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UMC Reports 2004 Fourth Quarter Results: Record High Annual RevenueTAIPEI, Taiwan, ROC --(Business Wire)-- Feb. 2, 2005 -- Fourth Quarter 2004 Overview(1) -- Revenue declined 18.4% sequentially to NT$28.23 billion (US$891 million) -- Operating income decreased 67.5% sequentially to NT$2.84 billion (US$90 million) -- Wafer shipments totaled 657 thousand 8-inch equivalent wafers; blended ASP was flat over the previous quarter -- EPS of NT$0.07; EPADS of US$0.011 United Microelectronics Corporation (NYSE: UMC; TSE: 2303) ("UMC" or "the Company"), a leading global semiconductor foundry, today announced its unconsolidated operating results for the fourth quarter of 2004. "Fiscal 2004 was a great year for UMC. Our foundry business had a strong 2004 and we posted a record for revenue. The combination of successful execution on capacity expansion, strong demand from each technology node, and an increase in the blended average selling price (ASP) drove UMC's revenue to NT$117.31 billion in 2004, a 38.2% year-over-year increase from 2003. Net income for the year increased 127.1% to NT$31.84 billion," said Dr. Jackson Hu, CEO at UMC. Dr. Hu continued, "At the beginning of the fourth quarter, we started to see weakening demand from our customers. Inventory adjustments by our customers resulted in an 18.4% decrease in revenue and our capacity utilization rate dropped to 72%. However, as we expected, demand from 90nm technology was still strong and sales increased substantially from 2% to 8% of total revenue in the fourth quarter. This leap in revenues from our most advanced process technology clearly demonstrates UMC's commitment to staying at the industry forefront of technological development. We expect this figure to increase to approximately 10% in the first quarter of 2005. Though we have moved into a more challenging market environment, we do not believe the inventory correction will last long and we anticipate a recovery in the 2nd half of 2005." "Our strategy of focusing on 90nm production at our 300mm fabs has proven to be a significant competitive edge and UMC will continue in this direction. Heading into 2005, we will continue to work on advanced technology development and capacity expansion. We will also leverage the 90nm production capacity that we successfully added in 2004 with our 90nm manufacturing knowledge to target more customers in each market segment and capture greater market share. We are confident that our leadership position in advanced process technology development and our strength in foundry services will lead us to continued growth in the coming years." Summary of Operating Results -0- *T Operating Results ====================================================================== (Amount: NT$ million) 4Q04 3Q04 QoQ % 4Q03 YoY % change change ---------------------------------------------------------------------- Revenue 28,229 34,580 (18.4) 23,719 19.0 Gross Profit 6,488 11,663 (44.4) 6,665 (2.7) Operating Expenses (3,649) (2,926) 24.7 (2,501) 45.9 Operating Income 2,839 8,737 (67.5) 4,164 (31.8) Non-op. Income (Expenses) (1,506) 2,177 (169.2) 2,549 (159.1) Net Income 1,333 10,914 (87.8) 6,727 (80.2) EPS (NT$ per share) 0.07 0.65 0.41 (US$ per ADS) 0.011 0.103 0.065 *T Revenue was down 18.4% quarter-over-quarter from NT$34.58 billion in 3Q04 to NT$28.23 billion, and increased 19.0% year-over-year from NT$23.72 billion in 4Q03. Gross profit for the quarter was NT$6.49 billion, or 23.0% of revenue, compared to NT$11.66 billion, or 33.7% of revenue in 3Q04. The decline in gross margin was mainly attributed to the decrease in the capacity utilization rate in 4Q04. Operating income decreased 67.5% sequentially and 31.8% from 4Q03 to NT$2.84 billion. The investment losses caused by the soft semiconductor market led to NT$1.51 billion in non-operating expenses in 4Q04. Net income in 4Q04 was NT$1.33 billion, a sequential decrease of 87.8% from 3Q04 and an 80.2% decrease over 4Q03. Earnings per ordinary share (EPS) for the quarter were NT$0.07. Earnings per ADS (EPADS) were US$0.011. This compares with 3Q04 earnings per ordinary share of NT$0.65 and earnings per ADS of US$0.103. One ADS represents five Taiwan-listed ordinary shares. The basic weighted average number of outstanding shares in 4Q04 was 16,960,076,025, compared with 16,939,523,025 shares in 3Q04 and 16,645,247,924 shares in 4Q03. The diluted weighted average number of outstanding shares was 17,210,737,283 in 4Q04, compared with 17,247,264,436 shares in 3Q04 and 17,009,289,422 shares in 4Q03. The increase in basic and diluted weighted average outstanding shares in 4Q04 was due to new share issuance for the exercise of