SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of November 2004
Commission File Number 1-31994
SEMICONDUCTOR MANUFACTURING INTERNATIONAL CORPORATION
(Translation of Registrant’s Name Into English)
18 Zhangjiang Road
Pudong New Area, Shanghai 201203
People’s Republic of China
(Address of Principal Executive Offices)
(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F): Form 20-F x Form 40-F
(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1)): Yes ¨ No x
(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7)): Yes ¨ No x
(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934): Yes ¨ No x
(If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- )
Semiconductor Manufacturing International Corporation (the “Registrant”) is furnishing under the cover of Form 6-K:
Exhibit 99.1: Press release regarding Registrant’s third quarter results, dated October 28, 2004.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| SEMICONDUCTOR MANUFACTURING INTERNATIONAL CORPORATION | ||||||||
| Date: November 1, 2004 |
By: | /s/ RICHARD R. CHANG | ||||||
| Name: | Richard R. Chang | |||||||
| Title: | Chairman of the Board, President and Chief Executive Officer | |||||||
EXHIBIT INDEX
| Exhibit |
Description | |
| Exhibit 99.1: | Press release regarding Registrant’s third quarter results, dated October 28, 2004. |
Exhibit 99.1
| Semiconductor Manufacturing International Corporation www.smics.com |
18 Zhangjiang Road Pudong New Area Shanghai, People’s Republic of China |
NEWS RELEASE
All currency figures stated in this report are in US Dollars unless stated otherwise.
The financial statement amounts in this report are determined in accordance with US GAAP.
SMIC reports 2004 third quarter results
Highlights
| • | Sales increased to $274.9 million in 3Q04, up 24.4% from $221.0 million in 2Q04. |
| • | Income from operations increased to $42.5 million in 3Q04, up 16.9% from $36.4 million in 2Q04. |
| • | Income attributable to holders of ordinary shares increased to $39.3 million in 3Q04, up 15.2% from $34.2 million in 2Q04. |
| • | Compared to 2Q04, wafer shipments increased 30.9% to 263,808 8-inch wafers. |
| • | Basic EPS $0.0022 (HKD$0.0170(1)) per ordinary share and $0.1095 per ADS; diluted EPS $0.0022 (HKD$0.0170(1)) per ordinary share and $0.1079 per ADS. |
Shanghai, China – October 28, 2004. Semiconductor Manufacturing International Corporation (NYSE: SMI; SEHK: 981) (“SMIC” or the “Company”), one of the leading semiconductor foundries in the world, today announced its consolidated results of operations for the three months ended September 30, 2004. Sales increased 24.4% in the third quarter of 2004 to $274.9 million from $221.0 million in the prior quarter. Income from operations increased 16.9% in the third quarter of 2004 to $42.5 million from $36.4 million in the prior quarter.
The Company reported income attributable to holders of ordinary shares increased 15.2% in the third quarter of 2004 to $39.3 million from $34.2 million in the prior quarter, or $0.0022 per ordinary share and $0.1095 per ADS (on a fully diluted basis, $0.0022 per ordinary share, and $0.1079 per ADS).
“We are pleased to report continued growth through the third quarter of 2004,” said Dr. Richard Chang, President and Chief Executive Officer of SMIC. “During the third quarter of 2004, the Asia Pacific region showed particular strength with the Greater China region accounting for 6.6% of total sales. New and existing customers contributed to our strong third quarter fab utilization of 99%. We received relatively strong orders from our customers across all market segments, and in particular the communications products market segment. On September 25, 2004, we commemorated the grand opening of Fab 4, which is China’s first 12-inch wafer fab facility. While ramp up of Fab 4 remains on schedule as planned with mass production set for the fourth quarter of 2004, we will continue expansion based on market demands. We believe that as we continue to execute our business plans and reach technological milestones that, in the interests of our shareholders, we are laying a solid foundation for future growth and development.”
Note:
| (1) | Based on the exchange rate of HKD$7.7774 to USD$1.00 at the close of trading on October 25, 2004. (Source: Bloomberg) |
Conference call / Webcast announcement details
Date: October 28, 2004
Time: 8:00 p.m. Shanghai time
Dial-in numbers and access codes: U.S. 1-617-847-8711 or HK 852-3002-1672 (Pass codes: SMIC).
