UMC Reports Fourth Quarter 2016 Results

United Microelectronics Corporation (NYSE: UMC; TWSE: 2303) (“UMC” or “The Company”), a leading global semiconductor foundry, today announced its consolidated operating results for the fourth quarter of 2016.

Fourth quarter consolidated revenue was NT$38.31 billion, flat from NT$38.16 billion in 3Q16 and an increase of 13.2% YoY from NT$33.85 billion in 4Q15. 4Q16 consolidated gross margin was 22.9%. Net income attributable to the stockholders of the parent was NT$2.55 billion, with earnings per ordinary share of NT$0.21.

Mr. Po-Wen Yen, CEO of UMC, said, “In the fourth quarter of 2016, UMC’s revenue from foundry operations was NT$38.22 billion. Overall capacity utilization reached 94%, bringing wafer shipments to 1.66 million 8-inch equivalent wafers. Operating margin was 6.3%. During the quarter, our 28nm and 40nm utilization rate continued to exceed 90%, while strength in 8” consumer and communication demand raised 8” fab utilization to nearly 100%. We also realized a noteworthy milestone in November with the grand opening of our 300mm Fab 12X in Xiamen, China, which began shipping 40nm customer wafers just 20 months after the fab’s March 2015 groundbreaking. This site will ideally position UMC to capitalize on the vast business opportunities within China’s semiconductor market while bringing us closer to our Chinese customers, where our team can provide superior technical and manufacturing services and more efficiently bring new tape outs into production. With regard to our advanced 14nm technology, we have recently made substantial progress for this advanced node. Following intensive engineering activities with our customer, UMC’s 14nm transistor performance has delivered speed and leakage results which are comparable with the industry’s 14nm standards. Our yields have fulfilled customer requirements, and we anticipate 14nm wafer shipments to commence in 1Q17, highlighting our determined efforts to reach this important milestone.”

CEO Yen continued, “Looking into the first quarter of 2017, as we enter early year seasonality, we expect a sequential decrease in our foundry business. For full year 2017, UMC will continue to work towards a year of growth and prosperity. Our fundamental 28nm process technology know-how will enable our team to develop new manufacturing solutions on logic and specialty technology platforms. We will also expand 300mm capacity at Fab 12X to address growing customer wafer demand, increase our foundry market share and elevate the competitiveness of our foundry services. We believe these efforts will position UMC to capture the next wave of growth opportunities.”

Summary of Operating Results

Operating Results
(Amount: NT$ million) 4Q163Q16

QoQ %
change

4Q15

YoY %
change

Net Operating Revenues 38,306 38,164 0.4 33,849 13.2
Gross Profit 8,759 8,301 5.5 6,979 25.5
Operating Expenses (6,627 ) (6,373 ) 4.0 (5,065 ) 30.8
Net Other Operating Income and Expenses 144 (443 ) - (34 ) -
Operating Income 2,276 1,485 53.3 1,880 21.1
Net Non-Operating Income and Expenses (1,210 ) 466 - 906 -
Net Income Attributable to Stockholders of the Parent 2,548 2,975 (14.4 ) 3,160 (19.4 )

EPS (NT$ per share)

0.21 0.24 0.25

(US$ per ADS)

0.033 0.037 0.039

In 4Q16, net operating revenues increased 0.4% to NT$38.31 billion, including NT$38.22 billion from the foundry segment. Revenue from 28nm and 40nm contribution was 22% and 26% respectively. Gross profit was NT$8.76 billion, or 22.9% of revenue. Operating expenses increased 4.0% to NT$6.63 billion. Net other operating income was NT$144 million, leading to an operating income of NT$2.28 billion. Net non-operating expense was NT$1.21 billion. Net income attributable to stockholders of the parent was NT$2.55 billion.

