Business Context and Reporting Period
This Form 6-K filing, dated June 17, 2010, contains the Notice and Agenda for the 2010 Annual Shareholders' Meeting of Advanced Semiconductor Engineering, Inc. (ASE), held on June 14, 2010. The filing includes the 2009 Business Report, audited financial statements for the year ended December 31, 2009, and proposals for earnings distribution and capital increases. ASE is a leading provider of semiconductor assembly and testing services, headquartered in Kaohsiung, Taiwan.
Key Financial Metrics (Year Ended Dec 31, 2009)
| Metric | 2009 (NT$) | 2008 (NT$) | Change |
|---|---|---|---|
| Net Revenues | 85,775,314,000 | 94,430,912,000 | -9.2% |
| Gross Profit | 18,146,184,000 | 21,769,474,000 | -16.6% |
| Net Income (Parent) | 6,744,546,000 | 6,160,052,000 | +9.5% |
| Basic EPS (After Tax) | NT$1.31 | NT$1.14 | +14.9% |
| Operating Cash Flow | 15,517,228,000 | 30,728,799,000 | -49.5% |
| Total Assets | 162,060,896,000 | 152,189,987,000 | +6.5% |
| Total Liabilities | 87,347,202,000 | 80,229,245,000 | +8.9% |
| Shareholders' Equity | 74,713,694,000 | 71,960,742,000 | +3.8% |
Dividend Proposal: The Board proposed a total dividend of NT$1.36 per share, consisting of a cash dividend of NT$0.36 and a stock dividend of NT$1.00 (comprising 84 shares from earnings and 16 shares from capital reserves per 1,000 shares held).
Material Changes vs. Prior Period
- Revenue Decline: Consolidated revenues decreased by 9.2% to NT$85.8 billion due to the global economic downturn in the first half of 2009, though the second half showed recovery.
- Profitability Improvement: Despite lower revenue, net income attributable to shareholders increased by 9.5% to NT$6.74 billion, driven by cost-cutting measures and improved operating efficiency.
- Cash Flow Volatility: Operating cash flow dropped significantly by 49.5% to NT$15.5 billion, primarily due to changes in working capital (increases in accounts receivable and inventory) compared to 2008.
- Capital Structure: The company retired 217.9 million shares of treasury stock in 2009, reducing the total share count.
Guidance, Outlook, and Management Commentary
- 2010 Outlook: Management anticipates a recovery in the semiconductor industry, projecting sales of approximately 7.2 billion packaged chips and 900 million tested chips. The company expects to benefit from the global economic recovery and increased outsourcing by IDM customers.
- Strategic Initiatives: ASE plans to merge with Universal Scientific Industrial Co., Ltd. to develop System-in-Package (SiP) module technology. The company is accelerating the transition to copper processes (replacing gold) to stabilize costs and is expanding capacity for aQFN and Fan-Out WLP technologies.
- Capital Raising: Shareholders are asked to authorize the Board to raise capital via cash capital increases, Global Depository Receipts (GDRs), or convertible bonds to fund plant expansion and repay loans. The maximum dilution from GDR issuance is estimated at 9.13%.
- Corporate Governance: The filing notes differences between ROC and NYSE governance standards, specifically regarding the lack of a majority of independent directors and the absence of a dedicated nominating or compensation committee, as permitted for foreign private issuers.
Investor Verification Checklist
- Dividend Ratification: Confirm shareholder approval of the NT$1.36 per share dividend proposal (cash and stock).
- Capital Increase Authorization: Verify the Board's authority to issue up to 500 million shares via GDRs or domestic cash increases.
- Related Party Transactions: Review the report on loans to third parties (e.g., NT$450 million loan to Powerchip Semiconductor Corp.) and guarantees (e.g., NT$762 million guarantee for ASE Shanghai).
- China Investments: Note the indirect investments in Mainland China (ASE Weihai and ASE Kunshan) totaling US$52 million approved in 2009.
- EPS Dilution: Assess the impact of the proposed stock dividend and potential future capital raises on earnings per share.