Advanced Semiconductor Engineering, Inc. Reports Unaudited Consolidated Financial Results for the Fourth Quarter and Full Year of 2017

TAIPEI, Taiwan, Feb. 1, 2018 /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 revenues[1] of NT$83,986 million for the fourth quarter of 2017 (4Q17), up by 9% year-over-year and up by 14% sequentially.  Net income attributable to shareholders of the parent for the quarter totaled NT$6,246 million, down from a net income attributable to shareholders of the parent of NT$7,957 million in 4Q16 and down from a net income attributable to shareholders of the parent of NT$6,336 million in 3Q17.  Basic earnings per share for the quarter were NT$0.74 (or US$0.123 per ADS), compared to basic earnings per share of NT$1.04 for 4Q16 and NT$0.76 for 3Q17. Diluted earnings per share for the quarter were NT$0.71 (or US$0.118 per ADS), compared to diluted earnings per share of NT$0.88 for 4Q16 and NT$0.69 for 3Q17.

For the full year of 2017, the Company reported net revenues of NT$290,441 million and net income attributable to shareholders of the parent of NT$22,988 million.  Basic earnings per share for the full year of 2017 were NT$2.82 (or US$0.463 per ADS).  Diluted earnings per share for the full year of 2017 were NT$2.62 (or US$0.430 per ADS).

RESULTS OF OPERATIONS

4Q17 Results Highlights – Consolidated

  • Net revenue contribution from packaging operations, testing operations, EMS operations, substrates sold to third parties and others, each represented approximately 39%, 8%, 52%, 1% and 0%, respectively, of total net revenues for the quarter.
  • Cost of revenue was NT$69,193 million for the quarter, up from NT$60,030 million in 3Q17.
    • Raw material cost totaled NT$44,775 million for the quarter, representing 53% of total net revenues.
    • Labor cost totaled NT$9,140 million for the quarter, representing 11% of total net revenues.
    • Depreciation, amortization and rental expenses totaled NT$7,020 million for the quarter.
  • Gross margin decreased 1.1 percentage points to 17.6% in 4Q17 from 18.7% in 3Q17.
  • Operating margin was 9.2% in 4Q17 compared to 9.6% in 3Q17.
  • In terms of non-operating items:
    • Net interest expense was NT$318 million.
    • Net foreign exchange gain of NT$780 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$216 million.
    • Net gain on equity-method investments was NT$29 million, including NT$134 million of the share of profit from our investment in Siliconware Precision Industries Co., Ltd.
    • Other net non-operating expenses of NT$102 million were primarily related to miscellaneous expenses. Total non-operating income for the quarter was NT$173 million.
  • Income before tax was NT$7,879 million for 4Q17, compared to NT$7,815 million in 3Q17. We recorded income tax expenses of NT$1,085 million for the quarter, compared to NT$1,083 million in 3Q17.
  • In 4Q17, net income attributable to shareholders of the parent was NT$6,246 million, compared to net income attributable to shareholders of the parent of NT$7,957 million in 4Q16 and net income attributable to shareholders of the parent of NT$6,336 million in 3Q17.
  • Our total number of shares outstanding at the end of the quarter was 8,737,306,664, including treasury stock owned by our subsidiaries. Our 4Q17 basic earnings per share of NT$0.74 (or US$0.123 per ADS) were based on 8,467,256,132 weighted average number of shares outstanding in 4Q17. Our 4Q17 diluted earnings per share of NT$0.71 (or US$0.118 per ADS) were based on 8,632,468,652 weighted average number of shares outstanding in 4Q17.

4Q17 Results Highlights – IC ATM[2]

  • Cost of revenues was NT$30,932 million for the quarter, down by 1.4% sequentially.
    • Raw material cost totaled NT$9,392 million for the quarter, representing 23% of total net revenues.
    • Labor cost totaled NT$7,769 million for the quarter, representing 19% of total net revenues.
    • Depreciation, amortization and rental expenses totaled NT$6,487 million for the quarter.
  • Gross margin increased 0.9 percentage points to 26.0% in 4Q17 from 25.1% in 3Q17.
  • Operating margin was 14.4% in 4Q17 compared to 13.7% in 3Q17.