employee stock options. Detailed Financials Section Depreciation and amortization were NT$10.54 billion in 4Q04, compared with NT$10.43 billion in 3Q04. Depreciation within COGS increased 1% to NT$9.36 billion, mainly due to the incremental depreciation from Fab12A. Total operating expenses increased 24.7% to NT$3.65 billion. This was primarily due to increased R&D spending for 90nm and 65nm technology development at Fab12A and higher Sales & Marketing expenses for IP fees. The R&D expense, which was 7.6% of revenue, increased 28% QoQ to NT$2.15 billion. -0- *T COGS & Expenses ====================================================================== (Amount: NT$ million) 4Q04 3Q04 QoQ % 4Q03 YoY % change change ---------------------------------------------------------------------- Revenue 28,229 34,580 -18.4% 23,719 19.0% COGS (21,741) (22,917) -5.1% (17,054) 27.5% Depreciation (9,363) (9,266) 1.0% (8,389) 11.6% Other Mfg. Costs (12,378) (13,651) -9.3% (8,665) 42.9% Gross Profit 6,488 11,663 -44.4% 6,665 -2.7% Gross Margin (%) 23.0% 33.7% 28.1% Total Operating Exp. (3,649) (2,926) 24.7% (2,501) 45.9% G&A (841) (667) 26.1% (539) 56.0% Sales & Marketing (658) (579) 13.6% (537) 22.5% R&D (2,150) (1,680) 28.0% (1,425) 50.9% Operating Income 2,839 8,737 -67.5% 4,164 -31.8% Operating Margin (%) 10.1% 25.3% 17.6% ---------------------------------------------------------------------- *T Net non-operating expense was NT$1.51 billion. This included NT$1.57 billion of investment disposal gains, though this was offset by NT$1.96 billion of net investment losses. The gain on disposal of investments included the sale of MediaTek and Novatek shares for NT$1,120 million and NT$329 million, respectively. Net investment losses mainly consisted of NT$1.54 billion from UMCi and NT$133 million from SiS in 4Q04. -0- *T Non-operating Income (Expenses) ====================================================================== (Amount: NT$ million) 4Q04 3Q04 4Q03 ---------------------------------------------------------------------- Net Non-operating Income (Exp.) (1,506) 2,177 2,549 Net Interest Income (Expense) (4) (114) (139) Net Investment Income (Loss) (1,955) 886 (1,163) Gain on Disposal of Investment 1,571 2,242 4,026 Exchange Gain (Loss) (754) 49 14 Others (364) (886) (189) ---------------------------------------------------------------------- *T The net cash outflow was NT$1.92 billion in 4Q04. Changes in working capital increased by NT$6.36 billion, mainly due to the decrease from notes and accounts receivable. Operating cash inflow was NT$18.86 billion, a NT$2.2 billion sequential decrease. The increase in investing cash outflow primarily reflects higher CAPEX in 4Q04. The NT$2.87 billion of financing cash outflow was mainly due to the repayment of corporate bonds. Over the next 12 months, we expect to repay NT$2.8 billion of our bonds payable. -0- *T Cash Flow Summary ====================================================================== For the 3-Month For the 3-Month (Amount: NT$ million) Period Ended Dec. Period Ended 31, 2004 Sep. 30, 2004 ---------------------------------------------------------------------- Cash Flow from Operations 18,857 21,059 Net Income (Loss) 1,333 10,914 Depreciation & Amortization 10,541 10,432 Changes in working capital 6,360 800 Others 623 (1,087) Cash Flow from Investing (17,907) (11,565) Capital Expenditures (16,257) (15,140) Others (1,650) 3,575 Cash Flow from Financing (2,872) (6,712) Net Cash Flow (1,922) 2,782 ---------------------------------------------------------------------- *T Cash and cash equivalents decreased by NT$1.92 billion to NT$83.35 billion due to higher cash outflow from investing. The decline in notes and accounts receivable reflect the downward trend of our business. Days sales outstanding(2) increased to 45 days, and average inventory turnover increased to 38 days. -0- *T Current Assets ====================================================================== (Amount: NT$ billion) 4Q04 3Q04 4Q03 ---------------------------------------------------------------------- Cash & Cash Equivalents 83.35 85.27 92.87 Notes & Accounts Receivable 10.70 17.42 14.12 Days Sales Outstanding 45 44 49 Inventory 8.54 9.03 7.37 Avg. Inventory Turnover 38 36 40 Total Current Assets 110.37 119.85 122.31 ---------------------------------------------------------------------- *T Total liabilities declined by 12.6%, or decreased by NT$9.09 billion, to NT$63.18 billion in 4Q04. UMC's Debt to Equity ratio was down to 24% at the end of 4Q04. -0- *T Liabilities ====================================================================== (Amount: NT$ billion) 4Q04 3Q04 4Q03 ---------------------------------------------------------------------- Total