Earnings per ordinary share for the quarter was NT$0.21. Earnings per ADS was US$0.033. The basic weighted average number of outstanding shares in 4Q16 was 12,208,239,978, compared with 12,208,239,978 shares in 3Q16 and 12,407,897,412 shares in 4Q15. The diluted weighted average number of outstanding shares was 13,442,173,503 in 4Q16, compared with 13,402,233,597 shares in 3Q16 and 13,601,975,910 shares in 4Q15. The fully diluted share count on December 31, 2016 was approximately 13,858,252,000. On December 31, 2016, UMC held 400 million treasury shares acquired from the 16th and 17th share buy-back programs.

Detailed Financials Section

Net operating revenues grew 0.4% to NT$38.31 billion. COGS slightly decreased to NT$29.55 billion, as depreciation was NT$11.31 billion, while other manufacturing costs decreased 1.9% to NT$18.23 billion. Gross profit was NT$8.76 billion, which included an insurance claim associated with the February 6, 2016 earthquake. Operating expenses grew 4.0% to NT$6.63 billion. G&A expense decreased 14% to NT$1.52 billion and Sales & Marketing grew to NT$1.28 billion. R&D expense increased 12.6% to NT$3.82 billion, or 10% of net operating revenues, which included an increase in R&D wafers. Net other operating income was NT$144 million, leading to an operating income of NT$2.28 billion.

COGS & Expenses

(Amount: NT$ million)

4Q16

3Q16

QoQ %
change

4Q15

YoY %
change

Net Operating Revenues

38,306 38,164 0.4 33,849 13.2
COGS (29,547 ) (29,863 ) (1.1 ) (26,870 ) 10.0
Depreciation (11,314 ) (11,274 ) 0.4 (9,700 ) 16.6
Other Mfg. Costs (18,233 ) (18,589 ) (1.9 ) (17,170 ) 6.2
Gross Profit 8,759 8,301 5.5 6,979 25.5
Gross Margin (%) 22.9 % 21.8 % 20.6 %
Operating Expenses (6,627 ) (6,373 ) 4.0 (5,065 ) 30.8
G&A (1,521 ) (1,769 ) (14.0 ) (916 ) 66.0
Sales & Marketing (1,282 ) (1,207 ) 6.2 (1,044 ) 22.8
R&D (3,824 ) (3,397 ) 12.6 (3,105 ) 23.2
Net Other Operating

Income & Expenses

144 (443 ) - (34 ) -
Operating Income 2,276 1,485 53.3 1,880 21.1

Net non-operating expense in 4Q16 was NT$1.21 billion. Net investment loss was NT$1.14 billion, which included an NT$599 million impairment loss from holdings of Shandong Huahong Energy Invest Co.

Non-Operating Income and Expenses

(Amount: NT$ million) 4Q16 3Q16 4Q15
Non-Operating Income and Expenses (1,210 ) 466 906
Net Interest Income and Expenses (418 ) (326 ) (19 )
Net Investment Gain and Loss (1,138 ) 834 230
Gain and Loss on Disposal of Investment 1,023 304 376
Exchange Gain and Loss (496 ) (338 ) (35 )
Other Gain and Loss (181 ) (8 ) 354

Cash inflow from operating activities reached NT$15.55 billion. Cash outflow from investing activities totaled NT$18.32 billion, including NT$21.88 billion in CAPEX spending for the foundry segment, resulting in a free cash outflow of NT$6.36 billion. Cash inflow from financing activities was NT$4.22 billion, mainly due to a cash inflow of NT$4.23 billion in bank loans. Net cash inflow for 4Q16 was NT$2.31 billion. Over the next 12 months, the company expects to repay NT$3 billion in bank loans.