4Q17 Results Highlights – EMS

  • Cost of revenues for the quarter was NT$39,287 million, up by 32.3% sequentially.
    • Raw material cost totaled NT$35,451 million for the quarter, representing 82% of total net revenues.
    • Labor cost totaled NT$1,336 million for the quarter, representing 3% of total net revenues.
    • Depreciation, amortization and rental expenses totaled NT$433 million for the quarter.
  • Gross margin decreased to 9.2% in 4Q17 from 10.3% in 3Q17.
  • Operating margin were both 4.3% in 4Q17 and 3Q17.

2017 Full-Year Results Highlights – Consolidated

  • Net revenues for the full year of 2017 amounted to NT$290,441 million, up by 6% from 2016. The revenue contribution from packaging operations, testing operations, EMS operations, substrates sold to third parties and others represented approximately 44%, 9%, 46%, 1% and 0%, respectively, of total net revenues for the year.
  • Cost of revenue for the year of 2017 was NT$237,709 million, compared with NT$221,697 million in 2016.
    • Raw material cost totaled NT$142,934 million for the year, representing 49% of total net revenues.
    • Labor cost totaled NT$35,978 million for the year, representing 12% of total net revenues.
    • Depreciation, amortization and rental expenses totaled NT$27,703 million for the year.
  • Gross margin decreased 1.1 percentage points to 18.2% in 2017 from 19.3% in 2016.
  • Operating margin decreased to 8.7% in 2017 from 9.7% in 2016.
  • Total non-operating income for the year was NT$5,711 million, compared to total non-operating income of NT$1,324 million for 2016.
  • Income before tax was NT$30,929 million for 2017. We recognized an income tax expense of NT$6,261 million for the year.
  • In 2017, net income attributable to shareholders of the parent amounted to NT$22,988 million, compared with a net income attributable to shareholders of the parent of NT$21,643 million in 2016.
  • Our total number of shares outstanding at the end of the year was 8,737,306,664, including treasury stock owned by our subsidiaries. Our 2017 basic earnings per share of NT$2.82 (or US$0.463 per ADS) were based on 8,160,887,369 weighted average numbers of shares outstanding in 2017. Our 2017 diluted earnings per share of NT$2.62 (or US$0.430 per ADS) were based on 8,369,240,703 weighted average number of shares outstanding in 2017.

2017 Full-Year Results Highlights – IC ATM

  • Cost of revenues for the full year of 2017 was NT$121,873 million, compared with NT$120,514 million in 2016.
    • Raw material cost totaled NT$36,953 million for the year, representing 23% of total net revenues.
    • Labor cost totaled NT$31,153 million for the year, representing 19% of total net revenues.
    • Depreciation, amortization and rental expenses totaled NT$25,788 million for the year.
  • Gross margin decreased to 24.3% in 2017 from 24.9% in 2016.
  • Operating margin decreased to 12.3% in 2017 from 12.9% in 2016.

2017 Full-Year Results Highlights – EMS

  • Cost of revenues was NT$120,354 million, up by 15.5% from 2016.
    • Raw material cost totaled NT$106,221 million for the year, representing 79% of total net revenues.
    • Labor cost totaled NT$4,756 million for the year, representing 4% of total net revenues.
    • Depreciation, amortization and rental expenses totaled NT$1,808 million for the year.
  • Gross margin increased to 10.2% in 2017 from 9.8% in 2016.
  • Operating margin increased to 4.2% in 2017 from 3.5% in 2016.

LIQUIDITY AND CAPITAL RESOURCES

  • Capital expenditures in 4Q17 totaled US$142 million, of which US$103 million were used in packaging operations, US$28 million in testing operations, US$7 million in EMS operations, US$3 million in interconnect materials operations and US$1 million in others.
  • For the full year of 2017, we spent US$639 million for capital expenditures, including US$468 million in packaging operations, US$134 million in testing operations, US$26 million in EMS operations, US$10 million in interconnect materials operations and US$1 million in others.
  • As of December 31, 2017, total unused credit lines amounted to NT$174,235 million.
  • Current ratio was 1.37 and net debt to equity ratio was 0.12 as of December 31, 2017.
  • Total number of employees was 68,753 as of December 31, 2017, compared to 68,231 as of September 30, 2017.

BUSINESS REVIEW

Packaging Operations[3]

  • Gross margin for our packaging operations during the quarter was 23.9%, up by 1.6 percentage points from 3Q17.
  • Capital expenditures for our packaging operations amounted to US$103 million for the quarter, of which US$46 million were used to purchase wafer bumping and flip chip packaging equipment, and US$57 million were used to purchase common equipment, SiP equipment and wirebond packaging equipment.

