UMC Reports 2009 Second Quarter Results

Depreciation within CoGS increased by 27.1% to NT$8.86 billion due to higher shipments in 2Q09. Other mfg. costs increased with rising wafer production in 2Q09, but were offset by the adoption of ROC SFAS No. 10, which allocated more fixed costs in 1Q09. As a result, other mfg. costs only increased by 2.3%. General and administration expenses decreased to NT$454 million, mainly due to the decrease in professional fees. Sales & marketing expenses dropped significantly to NT$376 million, mainly due to the collection of estimated bad debts that were charged as expenses in previous quarters. Therefore, total operating expenses decreased 10% to NT$2.69 billion. The total R&D expense was 8.2% of revenue in 2Q09.

    Non-operating Income (Expenses)
    (Amount: NT$ million)                         2Q09      1Q09      2Q08

    Net Non-operating Income (Exp.)               (901)      (843)      98
     Net Interest Income                            17         37      160
     Net Investment Loss                        (1,586)    (1,079)    (629)
     Gain on Disposal of Investment                788          0      524
     Exchange Gain (Loss)                         (141)       255       36
     Others                                         21        (56)       7

Net non-operating losses during 2Q09 were NT$901 million. Net investment losses were NT$1.59 billion, mainly coming from other-than-temporary fixed asset impairment losses from UMCJ. Gain on disposal of investment of NT$788 million was from disposal of Mediatek holdings during 2Q09. The exchange loss of NT$141 million was partially offset by the valuation gain of forward contract. Therefore, the net exchange loss was NT$3.7 million.

    Cash Flow Summary
                                     For the             For the
                                     3-Month             3-Month
    (Amount: NT$                     Period              Period
     million)                        Ended               Ended
                                     Jun. 30,            Mar. 31,
                                     2009                2009
    Cash Flow from Operations         3,420               3,746
     Net Income (Loss)                1,547              (8,160)
     Depreciation & Amortization      8,452               8,640
     Changes in working capital      (6,620)              3,051
     Others                              41                 215
    Cash Flow from Investing         (1,326)             (1,696)
     Capital Expenditures            (1,256)             (1,568)
     Others                             (70)               (128)
    Cash Flow from Financing            103              (2,393)
     Long term loan                     100                  --
     Purchase of treasury stock          --              (2,393)
     Others                               3                  --
    Effect of exchange rate            (199)                125
    Net Cash Flow                     1,998                (218)

Net cash inflow was NT$2 billion in 2Q09. Operating cash inflow was NT$3.42 billion. The investing cash outflow primarily reflects the CAPEX in 2Q09 of NT$1.26 billion. Free cash flow (Note 2) for 2Q09 and 1H09 was NT$2.16 billion and NT$4.35 billion, respectively. Over the next 12 months, UMC expects to repay NT$7.5 billion in term loans.

    Note 2: Free cash flow = Operating cash flow - Capital expenditures

    Current Assets
    (Amount: NT$ billion)                2Q09       1Q09       2Q08

    Cash & Cash Equivalents                37.90              35.91            25.42
        Notes  &  Accounts  Receivable                  13.78                6.08            14.79
            Days  Sales  Outstanding                              40                    58                  50
        Inventories                                                    8.53                7.05            12.31
            Avg.  Inventory  Turnover                            42                    45                  56
        Total  Current  Assets                                63.90              51.50            58.37


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