Advanced Semiconductor Engineering, Inc. Reports Unaudited Consolidated Financial...

Advanced Semiconductor Engineering, Inc. Reports Unaudited Consolidated
Financial Results for the Second-Quarter of 2008

TAIPEI, Taiwan, Aug. 5 /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 net revenues (Note 1) of NT$25,610
million for the second quarter of 2008 (2Q08), up 10% year-over-year and up 4%
sequentially. Net income for the quarter totaled NT$2,412 million, down from
NT$2,575 million in 2Q07 and up from NT$2,337 million in 1Q08. Diluted
earnings per share for the quarter was NT$0.44 (or US$0.072 per ADS), compared
to NT$0.48 for 2Q07 and NT$0.43 for 1Q08.
Note 1:
All financial information presented in this press release is unaudited,
consolidated and prepared in accordance with accounting principles
generally accepted 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 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 for any future period.
RESULTS OF OPERATIONS

2Q08 Results Highlights

-- Net revenue contribution from IC packaging operations (including module
assembly), testing operations, and substrates sold to third parties was
NT$20,033 million, NT$5,102 million and NT$475 million, respectively,
and each represented approximately 78%, 20% and 2% respectively, of
total net revenues for the quarter.
-- Cost of revenues was NT$19,098 million, up 13% year-over-year and up 3%
sequentially.
-- As a percentage of total net revenues, cost of revenues was 75% in
2Q08, up from 73% in 2Q07 and relatively unchanged compared to 1Q08.
-- Raw material cost totaled NT$7,695 million during the quarter,
representing 30% of total net revenues, compared with NT$7,301
million and 30% of net revenues in the previous quarter.
-- Depreciation, amortization and rental expenses totaled NT$3,972
million during the quarter, down 4% year-over-year and up 1%
sequentially.

-- Total operating expenses during 2Q08 were NT$2,928 million, including
NT$980 million in R&D and NT$1,948 million in SG&A. Compared with
operating expenses of NT$2,836 million in 1Q08, the sequential increase
was primarily attributable to bonuses paid to employees and
compensation to directors and supervisors of one of our subsidiaries in
2Q08. Total operating expenses as a percentage of net revenues for the
current quarter were 11%, relatively unchanged compared with 2Q07 and
1Q08.
-- Operating profit for the quarter totaled NT$3,584 million, up from
NT$3,352 million in the previous quarter. Operating margin was 14% in
2Q08 and remained unchanged compared with the previous quarter.
-- In terms of non-operating items:

-- Net interest expense was NT$268 million, down from NT$275 million a
quarter ago.
-- Net exchange gain of NT$294 million was primarily attributable to
exchange gains from the appreciation of the Renminbi against the
U.S.
dollar.
-- Gain on long-term investment of NT$28 million was primarily
attributable to investment income of NT$32 million from USI and
investment loss of NT$3 million from Hung Ching Construction.
-- Other non-operating expenses of NT$76 million were primarily related
to loss from inventory provision adjustment and other miscellaneous
expenses. Together with other non-operating expenses, total non-
operating expenses for the quarter were NT$22 million, compared to
NT$292 million for 2Q07 and NT$69 million for 1Q08.

-- Income before tax was NT$3,562 million for 2Q08, compared with NT$3,283
million in the previous quarter. We recorded an income tax expense of
NT$779 million during the quarter, compared with an income tax expense
of NT$411 million in 1Q08. The sequential increase of the income tax
expense was primarily due to the undistributed earnings tax of one of
our subsidiaries in 2Q08. Minority interest was NT$371 million for
2Q08, down from NT$535 million in the previous quarter, primarily due
to the completion of the ASE Test privatization transaction at the end
of May.
-- In 2Q08, net income was NT$2,412 million, compared to net income of
NT$2,575 million for 2Q07 and NT$2,337 million for 1Q08.
-- Our total number of shares outstanding at the end of the quarter was
5,476,949,209, excluding treasury stock. Our diluted EPS for 2Q08 was
NT$0.44, or US$0.072 per ADS, based on 5,494,051,808 weighted average
number of shares outstanding in 2Q08.

LIQUIDITY AND CAPITAL RESOURCES
-- As of June 30, 2008, our cash and other financial assets totaled
NT$32,648 million, compared to NT$29,127 million on March 31, 2008.
-- Capital expenditures in 2Q08 totaled US$130 million, of which US$71
million was used for IC packaging, US$56 million was used for testing,
and US$3 million was used for interconnect materials.
-- As of June 30, 2008, we had total bank debts of NT$64,687 million,
compared to NT$38,794 million as of March 31, 2008. The increase in
our bank debt was mainly attributable to the financing of the ASE Test
privatization. Total bank debts consisted of NT$12,456 million of
revolving working capital loans, NT$6,162 million of the current
portion of long-term debts, NT$1,375 million of current portion of
bonds payable, NT$40,663 million of long-term debts and NT$4,031
million of long-term bonds payable. Total unused credit lines were
NT$69,692 million.
-- Current ratio as of June 30, 2008 was 1.24, compared to 1.57 as of
March 31, 2008. Net debt to equity ratio was 0.57 as of June 30, 2008.
-- Total number of employees was approximately 30,363 as of June 30, 2008.