Current Liabilities 23.28 32.02 32.75 Accounts Payable 4.44 6.43 4.12 Short-term Credit / Bonds 4.72 8.39 18.52 Others 14.12 17.20 10.11 Long-term Liabilities 33.61 33.83 48.55 Total Liabilities 63.18 72.27 87.87 Debt to Equity 24% 27% 38% ---------------------------------------------------------------------- *T Blended Average Selling Price Trend The blended average selling price (ASP) for the quarter was flat in US dollar terms compared with the previous quarter. (To view ASP trend, visit http://www.umc.com/english/investors/4Q04_ASP_trend.asp) Analysis of Revenue(3) The percentage of revenue contributed from North America grew to 49% in 4Q04 while the percentage of revenue from the Asia Pacific region and Europe decreased to 32% and 16% respectively over the quarter. -0- *T Revenue Breakdown by Region ---------------------------------------------------------------------- Region 4Q04 3Q04 2Q04 1Q04 4Q03 ====================================================================== North America 49% 44% 44% 43% 39% Asia Pacific 32% 33% 35% 37% 41% Europe 16% 19% 17% 16% 17% Japan 3% 4% 4% 4% 3% ---------------------------------------------------------------------- *T The percentage of revenue from leading edge 90nm sales increased significantly to 8% in 4Q04 from 2% in 3Q04. The increase was mainly due to the increase of 90nm capacity to satisfy demand, especially from the communication market. The percentage of revenue from 0.18-micron and below technologies in 4Q04 increased to 62%, from 60% in 3Q04. -0- *T Revenue Breakdown by Geometry ---------------------------------------------------------------------- Geometry 4Q04 3Q04 2Q04 1Q04 4Q03 ====================================================================== 90nm 8% 2% 1% 0% 0% 0.13um 19% 18% 13% 12% 12% 0.15um 16% 15% 12% 9% 9% 0.15um (less than) x (less than) =0.18um 19% 25% 27% 29% 25% 0.18um (less than) x (less than) =0.25um 12% 14% 19% 19% 22% 0.25um (less than) x (less than) =0.35um 17% 17% 19% 21% 23% 0.5um and above 9% 9% 9% 10% 9% ---------------------------------------------------------------------- *T IDM customers accounted for 34% of revenue in 4Q04. -0- *T Revenue Breakdown by Customer Type ---------------------------------------------------------------------- Customer Type 4Q04 3Q04 2Q04 1Q04 4Q03 ====================================================================== Fabless 66% 68% 70% 72% 71% IDM 34% 32% 30% 28% 29% System 0% 0% 0% 0% 0% ---------------------------------------------------------------------- *T Revenue from the communication market accounted for 49% of total revenue in 4Q04. Revenue from the computer segment increased to 24% in 4Q04. Most of this increase was due to relatively stronger demand from PC chipsets and graphics customers. -0- *T Revenue Breakdown by Application (a) ---------------------------------------------------------------------- Application 4Q04 3Q04 2Q04 1Q04 4Q03 ====================================================================== Computer 24% 20% 20% 24% 26% Communication 49% 44% 44% 42% 38% Consumer 23% 32% 32% 30% 31% Memory 1% 2% 2% 3% 3% Others 3% 2% 2% 1% 2% ---------------------------------------------------------------------- (a) Computer consists of ICs such as HDD controllers, DVD-ROM/CD-ROM drives ICs, LCD drivers, graphic processors, and PDAs. Communication consists of xDSL, DSP, WLAN, LAN controllers, handset components, caller ID devices, etc. Consumer consists of ICs used for DVD players, game consoles, digital cameras, smart cards, toys, etc. Memory consists of DRAM, SRAM, Flash, EPROM, ROM, and EEPROM. *T Capacity(4) Capacity for 4Q04, including UMCi, was 918 thousand 8-inch equivalent wafers. The incremental increase in capacity of 72 thousand 8-inch equivalent wafers during 4Q04 was mainly due to capacity expansion at Fab12A and UMCi. We estimate that the installed capacity in 1Q05 will be 954 thousand 8-inch equivalent wafers. The increase in estimated capacity during the first quarter of 2005 is expected to be primarily due to additional 300mm capacity from Fab 12A and UMCi. Approximately 7% of this installed capacity will be unavailable for production due to scheduled annual maintenance in 1Q05. -0- *T Annual Capacity in thousands of 8-inch wafer equivalents ---------------------------------------------------------------------- FAB Geometry (um) 2004 2003 2002 2001 ====================================================================== Fab 6A 6" 3.5 - 0.45 346 352 349 345 Fab 8AB 8" 0.5 - 0.25 796 801 853 943 Fab 8C 8" 0.35 - 0.15 386 325 355 460 Fab 8D 8" 0.18 - 0.09 256 238 214 290 Fab 8E 8" 0.5 - 0.18 401 354 376 474 Fab 8F 8" 0.25 - 0.15 349 342 312 351 Fab 8S 8" 0.25 - 0.15 131 0 0 0 Fab 12A 12" 0.18 - 