Testing Operations

  • Depreciation, amortization and rental expense associated with our testing operations amounted to NT$1,645 million during the quarter, down from NT$1,659 million in 3Q17.
  • In 4Q17, gross margin for our testing operations was 36.6%, down by 1.2 percentage points from 3Q17.
  • Capital expenditures for our testing operations amounted to US$28 million during the quarter.

EMS Operations

  • In 4Q17, gross margin for our EMS operations was 9.2%, down by 1.1 percentage points from 3Q17.
  • Capital expenditures for our EMS operations amounted to US$7 million during the quarter.

Substrate Operations

  • PBGA substrate manufactured by ASE amounted to NT$2,127 million for the quarter, down by NT$51 million, or by 2.4% from 3Q17. Of the total output of NT$2,127 million, NT$922 million was from sales to external customers.
  • Gross margin for substrate operations was 12.2% for the quarter, down by 0.9 percentage points from 3Q17.
  • In 4Q17, our internal substrate manufacturing operations supplied 25% (by value) of our total substrate requirements.

Customers

IC ATM consolidated Basis

  • Our five largest customers together accounted for approximately 34% of our total net revenues in 4Q17, compared to 36% in 3Q17. No customer accounted for more than 10% of our total net revenues in 4Q17.
  • Our top 10 customers contributed 49% of our total net revenues for the quarter, compared to 50% in 3Q17.
  • Our customers that are integrated device manufacturers or IDMs accounted for 45% of our total net revenues for the quarter, compared to 44% in 3Q17.

EMS Basis

  • Our five largest customers together accounted for approximately 82% of our total net revenues in 4Q17, compared to 80% in 3Q17. One customer accounted for more than 10% of our total net revenues in 4Q17.
  • Our top 10 customers contributed 90% of our total net revenues during the quarter, compared to 89% in 3Q17.

OUTLOOK

Based on our current business outlook and exchange rate assumptions, management projects overall performance for the first quarter of 2018 to be as follows:

  • In USD terms, IC-ATM 1Q18 business should be slightly ahead of 1Q17 levels;
  • Excluding foreign exchange impacts, IC-ATM 1Q18 gross margin should also slightly improve versus 1Q17 levels;
  • EMS 1Q18 business should be slightly below 3Q17 levels;
  • EMS 1Q18 gross margin should be slightly above 4Q17 levels.

About ASE, Inc.

ASE, Inc. is among the world's leading companies in semiconeuctor packaging and testing, 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.  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 uncertainties as to whether we can complete the share exchange contemplated by a joint share exchange agreement between Siliconware Precision Industries Co., Ltd. and us; 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 2016 Annual Report on Form 20-F filed on April 21, 2017.

 


Supplemental Financial Information


IC ATM Consolidated Operations

Amounts in NT$ Millions

4Q/17

3Q/17

4Q/16

Net Revenues

41,794

41,854

43,463

Revenues by Application




Communication

48%

49%

53%

Computer

11%

10%

10%

Automotive, Consumer & Others

41%

41%

37%


Packaging Operations

Amounts in NT$ Millions

4Q/17

3Q/17

4Q/16

Net Revenues

34,226

33,897

35,242

Revenues by Packaging Type




Bumping, Flip Chip, WLP & SiP

34%

32%

32%

IC Wirebonding

55%

57%

57%

Discrete and Others

11%

11%

11%

Capacity




CapEx (US$ Millions)*

103

84

87

Number of Wirebonders

16,076

16,083

15,897


Testing Operations

Amounts in NT$ Millions

4Q/17

3Q/17

4Q/16

Net Revenues

6,556

6,889

7,303

Revenues by Testing Type




Final test

78%

79%

77%

Wafer sort

19%

18%

20%

Engineering test

3%

3%

3%

Capacity




CapEx (US$ Millions)*

28

29

30

Number of Testers

3,760

3,739

3,739


EMS Operations

Amounts in NT$ Millions

4Q/17

3Q/17

4Q/16

Net Revenues

43,289

33,100

34,634

Revenues by End Application




Communication

42%

45%

53%

Computer

14%

14%

14%

Consumer

32%

26%

20%

Industrial

6%

8%

7%

Automotive

5%

6%

5%

Others

1%

1%

1%

Capacity




CapEx (US$ Millions)*

7

13

6





* Capital expenditure excludes building construction costs.