Cash Flow Summary

(Amount: NT$ million)

For the 3-Month
Period Ended
Dec. 31, 2016

For the 3-Month
Period Ended
Sep. 30, 2016

Cash Flow from Operating Activities 15,546 13,888
Net income before tax 1,066 1,951
Depreciation & Amortization 13,376 12,901
Gain on disposal of investments (1,023 ) (304 )
Impairment loss on financial assets 233 68
Impairment loss on non-financial assets 837 455
Exchange loss (gain) on financial assets and liabilities 1,114 (12 )
Changes in working capital (164 ) 559
Income tax paid (146 ) (1,688 )
Other 253 (42 )
Cash Flow from Investing Activities (18,321 ) (15,400 )
Capital expenditures (21,905 ) (19,862 )
Proceeds from disposal of AFS financial assets 1,582 594
Acquisition of investments accounted for under the equity method (840 ) -
Changes in refundable deposits 32 402
Acquisition of intangible assets (316 ) (567 )
Other 3,126 4,033
Cash Flow from Financing Activities 4,221 8,885
Bank loans 4,230 13,446
Increase in other financial liabilities - 2,345
Cash dividends - (6,907 )
Other (9 ) 1
Effect of Exchange Rate 867 (1,532 )
Net Cash Flow 2,313 5,841

Cash and cash equivalents increased to NT$57.58 billion, mainly due to bank loans of NT$4.23 billion. Days of inventory remained at 53 days.

Current Assets
(Amount: NT$ billion) 4Q16 3Q16 4Q15
Cash and Cash Equivalents 57.58 55.27 53.29
Notes & Accounts Receivable 23.05 22.37 19.33
Days Sales Outstanding 54 56 53
Inventories, net 17.00 17.17 17.64
Days of Inventory 53 53 58
Total Current Assets 110.47 106.97 94.82

Current liabilities decreased to NT$71.98 billion, primarily reflecting the decrease in short-term credit. Long-term credit/bonds increased to NT$60.73 billion, mostly reflecting the long-term credit for United Semiconductor (Xiamen). Total liabilities increased to NT$167.91 billion, leading to a debt to equity ratio of 77%.

Liabilities
(Amount: NT$ billion) 4Q16 3Q16 4Q15
Total Current Liabilities 71.98 83.44 48.25
Notes & Accounts Payable 6.85 6.74 5.95
Short-Term Credit / Bonds 31.05 47.05 12.11
Payable on Equipment 15.04 14.45 14.66
Other 19.04 15.20 15.53
Long-Term Credit / Bonds 60.73 39.68 47.52
Long-Term Investment Liabilities 20.31 20.54 6.06
Total Liabilities 167.91 155.96 108.55
Debt to Equity 77 % 71 % 47 %

Analysis of Revenue2 for Foundry Segment

Revenue from North America and Asia Pacific accounted for 48% and 45% of 4Q16 sales, respectively.

Revenue Breakdown by Region
Region4Q163Q162Q161Q164Q15
North America 48 % 52 % 49 % 48 % 47 %
Asia Pacific 45 % 42 % 45 % 45 % 37 %
Europe 4 % 4 % 4 % 3 % 6 %
Japan 3 % 2 % 2 % 4 % 10 %

28nm revenue contribution increased to 22% in 4Q16, reflecting stable wafer demand. 40nm accounted for 26% of sales as the wafer revenue from 28nm and 40nm remained at 48%.

Revenue Breakdown by Geometry
Geometry4Q163Q162Q161Q164Q15
28nm and below 22 % 21 % 17 % 8 % 11 %
28nm<x<=40nm 26 % 27 % 26 % 29 % 24 %
40nm<x<=65nm 14 % 15 % 18 % 19 % 23 %
65nm<x<=90nm 3 % 4 % 4 % 4 % 4 %
90nm<x<=0.13um 11 % 11 % 11 % 12 % 12 %
0.13um<x<=0.18um 11 % 11 % 12 % 13 % 11 %
0.18um<x<=0.35um 10 % 8 % 9 % 12 % 12 %
0.5um and above 3 % 3 % 3 % 3 % 3 %

Revenue from fabless customers remained at 93% of revenue for 4Q16.

Revenue Breakdown by Customer Type
Customer Type4Q163Q162Q161Q164Q15
Fabless 93 % 93 % 93 % 91 % 85 %
IDM 7 % 7 % 7 % 9 % 15 %

Revenue from the communication segment was 53% of sales, while consumer business remained at 26%. Computing segment increased to 13%, partly driven by tablet computing products.