0.09 392 234 119 22 ====================================================================== Subtotal (b) 3,057 2,646 2,578 2,885 ====================================================================== UMCi (12I) 12" 0.13 - 0.09 101 0 0 0 ---------------------------------------------------------------------- Total 3,158 2,646 2,578 2,885 ---------------------------------------------------------------------- YoY Growth Rate 19% 3% -11% 24% ---------------------------------------------------------------------- Quarterly Capacity in thousands of 8-inch wafer equivalents ---------------------------------------------------------------------- FAB 1Q05E 4Q04 3Q04 2Q04 ====================================================================== Fab 6A 86 86 86 86 Fab 8AB 204 204 200 196 Fab 8C 101 101 99 96 Fab 8D 75 72 65 61 Fab 8E 102 102 102 101 Fab 8F 95 95 92 81 Fab 8S 72 71 60 0 Fab 12A 139 127 113 84 ====================================================================== Subtotal 874 858 817 705 ====================================================================== UMCi (12I) 80 60 29 9 ---------------------------------------------------------------------- Total 954 918 846 714 ---------------------------------------------------------------------- (b) One 6-inch wafer is converted into 0.5625(6(squared)/8(squared)) 8-inch equivalent wafer; one 12-inch wafer is converted into 2.25(12(squared)/8(squared)) 8-inch equivalent wafers. *T Shipment and Utilization Rate(5) Wafer shipments declined by 134 thousand 8-inch equivalent wafers to 657 thousand wafers. This represents a 16.9% QoQ decrease. The utilization rate for the quarter was 72%, which was in line with our previous guidance. -0- *T Wafer Shipments ---------------------------------------------------------------------- 4Q04 3Q04 2Q04 1Q04 4Q03 ====================================================================== Wafer Shipments ('000 8-inch eq.) 657 791 710 647 644 ---------------------------------------------------------------------- Quarterly Capacity Utilization Rate ---------------------------------------------------------------------- 4Q04 3Q04 2Q04 1Q04 4Q03 ====================================================================== Utilization Rate 72% 94% 99% 100%(c) 96% Total Capacity ('000 8-inch eq.) 918 846 714 680 672 ---------------------------------------------------------------------- (c) Utilization rate was calculated based on 1Q04 available capacity, which is 95% of total capacity after factoring in a 5% productivity loss due to annual scheduled maintenance. *T CAPEX For fiscal year 2004, UMC and UMCi had a total CAPEX of US$1.53 billion and US$0.91 billion, respectively. The total amount of capital expenditure spent in 2004 was ahead of previously planned CAPEX, which was US$1.18 billion for UMC and US$0.85 billion for UMCi. UMC's CAPEX for fiscal year 2005 is expected to be between US$1 billion and US$1.5 billion. -0- *T UMC Capital Expenditure by Year - in US$ billion ---------------------------------------------------------------------- Year 2004 2003 2002 2001 2000 1999 ---------------------------------------------------------------------- CAPEX $1.53 $0.37 $0.8 $1.1 $2.8 $1.9 ---------------------------------------------------------------------- 2004 CAPEX Plan ---------------------------------------------------------------------- 8" fab 12" fab 12" R&D Total ====================================================================== UMC 14% 75% 11% US$1,530 million UMCJ 100% - - US$120 million UMCi - 100% - US$910 million ---------------------------------------------------------------------- 2005 CAPEX Plan ---------------------------------------------------------------------- 8" fab 12" fab 12" R&D Total ---------------------------------------------------------------------- UMC 5% 80% 15% US$1 - 1.5 billion ---------------------------------------------------------------------- *T Long-term Investments(6) Consolidated Long-term Investments as of December 31, 2004 -0- *T As of End of 4Q04 As of End of 3Q04 -------------------------------------------- ------------------------- (Amount: NT$ Book Fair Book Fair million) value % value % value % value % ====================================================================== Foundry Industry 41,235 59 36,281 41 42,173 59 40,845 42 Strategic Semiconductor Investments 12,028 17 33,232 38 12,394 18 36,748 38 Other Investments 16,515 24 18,813 21 16,573 23 19,055 20 ====================================================================== Total 69,778 100 88,326 100 71,140 100 96,648 100 ---------------------------------------------------------------------- *T As of December 31, 2004, the total book value of long-term investments held by UMC