UMC Reports 2003 Second Quarter Results
Wednesday July 30, 1:46 am ET
Results Top Guidance; Sequential Operating Income Increased 255%
TAIPEI, Taiwan--(BUSINESS WIRE)--July 30, 2003-- Second Quarter 2003 Highlights(1):
Quarter-over-quarter revenue increased by 21.3 % to NT$21.71 billion (US$627 million)
Quarter-over-quarter operating income increased by 255.4% to NT$2.48 billion (US$72 million)
Net income of NT$2.69 billion (US$78 million)
Wafer shipments increased 23.3% to 550 thousand 8-inch equivalent wafers; blended average selling price declined by 1%
EPS of NT$0.18, or EPADS of US$0.026
United Microelectronics Corporation (NYSE: UMC - News; TSE: 2303 - News; "UMC" or "the Company"), a leading global semiconductor foundry, today announced its unconsolidated operating results for the second quarter of 2003.
"Due to new customer wins in the PC segment, we are pleased to report a more than 20% growth in revenue and a 255% increase in operating income compared with the previous quarter. We also exited the second quarter with significant momentum in our technology development efforts, establishing UMC as the leader in the delivery of next-generation 90-nm technology, and making further progress in high-yield production for customer products using 0.13-micron technology on 300-mm wafers," UMC CEO Dr. Jackson Hu said.
"In the third quarter we expect demand to slow, particularly for handset components, due to high inventory levels caused by the recent SARS outbreak. The slowdown should be short and we are expecting demand to quickly return to normal levels. In the second half of the year we are expecting demand for our 0.13-micron technology to improve and we also expect the economies of scale associated with our 300mm production facilities to result in reduced costs." Jackson continued.
"By continuously enhancing our customer-oriented services, and pioneering manufacturing technologies, we will strengthen our position as one of the world's most competitive semiconductor technology companies."
Dr. Jackson Hu was appointed as UMC's CEO on July 15, 2003. Dr. Hu joined UMC at the beginning of 2003 as the president of the New Business Development Group and the head of the Design Support division. He is a 25-year veteran of the high-tech industry. Prior to joining UMC, Dr. Hu was the president and CEO of SiRF Technology, a fabless integrated circuit and intellectual property company serving the communications industry. Other executive management experience includes serving as senior vice president and general manager of S3, where he helped grow the company into an industry leader with a 35 percent market share of the graphics processor sector. Hu's other significant accomplishments include co-founding two fabless design companies - IC Ensemble and Western Digital - which were later acquired by other leading technology companies.
Priorities and Goals of UMC as Outlined by Dr. Jackson Hu, CEO
1. UMC will accelerate its investment in 12-inch (300mm) manufacturing facilities. Before the end of next year, UMC expects to expand capacity at its Taiwan based Fab12A to 20,000 wafers per month, and capacity at its Singapore based affiliate, UMCi, to 10,000 wafers per month.
2. In order to ensure continued leadership in 12-inch wafer manufacturing, UMC will further strengthen its research and development in 90-nanometer and below process technologies, and ensure the availability of a complete catalog of relevant IP (silicon intellectual property) for integration in customers' leading-edge designs.
3. UMC will continue to operate as a pure semiconductor foundry, while enhancing partnerships with customers. In order to ensure a diversified and sufficient customer base, UMC may choose to make investments in certain semiconductor design companies. At the same time, UMC will take all possible measures to avoid any conflict of interest with its existing customers.
4. UMC plans to carefully review its investment portfolio, and divest itself of non-core investments. With regard to its investments in listed semiconductor companies, UMC plans to gradually divest from these in a manner that will not negatively impact their share price or business relationship with UMC. Capital gains earned from these divestments will be used to enhance profitability. UMC strongly believes that its relationships with customers and partners should be based on UMC's technical proficiency and outstanding foundry services and not based on investment or shareholding status.
(1) Unless otherwise stated, all financial figures discussed in this
announcement are prepared in accordance with ROC GAAP, which
differ in some material respects from generally accepted
accounting principles in the United States. They are unaudited,
unconsolidated, and represent comparisons among the three-month
period ending June 30, 2003, the three-month period ending March
31, 2003, and the equivalent three-month period that ended June
30, 2002. For all 2Q03 results, New Taiwan Dollar (NT$) amounts
have been converted into U.S. dollars at the exchange rate of
NT$34.61 to one U.S. dollar.
