ASE Technology Holding Co., Ltd. - Q3 2002 Financial Summary
Business Context and Reporting Period
This Form 6-K reports the unaudited financial results for Advanced Semiconductor Engineering, Inc. (ASE) for the third quarter ended September 30, 2002. ASE is a leading independent provider of semiconductor packaging and testing services. The filing includes a press release dated October 29, 2002, detailing operational performance and liquidity status.
Key Financial Metrics
- Revenue: NT$11,861 million (up 10% sequentially, up 42% year-over-year).
- Net Income: NT$315 million for Q3 2002; NT$158 million for the nine months ended September 30, 2002.
- Earnings Per Share (Diluted): NT$0.10 (US$0.015 per ADS) for Q3 2002.
- Gross Margin: 16% (up 1% sequentially).
- Operating Margin: 2% (Operating profit of NT$222 million).
- EBITDA: NT$3,597 million for the quarter.
- Liquidity: Cash and short-term investments totaled NT$12,445 million as of September 30, 2002.
- Debt: Total short-term debt was NT$15,261 million. The company retired its remaining US$200 million Convertible Bonds due in November 2002.
- Capital Expenditures: US$153 million in Q3 2002; full-year forecast increased to US$350 million.
Material Changes vs. Prior Period
- Revenue Growth: Driven by a 44% year-over-year increase in assembly revenues and a 35% increase in testing revenues. Revenue from IDM customers rose to 54% of total revenue.
- Profitability Improvement: The company returned to profitability with a net income of NT$315 million, compared to a net loss of NT$679 million in Q3 2001. This was aided by an income tax benefit of NT$288 million.
- Operational Mix: Fine pitch assembly now comprises 55% of assembly revenues (up from 43% year-over-year). BGA and substrate-based packages accounted for 53% of assembly revenues.
- Utilization: Assembly operations averaged mid-70% utilization, with fine pitch and flip-chip capacity near full utilization. Testing operations averaged above 60% utilization.
- Accounting Change: Effective January 1, 2002, ROC GAAP changes required stocks held by subsidiaries to be presented as treasury stock, reducing the share count used for EPS calculations.
Guidance, Outlook, and Risks
Outlook: Management expects Q4 2002 consolidated revenues to decline no more than 5% sequentially. Gross and operating margins are expected to remain at levels similar to Q3 2002.
Management Commentary: Chairman Jason Chang noted that despite a slower industry recovery, the environment is favorable due to the consolidation of IC backend capacity and reduced investment by IDM customers in internal capacity. President Leonard Liu highlighted a fundamental industry shift toward partners offering total solutions.
Risks and Contingencies: The filing includes a Safe Harbor notice citing risks such as the highly competitive semiconductor industry, the ability to introduce new technologies, integration of acquisitions, international business risks, and foreign currency fluctuations. Economic and industry conditions remain uncertain.
Investor Verification Checklist
- Verify the impact of the ROC GAAP change on share count and EPS calculations.
- Confirm the sustainability of the 16% gross margin given the forecasted revenue decline in Q4.
- Assess the utilization rates of fine pitch and flip-chip capacity versus standard packages.
- Review the details of the US$200 million convertible bond retirement and its effect on future interest expenses.
- Monitor the increase in full-year capital expenditure forecast from US$280 million to US$350 million.