was NT$69.78 billion, and the estimated fair value of long-term investments was NT$88.33 billion. The decrease in book value of foundry industry investments was mainly due to the recognition of losses in the Company's investments in UMCi. The decrease in fair value of strategic semiconductor investments is mainly due to the disposal of MediaTek shares and a decrease in the share price of several investments. The decrease in other investments is due to the disposal of AU Optronics shares and a decrease in the share price of several investments. Brief Summary of Full Year 2004 Results -- Revenue increased 38.2% YoY to NT$117.31 billion, from NT$84.86 billion in 2003 -- Gross profit increased 84.2% YoY to NT$35.82 billion, from NT$19.44 billion in 2003 -- Net income increased 127.1% YoY to NT$31.84 billion, from NT$14.02 billion in 2003 -- EPS was NT$1.89 for 2004. EPADS was US$0.298. This compared to EPS of NT$0.84 or EPADS of 0.133 for 2003 -- The percentage of revenue from 90nm sales increased to 3%, from 0% in 2003; the percentage of revenue from 0.18um and below sales increased to 55%, from 41% in 2003 -0- *T Operating Results ====================================================================== (Amount: NT$ million) YoY % 2004 2003 change ---------------------------------------------------------------------- Revenue 117,312 84,862 38.2 Gross Profit 35,821 19,442 84.2 Operating Expenses (11,366) (9,506) 19.6 Operating Income 24,455 9,936 146.1 Non-op. Income (Expenses) 7,422 4,879 52.1 Net Income 31,843 14,020 127.1 EPS (NT$ per share) 1.89 0.84 (US$ per ADS) 0.298 0.133 ---------------------------------------------------------------------- Annual Sales Breakdown in Revenue ---------------------------------------------------------------------- Region 2004 2003 ====================================================================== North America 45% 40% Asia Pacific 34% 40% Europe 17% 16% Japan 4% 4% ---------------------------------------------------------------------- ---------------------------------------------------------------------- Application 2004 2003 ====================================================================== Computer 22% 27% Communication 45% 38% Consumer 29% 30% Memory 2% 3% Others 2% 2% ---------------------------------------------------------------------- Annual Sales Breakdown in Revenue ---------------------------------------------------------------------- Technology 2004 2003 ====================================================================== 90nm 3% 0% 0.13um 15% 8% 0.15um 13% 7% 0.15um (less than) x (less than) =0.18um 24% 26% 0.18um (less than) x (less than) =0.25um 16% 24% 0.25um (less than) x (less than) =0.35um 19% 24% 0.5um and above 10% 11% ---------------------------------------------------------------------- ---------------------------------------------------------------------- Customer Type 2004 2003 ====================================================================== Fabless 69% 73% IDM 31% 27% System 0% 0% ---------------------------------------------------------------------- *T Recent Developments / Announcements -0- *T Jan. 31, 2005 Magma's QuickCap NX Extractor Available for UMC's Deep Submicron Technologies Dec. 20, 2004 UMC Enhances 90-nm Manufacturability Using Synopsys' Phase Shift Technology Nov. 08, 2004 ARM, Artisan, National Semiconductor, Synopsys and UMC Collaborate On Comprehensive Low-Power SoC Solution Oct. 27, 2004 UMC Delivers 20 Millionth RADEON 9200 Chip for ATI Technologies Oct. 27, 2004 UMC 3Q 2004 Financial Results Please visit UMC's website http://www.umc.com/english/news/index.asp for further details regarding the above announcements. *T First Quarter of 2005 Outlook & Guidance Quarter-over-quarter Guidance: -- Wafer ASP: a decrease of approximately 10% in US dollar terms -- Wafer shipments: a decrease of 17% -- Capacity utilization rate: approximately 60% -- Profitability: approaching operating breakeven point -- Percentage of 0.18um & below revenues: unchanged QoQ with revenue from 90nm expected to reach approximately 10% -- 2005 CAPEX: expected to be within the range of US$1 billion to US$1.5 billion Conference Call / Webcast Announcement -0- *T Wednesday, February 2, 2005 Time: 9:00 PM (Taipei) / 8:00 AM (New York) / 1:00 PM (London) Dial-in numbers and Access Codes: Asia/Europe: +1-617-614-3669 North America: 800-510-9834 Access Code: UMCCall *T A live webcast and replay of the 4Q04 results announcement will be available at www.umc.com under the "Investor Relations / Investor Events" section. About UMC UMC (NYSE: UMC, TSE: 2303) is a leading global semiconductor foundry that manufactures advanced process ICs for applications spanning every major sector of the