Summary of Operating Results
-0-
QoQ YoY
(Figures in million NT$) 2Q03 1Q03 % change 2Q02 % change
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Revenue 21,706 17,898 21.3 18,580 16.8
Gross Profit 4,983 2,740 81.9 4,205 18.5
Operating Expenses (2,499)(2,041) 22.4 (3,196) (21.8)
Operating Profit 2,484 699 255.4 1,009 146.2
Non-op Income and Exp. 610 (295) -- 3,441 (82.3)
Net Income 2,687 403 566.7 4,446 (39.6)
EPS (NT$ per share) 0.18 0.03 0.30
(US$ per ADR) 0.026 0.004 0.043
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Revenue for 2Q03 was NT$21.71 billion, representing a 16.8% YoY increase from NT$18.58 billion in 2Q02, and a 21.3% QoQ increase from NT$17.90 billion in 1Q03. Operating profit for the quarter was NT$2.48 billion, a 255.4% increase from NT$699 million in 1Q03. The increase in operating profit is primarily attributable to higher gross profit and revenue. Net income for 2Q03 was NT$2.69 billion, an increase of 566.7% compared to NT$403 million in 1Q03.
Earnings per ordinary share (EPS) for the quarter were NT$0.18. Earnings per ADS (EPADS) were US$0.026. This compares with earnings per ordinary share and ADS in 2Q02 of NT$0.30 and US$0.043 respectively. One ADS represents five Taiwan listed ordinary shares. Total weighted average outstanding shares in 2Q03 were 14,639,462,467 shares, compared with 14,726,502,640 shares in 1Q03 and 14,751,351,270 shares in 2Q02. Diluted total weighted average outstanding shares, which include the dilution effects of future ECB conversion and issued stock options, were 14,837,109,684 shares in 2Q03, compared with 14,763,951,887 shares in 1Q03 and 14,918,805,462 shares in 2Q02.
Detailed Financials Section
Depreciation and amortization expenses were NT$9.37 billion in 2Q03, compared to NT$9.16 billion in 1Q03. Depreciation within COGS increased by 8.2% to NT$8.11 billion. Total operating expenses increased by NT$458 million. Sales and marketing expenses increased by NT$191 million to NT$457 million, mainly due to increased expenditure on IP acquired in anticipation of future customer demand. R&D spending increased 16.8% QoQ to NT$1.48 billion mainly due to increased spending associated with our 90-nanometer generation process technology.
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COGS & Expenses
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(Amount: NT$ million) 2Q03 1Q03 QoQ 2Q02 YoY
%change %change
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Revenue 21,706 17,898 21.3 18,580 16.8
COGS (16,723) (15,158) 10.3 (14,375) 16.3
Depreciation (8,114) (7,501) 8.2 (7,090) 14.4
Other Mfg. Costs (8,609) (7,657) 12.4 (7,285) 18.2
Gross Profit 4,983 2,740 81.9 4,205 18.5
Gross Margin (%) 23.0% 15.3% 22.6%
Total Op. Exp. (2,499) (2,041) 22.4 (3,196) (21.8)
G&A (565) (510) 10.8 (1,049) (46.1)
Selling and Mkting (457) (266) 71.8 (99) 361.6
R&D (1,477) (1,265) 16.8 (2,048) (27.9)
Operating Profit 2,484 699 255.4 1,009 146.2
Operating Margin (%) 11.5% 3.9% 5.4%
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Net non-operating income for 2Q03 was NT$610 million, of which NT$179 million was attributable to investment income. Gains on disposal of investments were NT$1.06 billion, and was mainly contributed from the liquidation of ITEX (Integrated Telecom Express, Inc.), an integrated circuit and software solutions provider to the broadband access commu-nications equipment industry. Other non-operating expenses consist of NT$230 million worth of losses associated with wafer scraps, and NT$366 million worth of inventory losses incurred due to customers withdrawing from specific markets and halting WIP (working in process).
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Non-operating Income (Expenses)
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(Amount: NT$ million) 2Q03 1Q03 2Q02
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Net Non-Operating Income (Loss) 610 (295) 3,441
Net Interest Income (Expense) (45) (20) (20)
Net Investment Income (Loss) 179 (124)(1,428)
Gain on Disposal of Investment 1,063 113 5,377
Exchange Gain (Loss) 59 69 (126)
Others (646)(333) (362)
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Net cash inflow was NT$21.66 billion in 2Q03. Cash outflow from investing activities primarily consists of equipment expenditures totaling NT$2.59 billion. Cash flow from financing activities primarily consists of NT$15 billion in funds raised from new unsecured domestic bonds issued during the period, and the retirement of NT$5.2 billion worth of long-term debt. Over the next 12 months, we expect to decrease our long-term loans and bond obligations by NT$15.3 billion. |
