NT$149,964 million.
• Current ratio as of March 31, 2015 was 1.48, compared to 1.44 as of December 31, 2014.  Net debt to equity ratio was 0.25 as of March 31, 2015.
• Total number of employees was 68,599 as of March 31, 2015, compared to 60,513 as of March 31, 2014 and 68,100 as of December 31, 2014.

BUSINESS REVIEW

Packaging Operations[3]

• Net revenues generated from our packaging operations were NT$31,546 million during the quarter, up by NT$3,759 million, or by 14% year-over-year, and down by NT$4,813 million, or by 13% sequentially.
• Net revenues from advanced packaging accounted for 33% of our total packaging net revenues during the quarter, down by 5 percentage points from 4Q14. Net revenues from IC wirebonding accounted for 58% of our total packaging net revenues during the quarter, up by 5 percentage points from 4Q14.  Net revenues from discrete and others accounted for 9% of our total packaging net revenues during the quarter, remained the same as 4Q14.
• Gross margin for our packaging operations during the quarter was 23.7%, up by 2.0 percentage points year-over-year and down by 5.9 percentage points from 4Q14.
• Capital expenditures for our packaging operations amounted to US$67 million during the quarter, of which US$31 million were used for purchases of wafer bumping and flip chip packaging equipment and US$36 million for common equipment purchases, including SiP equipment purchases.
• As of March 31, 2015, there were 15,772 wirebonders in operation. 15 wirebonders were added and 35 wirebonders were disposed of during the quarter.

Testing Operations

• Net revenues generated from our testing operations were NT$6,180 million during the quarter, up by NT$395 million, or by 7% year-over-year, and down by NT$483 million, or by 7% sequentially.
• Final testing accounted for 74% of our total testing net revenues, down by 1 percentage point from the previous quarter.  Wafer sort accounted for 21% of our total testing net revenues, remained the same as 4Q14.  Engineering testing accounted for 5% of our total testing net revenues, up by 1 percentage point from 4Q14.
• Depreciation, amortization and rental expense associated with our testing operations amounted to NT$1,701 million during the quarter, up from NT$1,642 million in 1Q14 and up from NT$1,669 million in 4Q14.
• In 1Q15, gross margin for our testing operations was 34.3%, up by 2.0 percentage points year-over-year and down by 4.6 percentage point from the previous quarter.
• Capital expenditures for our testing operations amounted to US$52 million during the quarter.
• As of March 31, 2015, there were 3,339 testers in operation. 121 testers were added and 49 testers were disposed of during the quarter.

EMS Operations

• Net revenues generated from our EMS operations were NT$28,344 million during the quarter, up by NT$6,968 million, or by 33% year-over-year, and down by NT$8,876 million, or by 24% sequentially.
• Communications products accounted for 47% of our total net revenues from EMS operations for the quarter, down by 20 percentage points from 4Q14.  Computing products accounted for 17% of our total net revenues from EMS operations, up by 4 percentage points from 4Q14.  Consumer products accounted for 18% of our total net revenues from EMS operations, up by 11 percentage point from 4Q14.  Industrial products accounted for 11% of our total net revenues from EMS operations, up by 3 percentage points from 4Q14.  Automotive products accounted for 6% of our total net revenues from EMS operations, up by 1 percentage point from the previous quarter.
• In 1Q15, gross margin for our EMS operations was 8.0%, down by 1.6 percentage points year-over-year and up by 0.1 percentage points from the previous quarter.
• Capital expenditures for our EMS operations amounted to US$16 million during the quarter.

Substrate Operations

• PBGA substrate manufactured by ASE amounted to NT$2,172 million during the quarter, up by NT$86 million, or by 4% year-over-year, and down by NT$111 million, or by 5% from 4Q14.  Of the total output of NT$ 2,172 million, NT$861 million was from sales to external customers.
• Gross margin for substrate operations was 17.1% during the quarter, up by 0.4 percentage points year-over-year and down by 2.1 percentage points from 4Q14.
• In 1Q15, our internal substrate manufacturing operations supplied 28% (by value) of our total substrate requirements.

Customers

IC ATM consolidated Basis

• Our five largest customers together accounted for approximately 37% of our total net revenues in 1Q15, compared to 34% in 1Q14 and 42% in 4Q14.  One customer accounted for more than 10% of our total net revenues in 1Q15.
• Our top 10 customers contributed 53% of our total net revenues during the quarter, compared to 47% in 1Q14 and 56% in 4Q14.
• Our customers that are integrated device manufacturers, or IDMs, accounted for 33% of our total net revenues during the quarter, compared to 36% in 1Q14 and 31% in 4Q14.

EMS Basis

• Our five largest customers together accounted for approximately 77% of our total net revenues in 1Q15, compared to 73% in 1Q14 and 78% in 4Q14.  One customer accounted for more than 10% of our total net revenues in 1Q15.
• Our top 10 customers contributed 89% of our total net revenues during the quarter, compared to 86% in 1Q14 and 88% in 4Q14.

OUTLOOK

Based on our current business outlook and exchange rate assumptions, management projects overall performance for the second quarter of 2015 to be as follows:

• IC ATM production capacity will be up 2%; blended IC ATM utilization should be flat to up 2%;
• IC ATM gross margin should stay relatively unchanged from the previous quarter;
• EMS business should reach a level between the results of the last two quarters;
• EMS gross margin might be slightly lower than the normalized margin in the previous quarter due to customer supply chain issues.

About ASE, Inc.

ASE, Inc. is the world's largest independent provider of packaging services and testing services, including front-end engineering testing, wafer probing and final testing services.  With advanced technological capabilities and a global presence spanning Taiwan, China, Korea, Japan, Singapore, Malaysia and the United States, ASE, Inc. has established a reputation for reliable, high quality products and services.  For more information, please 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 United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended, including statements regarding our future results of operations and business prospects.  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 or electronic industry; changes in our regulatory environment, including our ability to comply with new or stricter environmental regulations and to resolve environmental liabilities; demand for the outsourced semiconductor packaging, testing and electronic manufacturing services we offer and for such outsourced services generally; the highly competitive semiconductor or manufacturing industry we are involved in; our ability to introduce new technologies in order to remain competitive; international business activities; our business strategy; our future expansion plans and capital expenditures; the strained relationship between the Republic of China and the People's Republic of China; general economic and political conditions; the recent global economic crisis; possible disruptions in commercial activities caused by natural or human-induced disasters; 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 2014 Annual Report on Form 20-F filed on March 18, 2015.

IR Contact:

Michelle Jao, Manager
[email protected]
Tel: +1.510.687.2481
http://www.aseglobal.com

Grace Teng, Manager
[email protected]
Tel: +886.2.6636.5678

Supplemental Financial Information

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/advanced-semiconductor-engineering-inc-reports-unaudited-consolidated-financial-results-for-the-first-quarter-of-2015-300074926.html

SOURCE Advanced Semiconductor Engineering, Inc.

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