Revenue Breakdown by Application (1)
Application4Q163Q162Q161Q164Q15
Computer 13 % 12 % 11 % 15 % 11 %
Communication 53 % 55 % 55 % 48 % 52 %
Consumer 26 % 26 % 27 % 30 % 29 %
Others 8 % 7 % 7 % 7 % 8 %

(1) Computer consists of ICs such as CPU, GPU, HDD controllers, DVD/CD-RW control ICs, PC chipset, audio codec, keyboard controller, monitor scaler, USB, I/O chipset. Communication consists of handset components, broadband, WLAN, bluetooth, Ethernet, LAN, DSP, etc. Consumer consists of ICs used for DVD players, DTV, STB, MP3/MP4, flash controller, game consoles, DSC, smart cards, toys, etc.

Blended ASP Trend for Foundry Segment

Blended average selling price (ASP) slightly decreased during 4Q16.

(To view ASP trend, visit http://www.umc.com/english/investors/4Q16_ASP_trend.asp)

Shipment and Utilization Rate3 for Foundry Segment

Wafer shipments increased 5.5% to 1,656K in 4Q16. Quarterly capacity increased 1.1% QoQ to 1,794K, leading to an overall utilization rate of 94% in 4Q16.

Wafer Shipments
4Q163Q162Q161Q164Q15

Wafer Shipments
(8” K equivalents)

1,656 1,569 1,514 1,432 1,384
Quarterly Capacity Utilization Rate
4Q163Q162Q161Q164Q15
Utilization Rate 94 % 89 % 89 % 82 % 83 %
Total Capacity
(8” K equivalents)
1,794 1,774 1,723 1,692 1,690

Capacity4 for Foundry Segment

Overall capacity in the fourth quarter increased to 1,794K 8-inch equivalent wafers. Estimated capacity in the first quarter will slightly decrease to 1,749K 8-inch equivalent wafers, mainly due to capacity conversion to 40nm at Fab 12i and fewer working days.

Annual Capacity in
thousands of wafers

Quarterly Capacity in
thousands of wafers

FABGeometry
(um)
2016201520142013FAB1Q17E4Q163Q162Q16
WTK 6" 3.5 – 0.45 423 421 448 448 WTK 104 106 106 106
Fab 8A 8" 0.5 – 0.25 827 813 813 813 Fab 8A 204 207 207 207
Fab 8C 8" 0.35 – 0.11 348 347 347 347 Fab 8C 86 87 87 87
Fab 8D 8" 0.13 – 0.09 342 341 358 382 Fab 8D 84 86 86 86
Fab 8E 8" 0.5 – 0.18 419 418 418 418 Fab 8E 103 105 105 105
Fab 8F 8" 0.18 – 0.11 401 388 388 388 Fab 8F 100 102 102 100
Fab 8S 8" 0.18 – 0.11 336 335 335 335 Fab 8S 83 84 84 84
Fab 8N 8" 0.5 – 0.11 750 667 547 469 Fab 8N 185 188 188 188
Fab 12A 12" 0.13 – 0.028 885 793 700 651 Fab 12A 229 233 233 214
Fab 12i 12” 0.13 – 0.040 584 572 573 550 Fab 12i 137 148 148 144
Fab 12X 12” 0.040 9 - -

-

Fab 12X 10 9 - -
Total(1) 6,983 6,617 6,323 6,107 Total1,7491,7941,7741,723
YoY Growth Rate 6 % 5 % 4 % 11 %

(1)One 6-inch wafer is converted into 0.5625(62/82) 8-inch equivalent wafer; one 12-inch wafer is converted into 2.25(122/82) 8-inch equivalent wafers. Capacity total figures are expressed in 8-inch equivalent wafers.

CAPEX for Foundry Segment

CAPEX spending in 4Q16 totaled US$689 million, bringing the spending for the full year 2016 to US$2.8 billion. Full year 2017 CAPEX plan is budgeted for US$2.0 billion.

Capital Expenditure by Year - in US$ billion
Year 2016 2015 2014 2013 2012
CAPEX $ 2.8 $ 1.9 $ 1.4 $ 1.1 $ 1.7

2012 figures account for UMC parent company only.