 




 

 

 

Advanced Semiconductor Engineering, Inc.

Summary of Consolidated Statement of Comprehensive Income Data

 (In NT$ millions, except per share data)

(Unaudited)



For the three months ended


For the year ended


Dec. 31

2017


Sep. 30

2017


Dec. 31

2016


Dec. 31

2017


Dec. 31

2016

Net revenues:










Packaging

33,045


32,880


33,620


126,225


125,283

Testing

6,553


6,889


7,303


26,157


27,032

Direct Material

922


948


806


3,690


3,262

EMS

43,285


33,098


34,627


133,948


115,395

Others

181


63


772


421


3,912

Total net revenues

83,986


73,878


77,128


290,441


274,884











Cost of revenues[4]

(69,193)


(60,030)


(61,754)


(237,709)


(221,697)

Gross profit

14,793


13,848


15,374


52,732


53,187











Operating expenses:










Research and development

(3,046)


(2,986)


(3,091)


(11,747)


(11,391)

Selling, general and administrative[4]

(4,041)


(3,794)


(4,153)


(15,767)


(15,136)

Total operating expenses

(7,087)


(6,780)


(7,244)


(27,514)


(26,527)

Operating income

7,706


7,068


8,130


25,218


26,660











Net non-operating (expenses) income:










Interest expense - net

(318)


(350)


(451)


(1,468)


(1,987)

Foreign exchange gain (loss)

780


33


(308)


3,503


1,928

Gain (loss) on valuation of financial assets and liabilities

 

(216)


 

598


 

1,940


 

(2,782)


 

440

Gain (loss) on equity-method investments[4]

29


323


422


434


1,520

Others

(102)


143


(73)


6,024


(577)

Total non-operating income (expenses)

173


747


1,530


5,711


1,324

Income before tax

7,879


7,815


9,660


30,929


27,984











Income tax expense

(1,085)


(1,083)


(1,274)


(6,261)


(5,091)

Income from continuing operations and              
  
before noncontrolling interest

6,794


6,732


8,386


24,668


22,893

Noncontrolling interest

(548)


(396)


(429)


(1,680)


(1,250)











Net income attributable to
  
shareholders of the parent

 

6,246


 

6,336


 

7,957


 

22,988


 

21,643











Per share data:










Earnings (losses) per share










– Basic

NT$0.74     


NT$0.76     


NT$1.04     


NT$2.82     


NT$2.82     

– Diluted

NT$0.71


NT$0.69


NT$0.88


NT$2.62


NT$2.37











Earnings (losses) per equivalent ADS










– Basic

US$0.123


US$0.125


US$0.164


US$0.463


US$0.438

– Diluted

US$0.118


US$0.115


US$0.139


US$0.430


US$0.367











Number of weighted average shares used in                     
  diluted EPS calculation (in thousands)

8,632,469


8,624,804


8,255,657


8,369,241


8,284,129











Exchange rate (NT$ per US$1)

30.08


30.22


31.62


30.42


32.22











 

 

Advanced Semiconductor Engineering, Inc.

Summary of Consolidated Statement of Comprehensive Income Data – IC ATM

 (In NT$ millions, except per share data)

(Unaudited)



For the three months ended


For the year ended


Dec. 31

2017


Sep. 30

2017


Dec. 31

2016


Dec. 31

2017


Dec. 31

2016

Net revenues:










Packaging

34,226


33,897


35,242


130,902


129,851

Testing

6,556


6,889


7,303


26,160


27,032

Direct Material

989


1,048


898


3,932


3,550

Others

23


20


20


87


83

Total net revenues

41,794


41,854


43,463


161,081


160,516











Cost of revenues4

(30,932)


(31,368)


(31,818)


(121,873)


(120,514)

Gross profit

10,862


10,486


11,645


39,208


40,002











Operating expenses:










Research and development

(2,125)


(2,123)


(2,270)


(8,361)


(8,343)

Selling, general and administrative4

(2,736)


(2,639)


(3,002)


(11,037)


(10,959)

Total operating expenses

(4,861)


(4,762)


(5,272)


(19,398)


(19,302)

Operating income

6,001


5,724


6,373


19,810


20,700











Net non-operating (expenses) income:










Interest expense - net

(394)


(416)


(499)


(1,751)


(2,204)

Foreign exchange gain (loss)

822


129


(432)


3,657


1,600

Gain (loss) on valuation of financial assets and liabilities

 

(577)


