UMC Reports Second Quarter 2017 Results

Note from UMC Concerning Forward-Looking Statements

Some of the statements in the foregoing announcement are forward-looking within the meaning of the U.S. Federal Securities laws, including statements about introduction of new services and technologies, future outsourcing, competition, wafer capacity, business relationships and market conditions. Investors are cautioned that actual events and results could differ materially from these statements as a result of a variety of factors, including conditions in the overall semiconductor market and economy; acceptance and demand for products from UMC; and technological and development risks. Further information regarding these and other risks is included in UMC’s filings with the U.S. Securities and Exchange Commission. UMC does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

Safe Harbor Statements

This release contains forward-looking statements. These statements constitute “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, and as defined in the United States Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by use of words such as “strategy,” “expects,” “continues,” “plans,” “anticipates,” “believes,” “will,” “estimates,” “intends,” “projects,” “goals,” “targets” and other words of similar meaning. You can also identify them by the fact that they do not relate strictly to historical or current facts.

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, but not limited to: (i) dependence upon the frequent introduction of new services and technologies based on the latest developments in the industry in which UMC operates; (ii) the intensely competitive semiconductor, communications, consumer electronics and computer industries and markets; (iii) the risks associated with international business activities; (iv) dependence upon key personnel; (v) general economic and political conditions; (vi) possible disruptions in commercial activities caused by natural and human-induced events and disasters, including natural disasters, terrorist activity, armed conflict and highly contagious diseases; (vii) reduced end-user purchases relative to expectations and orders; and (viii) fluctuations in foreign currency exchange rates. Further information regarding these and other risks is included in UMC’s filings with the United States Securities and Exchange Commission. All information provided in this release is as of the date of this release and are based on assumptions that UMC believes to be reasonable as of this date, and UMC does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

The financial statements included in this release are prepared and published in accordance with Taiwan International Financial Reporting Standards, or TIFRSs, recognized by the Financial Supervisory Commission in the ROC, which is different from International Financial Reporting Standards, or IFRSs, issued by the International Accounting Standards Board. Investors are cautioned that there may be significant differences between TIFRSs and IFRSs. In addition, TIFRSs and IFRSs differ in certain significant respects from generally accepted accounting principles in the ROC and generally accepted accounting principles in the United States.

This presentation is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.

1 Unless otherwise stated, all financial figures discussed in this announcement are prepared in accordance with TIFRSs recognized by Financial Supervisory Commission in the ROC, which is different from IFRSs issued by the International Accounting Standards Board. They represent comparisons among the three-month period ending Jun. 30, 2017, the three-month period ending Mar. 31, 2017, and the equivalent three-month period that ended Jun. 30, 2016. For all 2Q17 results, New Taiwan Dollar (NT$) amounts have been converted into U.S. Dollars at the Jun. 30, 2017 exchange rate of NT$ 30.42 per U.S. Dollar.

2 Revenue in this section represents wafer sales

3 Utilization Rate = Quarterly Wafer Out / Quarterly Capacity

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.

- FINANCIAL TABLES TO FOLLOW -

  UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES
Consolidated Condensed Balance Sheet
As of June 30, 2017
Figures in Millions of New Taiwan Dollars (NT$) and U.S. Dollars (US$)
       
 
June 30, 2017
US$ NT$ %
Assets
Current assets
Cash and cash equivalents 2,240 68,134 17.7 %
Financial assets at fair value through profit or loss, current 26 800 0.2 %
Notes & Accounts receivable, net 731 22,226 5.8 %
Inventories, net 535 16,285 4.2 %
Other current assets 415   12,633   3.2 %
Total current assets 3,947   120,078   31.1 %
 
Non-current assets
Funds and investments 1,180 35,907 9.3 %
Property, plant and equipment 6,994 212,772 55.1 %
Other non-current assets 562   17,060   4.5 %
Total non-current assets 8,736   265,739   68.9 %
Total assets 12,683   385,817   100.0 %
 
Liabilities
Current liabilities
Short-term loans 726 22,088 5.7 %
Financial liabilities at fair value through profit or loss, current 3 85 0.0 %
Payables 923 28,072 7.2 %
Dividends payable 201 6,112 1.6 %
Current portion of long-term liabilities 858 26,105 6.8 %
Other current liabilities 172   5,234   1.4 %
Total current liabilities 2,883   87,696   22.7 %
 
Non-current liabilities
Bonds payable 601 18,280 4.7 %
Long-term loans 1,083 32,957 8.5 %
Other non-current liabilities 1,108   33,688   8.8 %
Total non-current liabilities 2,792   84,925   22.0 %
Total liabilities 5,675   172,621   44.7 %
 
Equity
Equity attributable to the parent company
Capital 4,150 126,243 32.7 %
Additional paid-in capital 1,343 40,854 10.6 %

Retained earnings, unrealized gain or loss on available-for-sale
financial assets and exchange differences on translation of
foreign operations

 

1,640 49,887 12.9 %
Treasury stock (155 ) (4,719 ) (1.2 %)
Total equity attributable to the parent company 6,978 212,265 55.0 %
Non-controlling interests 30   931   0.3 %
Total equity 7,008   213,196   55.3 %
Total liabilities and equity 12,683   385,817   100.0 %
 
               
Note:New Taiwan Dollars have been translated into U.S. Dollars at the June 30, 2017 exchange rate of NT $30.42 per U.S. Dollar.
 
UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Comprehensive Income
Figures in Millions of New Taiwan Dollars (NT$) and U.S. Dollars (US$)
Except Per Share and Per ADS Data
                 
 
Year over Year Comparison Quarter over Quarter Comparison
Three-Month Period Ended Three-Month Period Ended
June 30, 2017 June 30, 2016 Chg. June 30, 2017 March 31, 2017 Chg.
US$ NT$ US$ NT$ %   US$ NT$ US$ NT$ %  
Net operating revenues 1,234 37,538 1,216 36,997 1.5 % 1,234 37,538 1,230 37,418 0.3 %
Operating costs (1,012 ) (30,799 ) (944 ) (28,712 ) 7.3 % (1,012 ) (30,799 ) (986 ) (29,990 ) 2.7 %
Gross profit 222   6,739   272   8,285   (18.7 %) 222   6,739   244   7,428   (9.3 %)
18.0 % 18.0 % 22.4 % 22.4 % 18.0 % 18.0 % 19.9 % 19.9 %
Operating expenses
- Sales and marketing expenses (34 ) (1,049 ) (36 ) (1,092 ) (3.9 %) (34 ) (1,049 ) (38 ) (1,170 ) (10.3 %)
- General and administrative expenses (34 ) (1,035 ) (50 ) (1,541 ) (32.8 %) (34 ) (1,035 ) (35 ) (1,050 ) (1.4 %)
- Research and development expenses (107 ) (3,246 ) (106 ) (3,226 ) 0.6 % (107 ) (3,246 ) (131 ) (3,991 ) (18.7 %)
Subtotal (175 ) (5,330 ) (192 ) (5,859 ) (9.0 %) (175 ) (5,330 ) (204 ) (6,211 ) (14.2 %)
Net other operating income and expenses 8   259   1   23   1,026.1 % 8   259   5   154   68.2 %
Operating income 55 1,668 81 2,449 (31.9 %) 55 1,668 45 1,371 21.7 %
4.4 % 4.4 % 6.6 % 6.6 % 4.4 % 4.4 % 3.7 % 3.7 %
 
Net non-operating income and expenses 15   448   (22 ) (650 ) -   15   448   (10 ) (304 ) -  
Income from continuing operations before

income tax

70 2,116 59 1,799 17.6 % 70 2,116 35 1,067 98.3 %
5.6 % 5.6 % 4.9 % 4.9 % 5.6 % 5.6 % 2.9 % 2.9 %
 
Income tax benefit (expense) (21 ) (638 ) (7 ) (220 ) 190.0 % (21 ) (638 ) 14   430   -  
Net income 49 1,478 52 1,579 (6.4 %) 49 1,478 49 1,497 (1.3 %)
3.9 % 3.9 % 4.3 % 4.3 % 3.9 % 3.9 % 4.0 % 4.0 %
 
Other comprehensive income (loss) 45   1,396   (32 ) (977 ) -   45   1,396   (98 ) (2,997 ) -  
 
Total comprehensive income (loss) 94   2,874   20   602   377.4 % 94   2,874   (49 ) (1,500 ) -  
 

Net income attributable to:

Stockholders of the parent

69 2,099 85 2,583 (18.7 %) 69 2,099 75 2,286 (8.2 %)

Non-controlling interests

(20 ) (621 ) (33 ) (1,004 ) (38.1 %) (20 ) (621 ) (26 ) (789 ) (21.3 %)
 
Comprehensive income (loss) attributable to:

Stockholders of the parent

115 3,488 54 1,635 113.3 % 115 3,488 (20 ) (599 ) -

Non-controlling interests

(21 ) (614 ) (34 ) (1,033 ) (40.6 %) (21 ) (614 ) (29 ) (901 ) (31.9 %)
 
Earnings per share-basic 0.006   0.17   0.007   0.21   0.006   0.17   0.006   0.19  
Earnings per ADS (2) 0.028   0.85   0.035   1.05   0.028   0.85   0.031   0.95  
Weighted average number of shares
outstanding (in millions) 12,208   12,335   12,208   12,208  
 
                                       
Notes:
(1) New Taiwan Dollars have been translated into U.S. Dollars at the June 30, 2017 exchange rate of NT $30.42 per U.S. Dollar.
(2) 1 ADS equals 5 common shares.
 
UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Comprehensive Income
Figures in Millions 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 Six-Month Period Ended
June 30, 2017 June 30, 2017
US$ NT$ %   US$ NT$ %  
Net operating revenues 1,234 37,538 100.0 % 2,464 74,956 100.0 %
Operating costs (1,012 ) (30,799 ) (82.0 %) (1,998 ) (60,788 ) (81.1 %)
Gross profit 222   6,739   18.0 % 466   14,168   18.9 %
 
 
Operating expenses
- Sales and marketing expenses (34 ) (1,049 ) (2.8 %) (73 ) (2,220 ) (3.0 %)
- General and administrative expenses (34 ) (1,035 ) (2.8 %) (68 ) (2,085 ) (2.8 %)
- Research and development expenses (107 ) (3,246 ) (8.6 %) (238 ) (7,237 ) (9.6 %)
Subtotal (175 ) (5,330 ) (14.2 %) (379 ) (11,542 ) (15.4 %)
Net other operating income and expenses 8   259   0.6 % 13   412   0.6 %
Operating income 55 1,668 4.4 % 100 3,038 4.1 %
 
Net non-operating income and expenses 15   448   1.2 % 5   146   0.1 %

Income from continuing operations before
income tax

 

70 2,116 5.6 % 105 3,184 4.2 %
 
 
Income tax expense (21 ) (638 ) (1.7 %) (7 ) (209 ) (0.2 %)
Net income 49 1,478 3.9 % 98 2,975 4.0 %
 
Other comprehensive income (loss) 45   1,396   3.8 % (53 ) (1,601 ) (2.2 %)
 
Total comprehensive income (loss) 94   2,874   7.7 % 45   1,374   1.8 %
 

Net income attributable to:

Stockholders of the parent

69 2,099 5.6 % 144 4,385 5.9 %

Non-controlling interests

(20 ) (621 ) (1.7 %) (46 ) (1,410 ) (1.9 %)
 

Comprehensive income (loss) attributable to:

Stockholders of the parent

115 3,488 9.3 % 95 2,888 3.9 %

Non-controlling interests

(21 ) (614 ) (1.6 %) (50 ) (1,514 ) (2.1 %)
 
Earnings per share-basic 0.006   0.17   0.012   0.36  
Earnings per ADS (2) 0.028   0.85   0.059   1.80  
 
Weighted average number of shares

outstanding (in millions)

12,208   12,208  
                       
Notes:
(1) New Taiwan Dollars have been translated into U.S. Dollars at the June 30, 2017 exchange rate of NT $30.42 per U.S. Dollar.
(2) 1 ADS equals 5 common shares.
 
UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statement of Cash Flows
For The Six-Month Period Ended June 30, 2017
Figures in Millions of New Taiwan Dollars (NT$) and U.S. Dollars (US$)
   
US$ NT$
Cash flows from operating activities :
Net income before tax 105 3,184
Depreciation & Amortization 867 26,385
Gain on disposal of investments (25 ) (761 )
Exchange gain on financial assets and liabilities (41 ) (1,249 )
Changes in other current assets (25 ) (764 )
Changes in other current liabilities 41 1,239
Changes in assets, liabilities and others 3   94  
Net cash provided by operating activities 925 28,128
 
Cash flows from investing activities :
Acquisition of available-for-sale financial assets (23 ) (691 )
Proceeds from disposal of available-for-sale financial assets 42 1,284
Proceeds from capital reduction and liquidation of investments 65 1,980
Acquisition of property, plant and equipment (854 ) (25,987 )
Acquisition of intangible assets (22 ) (673 )
Others (10 ) (311 )
Net cash used in investing activities (802 ) (24,398 )
 
Cash flows from financing activities :
Increase in short-term loans 86 2,604
Proceeds from bonds issued 273 8,300
Redemption of bonds (247 ) (7,500 )
Proceeds from long-term loans 306 9,308
Repayments of long-term loans (101 ) (3,076 )
Acquisition of subsidiaries (40 ) (1,228 )
Others 4   144  
Net cash provided by financing activities 281 8,552
 
Effect of exchange rate changes on cash and cash equivalents (57 ) (1,727 )
Net Increase in cash and cash equivalents 347 10,555
 
Cash and cash equivalents at beginning of period 1,893   57,579  
 
Cash and cash equivalents at end of period 2,240   68,134  
 
       
Note: New Taiwan Dollars have been translated into U.S. Dollars at the June 30, 2017 exchange rate of NT $30.42 per U.S. Dollar.

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