2017 CAPEX Plan

8"12"Total
9 % 91 % US$2.0 billion

Brief Summary of Full Year 2016 Consolidated Results

  • Consolidated revenue increased 2.1% YoY to NT$147.87 billion, up from NT$144.83 billion in 2015. Foundry segment revenue in 2016 increased 4.0% YoY to NT$147.44 billion, from NT$141.71 billion in 2015.
  • Gross margin was 20.5%, compared to 21.9% in 2015.
  • Operating margin was 4.2%, compared to 7.5% in 2015.
  • Net income attributable to stockholders of the parent was NT$8.32 billion in 2016.
  • EPS was NT$0.68, or EPADS was US$0.105 for 2016.
  • The contribution from 28nm technologies increased to 17% in 2016 from 10% in 2015. The revenue from 40nm in 2016 increased to 27%.
Operating Results

(Amount: NT$ million)

20162015

YoY %
change

Net Operating Revenues 147,870 144,830 2.1
Gross Profit 30,379 31,769 (4.4 )
Operating Expenses (23,922 ) (19,969 ) 19.8
Net Other Operating Income & Expenses (263 ) (964 ) (72.7 )
Operating Income 6,194 10,836 (42.8 )
Net Non-Operating Income & Expenses (1,347 ) 2,876 -
Income Tax Expenses (984 ) (876 ) 12.3
Net Income Attributable to Stockholders of the Parent 8,316 13,449 (38.2 )

EPS (NT$ per share)

0.68 1.08
(US$ per ADS) 0.105 0.167

Annual Sales Breakdown in Revenue for Foundry Segment

Region20162015
North America 49 % 46 %
Asia Pacific 44 % 40 %
Europe 4 % 7 %
Japan 3 % 7 %
Technology20162015
28nm and below 17 % 10 %
28nm<x<=40nm 27 % 24 %
40nm<x<=65nm 16 % 22 %
65nm<x<=90nm 4 % 5 %
90nm<x<=0.13um 11 % 13 %
0.13um<x<=0.18um 12 % 11 %
0.18um<x<=0.35um 10 % 12 %
0.5um and above 3 % 3 %
Customer Type20162015
Fabless 92 % 88 %
IDM 8 % 12 %
Application20162015
Computer 13 % 12 %
Communication 53 % 54 %
Consumer 27 % 28 %
Others 7 % 6 %

First Quarter of 2017 Outlook & Guidance

Quarter-over-Quarter Guidance:

  • Wafer Shipments: To decrease by approximately 1%
  • ASP in NTD: To decrease by approximately 3%
  • Profitability: Gross profit margin will be in the mid-teens % range
  • Foundry Segment Capacity Utilization: Approximately 90%
  • 2017 CAPEX for Foundry Segment: US$2.0bn

Recent Developments / Announcements

Dec 19, 2016

Cypress Ships MCUs Based on eCT Embedded Flash Manufactured at UMC

Nov 16, 2016

UMC Holds Grand Opening Ceremony for New 12-inch Wafer Fab in China

Oct 27, 2016

UMC Statement on Recent Media Report

Oct 26, 2016

UMC 3Q 2016 Financial Results

Please visit UMC’s website for further details regarding the above announcements

Conference Call / Webcast Announcement

Monday, January 23, 2017

Time: 5:00 PM (Taipei) / 4:00 AM (New York) / 09:00 AM (London)

Dial-in numbers and Access Codes:

USA Toll Free:

1-800 871-3110, 1-888 700-7397

Taiwan Number:

02-2192-8016

Other Areas:

+886-2-2192-8016

Access Code:

UMC

A live webcast and replay of the 4Q16 results announcement will be available at www.umc.com under the “Investors / Events” section.