 

365


 

1,880


 

(3,762)


 

460

Gain (loss) on equity-method investments4

1,245


1,249


1,611


8,505


5,188

Others

2


154


105


514


(320)

Total non-operating income (expenses)

1,098


1,481


2,665


7,163


4,724

Income before tax

7,099


7,205


9,038


26,973


25,424











Income tax expense

(776)


(784)


(967)


(3,671)


(3,481)

Income from continuing operations and
  before noncontrolling interest

6,323


6,421


8,071


23,302


21,943

Noncontrolling interest

(77)


(85)


(114)


(314)


(300)











Net income attributable to

shareholders of the parent

 

6,246


 

6,336


 

7,957


'

22,988


 

21,643











 

 

 


 

 

 

Advanced Semiconductor Engineering, Inc.

Summary of Consolidated Statement of Comprehensive Income Data – EMS

 (In NT$ millions, except per share data)

(Unaudited)



For the three months ended


For the year ended


Dec. 31

2017


Sep. 30

2017


Dec. 31

2016


Dec. 31

2017


Dec. 31

2016

Net revenues:










Total net revenues

43,289


33,100


34,634


134,000


115,498











Cost of revenues

(39,287)


(29,691)


(31,038)


(120,354)


(104,211)

Gross profit

4,002


3,409


3,596


13,646


11,287











Operating expenses:










Research and development

(936)


(877)


(840)


(3,452)


(3,133)

Selling, general and administrative

(1,208)


(1,101)


(1,099)


(4,536)


(4,068)

Total operating expenses

(2,144)


(1,978)


(1,939)


(7,988)


(7,201)

Operating income

1,858


1,431


1,657


5,658


4,086











Net non-operating (expenses) income:










Total non-operating income

454


235


114


1,272


606

Income before tax

2,312


1,666


1,771


6,930


4,692











Income tax expense

(324)


(293)


(509)


(1,204)


(1,044)

Income from continuing operations and
  
before noncontrolling interest

1,988


1,373


1,262


5,726


3,648

Noncontrolling interest

(500)


(338)


(305)


(1,440)


(906)











Net income attributable to
  s
hareholders of the parent

 

1,488


 

1,035


 

957


 

4,286


 

2,742

 


 

 

Advanced Semiconductor Engineering, Inc.

Summary of Consolidated Balance Sheet Data

(In NT$ millions)

(Unaudited)



As of Dec. 31, 2017


As of Sep. 30, 2017





Current assets:




Cash and cash equivalents

46,078


38,975

Financial assets – current

5,785


3,989

Notes and accounts receivable

55,201


51,830

Inventories

34,080


37,266

Others

3,794


7,852

Total current assets

144,938


139,912





Financial assets – non current & Investments – equity method

50,983


51,107

Property plant and equipment

135,169


136,982

Intangible assets

11,341


11,830

Prepaid lease payments

8,851


7,810

Others

12,576


12,358

Total assets

363,858


359,999





Current liabilities:




Short-term borrowings

17,962


19,638

Current portion of bonds payable

6,161


6,137

Current portion of long-term borrowings & capital lease obligations

 

8,280


 

6,882

Notes and accounts payable

41,672


41,077

Others

31,546


28,665

Total current liabilities

105,621


102,399





Bonds payable

16,982


16,981

Long-term borrowings & capital lease obligations

27,520


32,908

Other liabilities

9,734


9,755

Total liabilities

159,857


162,043

Shareholders of the parent

190,642


185,160





Noncontrolling interest

13,359


12,796

Total liabilities & shareholders' equity

363,858


359,999









Current Ratio

1.37


1.37

Net Debt to Equity

0.12


0.20





 

 

 

[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.

[2]

ATM stands for Semiconductor Assembly, Testing and Material.

[3]

IC packaging services include module assembly services.

[4]

As of September 30, 2017, we have completed the identification of the difference between the cost of the investment and our share of the net fair value of subsidiary and associates' identifiable assets and liabilities. Accordingly, we retrospectively adjusted the provisional amounts recognized at the acquisition dates in May, July and November 2016, respectively.

IR Contact:

Iris Wu, Manager

Grace Teng, Manager

irissh_wu@aseglobal.com

grace_teng@aseglobal.com  

Tel: +886.2.6636.5678

Tel: +886.2.6636.5678

http://www.aseglobal.com


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SOURCE Advanced Semiconductor Engineering, Inc.

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