A live webcast of the third quarter results announcement will be available at http://www.smics.com/ under the “Investor Relations” section. An archived version of the webcast, along with a soft copy of this news release will be available on the SMIC website for a period of 12 months following the webcast.
About SMIC
SMIC (NYSE: SMI, SEHK: 0981.HK) is one of the leading semiconductor foundries in the world, providing integrated circuit (IC) manufacturing at 0.35-micron to 0.13-micron and finer line technologies to customers worldwide. Established in 2000, SMIC has four 8-inch wafer fabrication facilities in volume production in Shanghai and Tianjin. In addition, SMIC recently commenced pilot production at its 12-inch wafer fabrication facility in Beijing. SMIC maintains customer service and marketing offices in the U.S., Europe, and Japan. As part of its dedication towards providing high-quality services, SMIC strives to comply with or exceed international standards and has achieved ISO9001, ISO/TS16949, OHSAS18001, and ISO14001 certifications. For more information, please visit http://www.smics.com/.
Safe harbor statements
(Under the Private Securities Litigation Reform Act of 1995)
This press release may contain, in addition to historical information, “forward-looking statements” within the meaning of the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on SMIC’s current assumptions, expectations and projections about future events. SMIC uses words like “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions to identify forward-looking statements, although not all forward-looking statements contain these words. These forward-looking statements are necessarily estimates reflecting the best judgment of SMIC’s senior management and involve significant risks, both known and unknown, uncertainties and other factors that may cause SMIC’s actual performance, financial condition or results of operations to be materially different from those suggested by the forward-looking statements including, among others, risks associated with cyclicality and market conditions in the semiconductor industry, intense competition, timely wafer acceptance by SMIC’s customers, timely introduction of new technologies, SMIC’s ability to ramp new products into volume, supply and demand for semiconductor foundry services, industry overcapacity, shortages in equipment, components and raw materials, availability of manufacturing capacity and financial stability in end markets.
Investors should consider the information contained in SMIC’s filings with the U.S. Securities and Exchange Commission (SEC), including its registration statement on Form F-1, as amended, filed with the SEC on March 11, 2004, especially in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections, and its registration statement on Form A-1 as filed with the Stock Exchange of Hong Kong (SEHK) on March 8, 2004, and such other documents that SMIC may file with the SEC or SEHK from time to time, including on Form 6-K. Other unknown or unpredictable factors also could have material adverse effects on SMIC’s future results, performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this press release may not occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this press release.
Except as required by law, SMIC undertakes no obligation and does not intend to update any forward-looking statement, whether as a result of new information, future events or otherwise.
| Investor Contacts: |
||
| Jimmy Lai | Calvin Lau | |
| Investor Relations Department | Investor Relations Department | |
| Tel: 86-21-5080-2000, ext. 16088 | Tel: 86-21-5080-2000, ext. 16693 | |
| Fax: 86-21-5080-3619 | Fax: 86-21-5080-3619 | |
| Evonne Hwang | ||
| Investor Relations Department | ||
| Tel: 86-21-5080-2000, ext. 16275 | ||
| Fax: 86-21-5080-3619 | ||
Summary:
Amounts in US$ thousands, except for EPS
| 3Q04 |
2Q04 |
QoQ |
3Q03 |
YoY |
||||||||||||||
| Sales |
274,897 | 220,988 | 24.4 | % | 107,141 | 156.6 | % | |||||||||||