About UMC

UMC (NYSE: UMC, TWSE: 2303) is a leading global semiconductor foundry that provides advanced IC production for applications spanning every major sector of the electronics industry. UMC’s robust foundry solutions enable chip designers to leverage the company’s sophisticated technology and manufacturing, which include volume production 28nm gate-last High-K/Metal Gate technology, ultra-low power platform processes specifically engineered for Internet of Things (IoT) applications and the automotive industry’s highest-rated AEC-Q100 Grade-0 manufacturing capabilities for production of ICs found in cars. UMC’s 11 wafer fabs are strategically located throughout Asia and are able to produce over 500,000 wafers per month. The company employs nearly 19,000 people worldwide, with offices in Taiwan, China, Europe, Japan, Korea, Singapore, and the United States. UMC can be found on the web at http://www.umc.com

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.

- FINANCIAL TABLES TO FOLLOW -

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 Dec 31, 2016, the three-month period ending Sep 30, 2016, and the equivalent three-month period that ended Dec 31, 2015. For all 4Q16 results, New Taiwan Dollar (NT$) amounts have been converted into U.S. Dollars at the Dec 31, 2016 exchange rate of NT$ 32.25 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.

UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES
Consolidated Condensed Balance Sheet
As of December 31, 2016
Figures in Millions of New Taiwan Dollars (NT$) and U.S. Dollars (US$)
December 31, 2016
US$ NT$ %
Assets
Current assets
Cash and cash equivalents 1,785 57,579 14.9 %
Financial assets at fair value through profit or loss, current 22 714 0.2 %
Notes & Accounts receivable, net 715 23,046 6.0 %
Inventories, net 527 16,998 4.4 %
Other current assets 376 12,133 3.1 %
Total current assets 3,425 110,470 28.6 %
Non-current assets
Funds and investments 1,078 34,766 9.0 %
Property, plant and equipment 6,976 224,983 58.2 %
Other non-current assets 510 16,436 4.2 %
Total non-current assets 8,564 276,185 71.4 %
Total assets 11,989 386,655 100.0 %
Liabilities
Current liabilities
Short-term loans 637 20,551 5.3 %
Financial liabilities at fair value through profit or loss, current 2 61 0.0 %
Payables 1,162 37,476 9.7 %
Current portion of long-term liabilities 326 10,501 2.7 %
Other current liabilities 105 3,389 0.9 %
Total current liabilities 2,232 71,978 18.6 %
Non-current liabilities
Bonds payable 1,069 34,482 8.9 %
Long-term loans 814 26,247 6.8 %
Other non-current liabilities 1,091 35,206 9.1 %
Total non-current liabilities 2,974 95,935 24.8 %
Total liabilities 5,206 167,913 43.4 %
Equity
Equity attributable to the parent company
Capital 3,915 126,243 32.7 %
Additional paid-in capital 1,271 40,997 10.6 %
Retained earnings, unrealized gain or loss on available-for-sale

financial assets and exchange differences on translation of

foreign operations

1,676 54,059 13.9 %
Treasury stock (146 ) (4,719 ) (1.2 %)
Total equity attributable to the parent company 6,716 216,580 56.0 %
Non-controlling interests 67 2,162 0.6 %
Total equity 6,783 218,742 56.6 %
Total liabilities and equity 11,989 386,655 100.0 %
Note:New Taiwan Dollars have been translated into U.S. Dollars at the December 31, 2016 exchange rate of NT $32.25 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 ComparisonQuarter over Quarter Comparison
Three-Month Period Ended Three-Month Period Ended
December 31, 2016 December 31, 2015 Chg. December 31, 2016 September 30, 2016 Chg.
US$ NT$ US$ NT$ % US$ NT$ US$ NT$ %
Net operating revenues 1,188 38,306 1,050 33,849 13.2 % 1,188 38,306 1,183 38,164 0.4 %
Operating costs (916 ) (29,547 ) (834 ) (26,870 ) 10.0 % (916 ) (29,547 ) (926 ) (29,863 ) (1.1 %)
Gross profit 272 8,759 216 6,979 25.5 % 272 8,759 257 8,301 5.5 %
22.9 % 22.9 % 20.6 % 20.6 % 22.9 % 22.9 % 21.8 % 21.8 %
Operating expenses
- Sales and marketing expenses (40 ) (1,282 ) (32 ) (1,044 ) 22.8 % (40 ) (1,282 ) (37 ) (1,207 ) 6.2 %
- General and administrative expenses (47 ) (1,521 ) (29 ) (916 ) 66.0 % (47 ) (1,521 ) (55 ) (1,769 ) (14.0 %)
- Research and development expenses (118 ) (3,824 ) (96 ) (3,105 ) 23.2 % (118 ) (3,824 ) (105 ) (3,397 ) 12.6 %
Subtotal (205 ) (6,627 ) (157 ) (5,065 ) 30.8 % (205 ) (6,627 ) (197 ) (6,373 ) 4.0 %
Net other operating income and expenses 4 144 (1 ) (34 ) - 4 144 (14 ) (443 ) -
Operating income 71 2,276 58 1,880 21.1 % 71 2,276 46 1,485 53.3 %
5.9 % 5.9 % 5.6 % 5.6 % 5.9 % 5.9 % 3.9 % 3.9 %
Net non-operating income and expenses (38 ) (1,210 ) 28 906 - (38 ) (1,210 ) 14 466 -
Income from continuing operations before