Business Review
IC Packaging Services (Note 2)
-- Net revenues generated from our IC packaging operations were NT$20,033
million during the quarter, up by NT$2,004 million or 11% year-over-
year and up by NT$806 million or 4% sequentially. On a sequential
basis, the increase in packaging net revenue was primarily due to an
increase in sales volume.
-- Net revenues from advanced substrate and leadframe-based packaging
accounted for 84% of total IC packaging net revenues during the
quarter,
which equaled the previous quarter.
-- Gross margin for our IC packaging operations was 21%, down by 3% year-
over-year and unchanged sequentially.
-- Capital expenditures for our IC packaging operations amounted to US$71
million during the quarter, of which US$61 million was used for
wirebonding packaging capacity, and US$10 million was used for wafer
bumping and flip chip packaging equipment.
-- As of June 30, 2008, there were 8,426 wirebonders in operation. 358
wirebonders were added, of which 119 wirebonders were obtained from the
acquisition of ASE Weihai Inc. and 58 wirebonders were disposed of
during the quarter.
-- Net revenues from flip chip packages and wafer bumping services
accounted for 10% of total packaging net revenues, up by 1 percentage
point from the previous quarter.

Note 2:
IC packaging services include module assembly services.

Testing Services
-- Net revenues generated from our testing operations were NT$5,102
million, up by NT$377 million or 8% year-over-year and up by NT$207
million or 4% sequentially.
-- Final testing contributed 77% to total testing net revenues, and stay
unchanged versus previous quarter. Wafer sort contributed 20% to total
testing net revenues, up by 1 percentage points from the previous
quarter. Engineering testing contributed 3% to total testing net
revenues, down by 1 percentage point from the previous quarter.
-- Depreciation, amortization and rental expense associated with our
testing operations amounted to NT$1,475 million, down from NT$1,574
million in 2Q07 and up from NT$1,455 million in 1Q08.
-- In 2Q08, gross margin for our testing operations was 38%, up by 3
percentage points year-over-year and up by 1 percentage point
sequentially.
-- Capital spending on our testing operations amounted to US$56 million
during the quarter.
-- As of June 30, 2008, there were 1,622 testers in operations. 130
testers were added, of which 52 testers were obtained from the
acquisition of ASE Weihai Inc. and 63 testers were disposed of during
the quarter.

Substrate Operations
-- PBGA substrate manufactured by ASE amounted to NT$2,161 million for the
quarter, up by NT$114 million or 6% from a year-ago quarter, and up by
NT$93 million or 5% from the previous quarter. Of the total output of
NT$2,161 million, NT$475 million was from sales to external customers.
-- Gross margin for substrate operations was 15% during the quarter, down
by 6 percentage points from a year ago quarter and unchanged from the
previous quarter.
-- In 2Q08, the Company's internal substrate manufacturing operations
supplied 58% (by value) of our total substrate requirements.
-- As of June 30, 2008, the Company's PBGA capacity was at 52 million
units per month.

Customers
-- Our five largest customers together accounted for approximately 28% of
our total net revenues in 2Q08, compared to 27% in 2Q07 and in 1Q08.
No single customer accounted for more than 10% of our total net
revenues.
-- Our top 10 customers contributed 46% of our total net revenues during
the quarter, compared to 44% in 2Q07 and 1Q08.
-- Our customers that are integrated device manufacturers, or IDMs,
accounted for 40% of our total net revenues during the quarter,
compared to 39% in 2Q07 and 42% in 1Q08.

About ASE, Inc.
ASE, Inc. is the world's largest independent provider of IC packaging
services and, together with its subsidiary ASE Test Limited, 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 includes such leading
names as ATI Technologies Inc., CSR plc, Freescale Semiconductor, Inc.,
MediaTek Inc., NEC Corporation, NVIDIA Corporation, NXP Semiconductors,
Qualcomm Incorporated, RF Micro Devices Inc., 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 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. We were not involved in the preparation of these
projections. 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; international business
activities; our business strategy; our future expansion plans and capital
expenditures; the strained relationship between the ROC and the PRC; general
economic and political conditions; 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 2007 Annual Report
on Form 20-F filed on June 30, 2008, as amended.
-- Tables to Follow --

Supplemental Financial Information

Consolidated Operations

Amounts in NT$ Millions 2Q/08 1Q/08 2Q/07

Net Revenues 25,610 24,695 23,362
Revenues by End Application
Communication 45% 45% 46%
Computer 24% 25% 22%
Automotive and Consumers 31% 30% 32%
Others 0% 0% 0%

Revenues by Region
North America 50% 50% 48%
Europe 9% 11% 12%
Taiwan 21% 23% 23%
Japan 9% 8% 9%
Other Asia 11% 8% 8%

IC Packaging Services

Amounts in NT$ Millions 2Q/08 1Q/08 2Q/07

Net Revenues 20,033 19,227 18,029
Revenues by Packaging Type
Advanced substrate &
leadframe based 84% 84% 85%
Traditional leadframe based 4% 4% 5%
Module assembly 4% 5% 6%
Others 8% 7% 4%

Capacity
CapEx (US$ Millions)* 71 78 49
Number of Wirebonders 8,426 8,126 7,040

Testing Services

Amounts in NT$ Millions 2Q/08 1Q/08 2Q/07

Net Revenues 5,102 4,895 4,724
Revenues by Testing Type
Final test 77% 77% 76%
Wafer sort 20% 19% 20%
Engineering test 3% 4% 4%

Capacity
CapEx (US$ Millions)* 56 44 20
Number of Testers 1,622 1,555 1,385

* Capital expenditure amounts exclude building construction costs.