semiconductor industry. UMC delivers cutting-edge foundry technologies that enable sophisticated system-on-chip (SOC) designs, including 90nm copper, 0.13um copper, and mixed signal/RFCMOS. UMC is also a leader in 300mm manufacturing; Fab 12A in Taiwan and Singapore-based UMCi are both in volume production for a variety of customer products. UMC employs over 10,500 people worldwide and has offices in Taiwan, Japan, Singapore, Europe, and the United States. UMC can be found on the web at http://www.umc.com. Safe Harbor Statements Except for statements in respect of historical matters, the statements in this release contain "forward-looking statements" within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual performance, financial condition or results of operations of UMC to be materially different from what is stated or may be implied in such forward-looking statements. Investors are cautioned that actual events and results could differ materially from those statements as a result of a number of factors, including, among other things: our dependence upon the frequent introduction of new services and technologies based on the latest developments in our industry; the intensely competitive semiconductor, communications, consumer electronics and computer industries and markets; the risks associated with international global business activities; our dependence upon key personnel; general economic and political conditions, including those related to the semiconductor, communications, consumer electronics and computer industries; possible disruptions in commercial activities caused by natural and human-induced events and disasters, including terrorist activity, armed conflict and highly contagious diseases, such as SARS; reduced end-user purchases relative to expectations and orders; fluctuations in foreign currency exchange rates; and those risks identified in the section entitled "Risk Factors" in UMC's Annual Report on Form 20-F for the year ended December 31, 2003 filed with the U.S. Securities and Exchange Commission on June 17, 2004. The financial statements included in this release are unaudited and unconsolidated, and prepared and published in accordance with ROC GAAP. Investors are cautioned that there are many differences between ROC GAAP and U.S. GAAP, as described in note 31 to the financial statements on Form 20-F for the year ended December 31, 2003 filed with the U.S. Securities and Exchange Commission on June 17, 2004. The forward-looking statements in this release reflect the current belief of UMC as of the date of this release and UMC undertakes no obligation to update these forward-looking statements for events or circumstances that occur after such date or to reflect the occurrence of unanticipated events. (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 December 31, 2004, the three-month period ending September 30, 2004, and the equivalent three-month period that ended December 31, 2003. For all 4Q04 results, New Taiwan Dollar (NT$) amounts have been converted into U.S. dollars at the exchange rate of NT$31.69 to one U.S. dollar. (2) Days Sales Outstanding = 365/ (Operating revenues for three-month period end *4)/ ((Beginning NR&AR balance, net + Ending NR&AR balance, net)/2)) Average Inventory Turnover = 365/((COGS for three-month period end *4)/((Beginning Inventory balance, net + Ending Inventory balance, net)/2)) (3) Revenue in this section represents net wafer sales. All revenue breakdown tables exclude JV's and subsidiaries. (4) Estimated capacity numbers are based on calculated maximum output rather than designed capacity. The actual capacity numbers may differ depending upon equipment delivery schedules, pace of migration to more advanced process technologies, and other factors affecting production ramp up. (5) Quarterly utilization rate = Quarterly wafer out / Estimated quarterly capacity (6) The long-term investment information disclosed is UMC Group consolidated data, which includes UMC, Hsun Chieh Investment Corp., Fortune Venture Capital Corp. and UMC Capital Corp. For publicly quoted investments, fair value is calculated by multiplying the average daily closing price of the last month of the accounting period (December of 2004) with the number of shares owned by the UMC Group as of December 31, 2004. Otherwise, book value or underlying equity net value of investments is taken as recorded on the balance sheet at the end of the accounting period (December 31, 2004) and is used as the fair value. -0- *T UNITED MICROELECTRONICS CORPORATION Unaudited Condensed Unconsolidated Balance Sheet As of December 31, 2004 Figures in Million of New Taiwan Dollars (NT$) and U.S. Dollars (US$) December 31, 2004 ------------------------- US$ NT$ % -------- -------- ------- ASSETS Current Assets Cash and Cash Equivalents 2,630 83,347 25.3% Marketable Securities 97 3,059 0.9% Notes & Accounts Receivables 338 10,696 3.2% Inventories 270 8,543 2.6% Other Current Assets 149 4,728 1.5% -------- -------- ------- Total Current Assets 3,484 110,373 33.5% -------- -------- ------- Non-Current Assets Funds and Long-term Investments 2,258 71,568 21.7% Other Financial Assets 41 1,304 0.4% Property, Plant and Equipment 4,334 137,355 41.7% Intangible Assets 38 1,215 0.4% Other Assets 245 7,748 2.3% -------- -------- ------- Total Non-Current Assets 6,916 219,190 66.5% -------- -------- ------- TOTAL ASSETS 10,400 329,563 100.0% ======== ======== ======= LIABILITIES Current Liabilities Short-term Loans 60 1,904 0.6% Payables 549 17,394 5.3% Current Portion of Long-term Interest- Bearing Liabilities 89 2,820 0.9% Other Current Liabilities 37 1,159 0.3% -------- -------- ------- Total Current Liabilities 735 23,277 7.1% -------- -------- ------- Non-Current Liabilities Bonds Payable 1,060 33,607 10.2% Other Liabilities 199 6,296 1.9% -------- -------- ------- Total Non-Current Liabilities 1,259 39,903 12.1% -------- -------- ------- TOTAL LIABILITIES 1,994 63,180 19.2% -------- -------- ------- STOCKHOLDERS' EQUITY Capital Stock 5,615 177,924 54.0% Capital Reserve 2,680 84,933 25.7% Retained Earnings, Unrealized Long-term Investment Loss and Translation Adjustment 985 31,211 9.5% Treasury Stock (874) (27,685) -8.4% -------- -------- ------- TOTAL STOCKHOLDERS' EQUITY 8,406 266,383 80.8% -------- -------- ------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 10,400 329,563 100.0% ======== ======== ======= Note: New Taiwan Dollars have been translated into U.S. Dollars at the December 31, 2004 exchange rate of NT$ 31.69 per U.S. Dollar. All figures are in ROC GAAP. UNITED MICROELECTRONICS CORPORATION Unaudited Condensed Unconsolidated Income Statement Figures in Million of New Taiwan Dollars (NT$) and U.S. Dollars (US$) Except Per Share and Per ADS Data Year over Year Comparison -------------------------------------------- Three-Month Period Ended Dec. 31, 2004 Dec. 31, 2003 % ------------------ ---------------- -------- US$ NT$ US$ NT$ Chg. -------- -------- ------ --------- -------- Net Sales 891 28,229 748 23,719 19.0% Cost of Goods Sold (686) (21,741) (538) (17,054) 27.5% -------- -------- ------ --------- -------- Net Gross Profit 205 6,488 210 6,665 -2.7% -------- -------- ------ --------- -------- 23.0% 23.0% 28.1% 28.1% Operating Expenses - Sales & Marketing 21 658 17 537 22.5% - General & Administrative 26 841 17 539 56.0% - Research & Development 68 2,150 45 1,425 50.9% -------- -------- ------ --------- -------- 115 3,649 79 2,501 45.9% -------- -------- ------ --------- -------- Operating Income (Loss) 90 2,839 131 4,164 -31.8% 10.1% 10.1% 17.6% 17.6% Net Non-Operating Income (Expenses) (48) (1,506) 81 2,549 -159.1% -------- -------- ------ --------- -------- Income (Loss) before Income Tax 42 1,333 212 6,713 -80.1% 4.7% 4.7% 28.3% 28.3% Income Tax (Expense) Benefit (0) (0) 0 14 -100.8% -------- -------- ------ --------- -------- Net Income (Loss) 42 1,333 212 6,727 -80.2% ======== ======== ====== ========= -------- 4.7% 4.7% 28.4% 28.4% Earnings per Share 0.002 0.07 0.013 0.41 -------- -------- ------ --------- Earnings per ADS (2) 0.011 0.35 0.065 2.05 -------- -------- ------ --------- Weighted Average Number of Shares Outstanding (in millions) 16,960 16,645 -------- --------- Quarter over Quarter Comparison ------------------- ------------------------ Three-Month Period Ended Dec. 31, 2004 Sept. 30, 2004 % -------- -------- -------- -------- -------- US$ NT$ US$ NT$ Chg. -------- --------- ------- --------- ------- Net Sales 891 28,229 1,091 34,580 -18.4% Cost of Goods Sold (686) (21,741) (723) (22,917) -5.1% -------- --------- ------- --------- ------- Net Gross Profit 205 6,488 368 11,663 -44.4% -------- --------- ------- --------- ------- 23.0% 23.0% 33.7% 33.7% Operating Expenses - Sales & Marketing 21 658 18 579 13.6% - General & Administrative 26 841 21 667 26.1% - Research & Development 68 2,150 53 1,680 28.0% -------- --------- ------- --------- ------- 115 3,649 92 2,926 24.7% -------- --------- ------- --------- ------- Operating Income (Loss) 90 2,839 276 8,737 -67.5% 10.1% 10.1% 25.3% 25.3% Net Non-Operating Income (Expenses) (48) (1,506) 68 2,177 -169.2% -------- --------- ------- --------- ------- Income (Loss) before Income Tax 42 1,333 344 10,914 -87.8% 4.7% 4.7% 31.6% 31.6% Income Tax (Expense) Benefit (0) (0) (0) (0) -62.6% -------- --------- ------- --------- ------- Net Income (Loss) 42 1,333 344 10,914 -87.8% ======== ========= ======= ========= ------- 4.7% 4.7% 31.6% 31.6% Earnings per Share 0.002 0.07 0.021 0.65 -------- --------- ------- --------- Earnings per ADS (2) 0.011 0.35 0.103 3.25 -------- --------- ------- --------- Weighted Average Number of Shares Outstanding (in millions) 16,960 16,940 --------- --------- Note: (1) New Taiwan Dollars have been translated into U.S. Dollars at the December 31, 2004 exchange rate of NT$ 31.69 per U.S. Dollar. All figures are in ROC GAAP. (2) 1 ADS equals 5 common shares. UNITED MICROELECTRONICS CORPORATION Unaudited Condensed Unconsolidated Income Statement Figures in Million of New Taiwan Dollars (NT$) and U.S. Dollars (US$) Except Per Share and Per ADS Data For the Three-Month Period Ended For the year Ended December 31, 2004 December 31, 2004 ------------------------- ----------------------- US$ NT$ % US$ NT$ % ------ --------- ------------------------ ------- Net Sales 891 28,229 100.0% 3,702 117,312 100.0% Cost of Goods Sold (686) (21,741) -77.0% (2,572) (81,491) -69.5% ------ --------- ------------------------ ------- Net Gross Profit 205 6,488 23.0% 1,130 35,821 30.5% ------ --------- ------------------------ ------- Operating Expenses - Sales & Marketing 21 658 2.3% 69 2,197 1.9% - General & Administrative 26 841 3.0% 83 2,645 2.2% - Research & Development 68 2,150 7.6% 206 6,524 5.6% ------ --------- ------------------------ ------- 115 3,649 12.9% 358 11,366 9.7% ------ --------- ------------------------ ------- Operating Income (Loss) 90 2,839 10.1% 772 24,455 20.8% Net Non-Operating Income (Expenses) (48) (1,506) -5.4% 234 7,422 6.3% ------ --------- ------------------------ ------- Income (Loss) before Income Tax 42 1,333 4.7% 1,006 31,877 27.1% Income Tax (Expense) Benefit (0) (0) 0.0% (1) (34) 0.0% ------ --------- ------------------------ ------- Net Income (Loss) 42 1,333 4.7% 1,005 31,843 27.1% ====== ========= ======================== ======= Earnings per Share 0.002 0.07 0.060 1.89 ------ --------- ---------------- Earnings per ADS (2) 0.011 0.35 0.298 9.45 ------ --------- ---------------- Weighted Average Number of Shares Outstanding (in millions) 16,960 16,828 -------- --------- Note: (1) New Taiwan Dollars have been translated into U.S. Dollars at the December 31, 2004 exchange rate of NT$ 31.69 per U.S. Dollar. All figures are in ROC GAAP. (2) 1 ADS equals 5 common shares. UNITED MICROELECTRONICS CORPORATION Unaudited Condensed Unconsolidated Statement of Cash Flows For The Twelve Months Ended December 31, 2004 Figures in Million of New Taiwan Dollars (NT$) and U.S. Dollars (US$) US$ NT$ ------- -------- Cash flows from operating activities: Net Income 1,005 31,843 Depreciation & Amortization 1,255 39,777 Bad debt expense 3 107 Long-term investment loss accounted for under the equity method 79 2,509 Cash dividends received under the equity method 14 440 Other investment loss 3 85 Loss on decline in market value and absolesence of inventories 27 845 Deferred charges transferred to loss 8 269 Gain on disposal of investments (395) (12,514) Loss on disposal of property, plant and equipment 3 87 Exchange gain on long-term liabilities (9) (295) Amortization of bond premiums (0) (10) Change in working capital & others 185 5,872 ------- -------- Net cash provided from operating activities 2,178 69,015 Cash flows from investing activities: Increase in marketable securities, net (45) (1,419) Cash proceeds from merger 2 70 Decrease in other financial assets, net 47 1,504 Increase in long-term investments (360) (11,427) Proceeds from disposal of long-term investments 190 6,028 Acquisition of property, plant and equipment (1,530) (48,503) Proceeds from disposal of property, plant and equipment 9 284 Decrease in other assets - others, net 34 1,066 Increase in deferred charges (31) (979) ------- -------- Net cash used in investing activities (1,684) (53,376) Cash flows from financing activities: Increase in short-term loans, net 47 1,504 Repayment of long-term loans (185) (5,866) Reacquisition of bonds (1) (41) Redemption of bonds (516) (16,337) Decrease in deposits-in 0 6 Treasury stock (164) (5,198) Employee stock option 25 788 Remuneration to directors and supervisors (0) (13) ------- -------- Net cash used in financing activities (794) (25,157) ------- -------- Net decrease in cash and cash equivalents (300) (9,518) ------- -------- Cash and cash equivalents at beginning of period 2,930 92,865 Cash and cash equivalents at end of period 2,630 83,347 ======= ======== ---------------------------------------------------------------------- Note: New Taiwan Dollars have been translated into U.S. Dollars at the December 31, 2004 exchange rate of NT$ 31.69 per U.S. Dollar. All figures are in ROC GAAP. *T |