income tax

33 1,066 86 2,786 (61.7 %) 33 1,066 60 1,951 (45.4 %)
2.8 % 2.8 % 8.2 % 8.2 % 2.8 % 2.8 % 5.1 % 5.1 %
Income tax benefit (expense) (19 ) (617 ) 9 285 - (19 ) (617 ) (6 ) (195 ) 216.4 %
Net income 14 449 95 3,071 (85.4 %) 14 449 54 1,756 (74.4 %)
1.2 % 1.2 % 9.1 % 9.1 % 1.2 % 1.2 % 4.6 % 4.6 %
Other comprehensive income (loss) (18 ) (591 ) 55 1,776 - (18 ) (591 ) (68 ) (2,213 ) (73.3 %)
Total comprehensive income (loss) (4 ) (142 ) 150 4,847 - (4 ) (142 ) (14 ) (457 ) (68.9 %)
Net income attributable to:
  Stockholders of the parent 79 2,548 98 3,160 (19.4 %) 79 2,548 92 2,975 (14.4 %)
  Non-controlling interests (65 ) (2,099 ) (3 ) (89 ) 2,258.4 % (65 ) (2,099 ) (38 ) (1,219 ) 72.2 %
Comprehensive income (loss) attributable to:
  Stockholders of the parent 59 1,902 154 4,961 (61.7 %) 59 1,902 25 802 137.2 %
  Non-controlling interests (63 ) (2,044 ) (4 ) (114 ) 1,693.0 % (63 ) (2,044 ) (39 ) (1,259 ) 62.4 %
Earnings per share-basic 0.007 0.21 0.008 0.25 0.007 0.21 0.007 0.24
Earnings per ADS (2) 0.033 1.05 0.039 1.25 0.033 1.05 0.037 1.20
Weighted average number of shares
outstanding (in millions) 12,208 12,408 12,208 12,208
Notes:
(1) New Taiwan Dollars have been translated into U.S. Dollars at the December 31, 2016 exchange rate of NT $32.25 per U.S. Dollar.
(2) 1 ADS equals 5 common shares.
UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Comprehensive Income
Figures in Millions of New Taiwan Dollars (NT$) and U.S. Dollars (US$)
Except Per Share and Per ADS Data
For the Three-Month Period Ended For the Twelve-Month Period Ended
December 31, 2016 December 31, 2016
US$ NT$ % US$ NT$ %
Net operating revenues 1,188 38,306 100.0 % 4,585 147,870 100.0 %
Operating costs (916 ) (29,547 ) (77.1 %) (3,643 ) (117,491 ) (79.5 %)
Gross profit 272 8,759 22.9 % 942 30,379 20.5 %
Operating expenses
- Sales and marketing expenses (40 ) (1,282 ) (3.3 %) (142 ) (4,589 ) (3.1 %)
- General and administrative expenses (47 ) (1,521 ) (4.0 %) (180 ) (5,801 ) (3.9 %)
- Research and development expenses (118 ) (3,824 ) (10.0 %) (420 ) (13,532 ) (9.1 %)
Subtotal (205 ) (6,627 ) (17.3 %) (742 ) (23,922 ) (16.1 %)
Net other operating income and expenses 4 144 0.3 % (8 ) (263 ) (0.2 %)
Operating income 71 2,276 5.9 % 192 6,194 4.2 %
Net non-operating income and expenses (38 ) (1,210 ) (3.1 %) (42 ) (1,347 ) (0.9 %)
Income from continuing operations before