Advanced Semiconductor Engineering, Inc.
Summary of Consolidated Income Statements Data
(In NT$ millions, except per share data)
(Unaudited)

For the three months ended For the period ended

Jun. 30 Mar. 31 Jun. 30 Jun. 30 Jun. 30
2008 2008 2007 2008 2007
Net revenues:
IC Packaging 20,033 19,227 18,029 39,260 34,312
Testing 5,102 4,895 4,724 9,997 9,049
Others 475 573 609 1,048 1,094
Total net revenues 25,610 24,695 23,362 50,305 44,455

Cost of revenues 19,098 18,507 16,958 37,605 33,055
Gross profit 6,512 6,188 6,404 12,700 11,400

Operating expenses:
Research and
development 980 1,096 720 2,076 1,409
Selling, general and
administrative 1,948 1,740 1,795 3,688 3,332
Total operating
expenses 2,928 2,836 2,515 5,764 4,741
Operating income 3,584 3,352 3,889 6,936 6,659

Net non-operating
(income) expenses:
Interest expenses --
net 268 275 306 543 659
Foreign exchange gain (294) (301) (147) (595) (165)
Gain on long-term
investment (28) (104) (65) (133) (141)
Others 76 199 198 276 439
Total non-operating
expenses 22 69 292 91 792
Income before tax 3,562 3,283 3,597 6,845 5,867

Income tax expense 779 411 866 1,191 1,185
Income from continuing
operations and before
minor interest 2,783 2,872 2,731 5,654 4,682

Minority interest 371 535 156 906 446

Net income 2,412 2,337 2,575 4,748 4,236

Per share data:
Earnings (loss) per
share
--Basic NT$0.46 NT$0.44 NT$0.50 NT$0.90 NT$0.82

--Diluted NT$0.44 NT$0.43 NT$0.48 NT$0.86 NT$0.79

Earnings (loss) per
equivalent ADS
--Basic US$0.075 US$0.070 US$0.075 US$0.146 US$0.125

--Diluted US$0.072 US$0.067 US$0.073 US$0.138 US$0.120

Number of weighted
average shares used
in diluted EPS
calculation
(in thousands) 5,494,052 5,460,822 5,433,905 5,479,984 5,463,437

Exchange rate
(NT$ per US$1) 30.36 31.74 33.11 31.05 32.94

Advanced Semiconductor Engineering, Inc.
Summary of Consolidated Balance Sheet Data
(In NT$ millions)
(Unaudited)

As of Jun. 30, As of Mar. 31,
2008 2008

Current assets:
Cash and cash equivalents 23,305 16,589
Financial assets -- current 9,343 12,538
Notes and accounts receivable 17,633 16,994
Inventories 5,598 5,439
Others 3,232 4,312
Total current assets 59,111 55,872

Financial assets -- non current 4,568 4,818
Properties -- net 83,209 81,297
Others 17,432 9,118
Total assets 164,320 151,105

Current liabilities:
Short-term debts -- revolving credit 12,456 10,573
Short-term debts -- current portion of
long-term debts 6,162 6,060

Short-term debts -- current portion of
bonds payable 1,375 1,375
Notes and accounts payable 8,339 7,762
Others 19,492 9,785
Total current liabilities 47,824 35,555

Long-term debts 40,663 16,602
Long-term bonds payable 4,031 4,184
Other liabilities 2,808 2,949
Total liabilities 95,326 59,290

Minority interest 2,980 14,958

Shareholders' equity 66,014 76,857
Total liabilities & shareholders' equity 164,320 151,105

Current Ratio 1.24 1.57
Net Debt to Equity 0.57 0.11

Contact:

ASE, Inc.
Joseph Tung, CFO or Vice President
Freddie Liu, Vice President
Allen Kan, Manager
Tel: +886-2-8780-5489
Fax: +886-2-2757-6121
Email: ir@aseglobal.com
Website: http://www.aseglobal.com

US contact:

Clare Lin, Director
Tel: +1-408-986-6524
Email: clare.lin@aseus.com

SOURCE Advanced Semiconductor Engineering, Inc.

Joseph Tung, CFO and Vice President, or Freddie Liu, Vice President, or Allen
Kan, Manager, +886-2-8780-5489, or fax, +886-2-2757-6121, ir@aseglobal.com,
all of ASE, Inc.; or US contact, Clare Lin, Director, +1-408-986-6524,
clare.lin@aseus.com