income tax

33 1,066 2.8 % 150 4,847 3.3 %
Income tax expense (19 ) (617 ) (1.6 %) (30 ) (984 ) (0.7 %)
Net income 14 449 1.2 % 120 3,863 2.6 %
Other comprehensive income (loss) (18 ) (591 ) (1.6 %) (136 ) (4,365 ) (2.9 %)
Total comprehensive income (loss) (4 ) (142 ) (0.4 %) (16 ) (502 ) (0.3 %)
Net income attributable to:
  Stockholders of the parent 79 2,548 6.7 % 258 8,316 5.6 %
  Non-controlling interests (65 ) (2,099 ) (5.5 %) (138 ) (4,453 ) (3.0 %)
Comprehensive income (loss) attributable to:
  Stockholders of the parent 59 1,902 5.0 % 124 3,983 2.7 %
  Non-controlling interests (63 ) (2,044 ) (5.4 %) (140 ) (4,485 ) (3.0 %)
Earnings per share-basic 0.007 0.21 0.021 0.68
Earnings per ADS (2) 0.033 1.05 0.105 3.40
Weighted average number of shares

outstanding (in millions)

12,208 12,289
Notes:
(1) New Taiwan Dollars have been translated into U.S. Dollars at the December 31, 2016 exchange rate of NT $32.25 per U.S. Dollar.
(2) 1 ADS equals 5 common shares.
UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statement of Cash Flows
For The Twelve-Month Period Ended December 31, 2016
Figures in Millions of New Taiwan Dollars (NT$) and U.S. Dollars (US$)
US$ NT$
Cash flows from operating activities :
Net income before tax 150 4,847
Depreciation & Amortization 1,612 51,984
Gain on disposal of investments (65 ) (2,098 )
Changes in notes & accounts receivable (114 ) (3,690 )
Changes in prepayments (293 ) (9,456 )
Changes in payables 40 1,304
Changes in other current liabilities 43 1,398
Changes in assets, liabilities and others 139 4,483
Income tax paid (72 ) (2,322 )
Net cash provided by operating activities 1,440 46,450
Cash flows from investing activities :
Proceeds from disposal of available-for-sale financial assets 112 3,626
Acquisition of property, plant and equipment (2,839 ) (91,561 )
Acquisition of intangible assets (48 ) (1,554 )
Others 292 9,403
Net cash used in investing activities (2,483 ) (80,086 )
Cash flows from financing activities :
Increase in short-term loans 469 15,129
Proceeds from long-term loans 764 24,629
Repayments of long-term loans (236 ) (7,624 )
Increase in other financial liabilities 495 15,979
Cash dividends (214 ) (6,907 )
Treasury stock acquired (74 ) (2,396 )
Others (1 ) (15 )
Net cash provided by financing activities 1,203 38,795
Effect of exchange rate changes on cash and cash equivalents (27 ) (870 )
Net Increase in cash and cash equivalents 133 4,289
Cash and cash equivalents at beginning of period 1,652 53,290
Cash and cash equivalents at end of period 1,785 57,579
Note: New Taiwan Dollars have been translated into U.S. Dollars at the December 31, 2016 exchange rate of NT $32.25 per U.S. Dollar.

Contacts:

UMC Investor Relations
Bowen Huang, +886-2-2658-9168, ext. 16900
bowen_huang@umc.com
or
David Wong, +886-2-2658-9168, ext. 16900
david_wong@umc.com

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