| Cost of sales |
(202,387 | ) | (159,507 | ) | 26.9 | % | (96,768 | ) | 109.1 | % | ||||||||
| Gross profit (loss) |
72,510 | 61,481 | 17.9 | % | 10,373 | 599.0 | % | |||||||||||
| Operating expenses |
(29,972 | ) | (25,091 | ) | 19.5 | % | (21,502 | ) | 39.4 | % | ||||||||
| Income (loss) from operations |
42,538 | 36,390 | 16.9 | % | (11,129 | ) | — | |||||||||||
| Other income (expenses) |
(3,195 | ) | (2,225 | ) | 43.6 | % | 2,673 | — | ||||||||||
| Net income (loss) |
39,343 | 34,165 | 15.2 | % | (8,456 | ) | — | |||||||||||
| Deemed dividend on preference |
||||||||||||||||||
| Shares |
— | — | — | (34,586 | ) | — | ||||||||||||
| Income (loss) attributable to holders of ordinary shares |
39,343 | 34,165 | 15.2 | % | (43,042 | ) | — | |||||||||||
| Gross profit margin |
26.4 | % | 27.8 | % | 9.7 | % | ||||||||||||
| Operating margin |
15.5 | % | 16.5 | % | -10.4 | % | ||||||||||||
| Basic EPS – per ordinary share(1) |
$ | 0.0022 | $ | 0.0019 | ($ | 0.4625 | ) | |||||||||||
| Basic EPS – per ADS |
$ | 0.1095 | $ | 0.0955 | ($ | 23.1237 | ) | |||||||||||
| Diluted EPS – per ordinary share |
$ | 0.0022 | $ | 0.0019 | ($ | 0.4624 | ) | |||||||||||
| Diluted EPS – per ADS |
$ | 0.1079 | $ | 0.0941 | ($ | 23.1237 | ) | |||||||||||
| Wafers shipped (in 8” wafers)(2) |
263,808 | 201,534 | 30.9 | % | 130,780 | 101.7 | % | |||||||||||
| Blended ASP |
$ | 991 | $ | 1,034 | -4.2 | % | $ | 771 | 28.5 | % | ||||||||
| Logic ASP(3) |
$ | 1,091 | $ | 1,089 | 0.2 | % | $ | 883 | 23.6 | % | ||||||||
| Capacity utilization |
99 | % | 99 | % | 93 | % | ||||||||||||
Note:
| (1) | Based on weighted average ordinary shares of 17,961 million in 3Q04 and 17,897 million in 2Q04 |
| (2) | Including copper interconnects |
| (3) | Excluding copper interconnects |
| • | Sales increased to $274.9 million in 3Q04, up 24.4% QoQ from $221.0 million in 2Q04 and 156.6% YoY from $107.1 million in 3Q03. Key factors leading to this increase were the following: |
| • | increased capacity to 99,043 8-inch wafers as of the end of 3Q04; |
| • | increased wafer shipments to 263,808, up 30.9% QoQ from 201,534 in 2Q04; and |
| • | high utilization rate of 99%. |
| • | Cost of sales increased to $202.4 million in 3Q04 from $159.5 million in 2Q04, primarily due to the increased wafer shipments. |
| • | Gross profit increased to $72.5 million in 3Q04, up 17.9% QoQ from $61.5 million in 2Q04 and up 599.0% from $10.4 million in 3Q03. |
| • | R&D expenses increased to $20.7 million in 3Q04, up 52.9%QoQ from $13.5 million in 2Q04, primarily due to non-recurring start up engineering costs associated with Fab 4 (Beijing) and 90nm research and development activities. |
| • | G&A expenses decreased to $3.8 million in 3Q04, down -36.3% QoQ from $6.0 million in 2Q04 due primarily to foreign exchange gains of $6.5 million relating to operating activities, i.e. accounts payable or accounts receivable. |
| • | Selling & Marketing expenses decreased slightly to $1.9 million in 3Q04. |
| • | Income (loss) from operations increased to $42.5 million in 3Q04, up 16.9% QoQ from $36.4 million in 2Q04 and from a loss of $11.1 million in 3Q03. |
| • | Other non-operating loss of $3.2 million in 3Q04 up 43.6% QoQ from a loss of $2.2 million in 2Q04 primarily due to foreign exchange losses of $3.6 million relating to non-operating activities resulting from financing or investment transactions, i.e. forward contracts are classified as other income (expenses). |
| • | Interest income increased to $3.1 million in 3Q04 due primarily to higher interest rates. |
| • | Net income increased to $39.3 million in 3Q04, up 15.2%QoQ from $34.2 million in 2Q04 and from a loss of $8.5 million in 3Q03. |
1. Analysis of revenues
| Sales analysis |
|||||||||||||||
| By Application |
3Q04 |
2Q04 |
1Q04 |
4Q03 |
3Q03 |
||||||||||
| Computer |
20.5 | % | 22.5 | % | 25.1 | % | 26.7 | % | 33.3 | % | |||||
| Communications |
57.2 | % | 54.3 | % | 56.0 | % | 55.8 | % | 48.2 | % | |||||
| Consumer |
17.1 | % | 17.1 | % | 12.7 | % | 13.5 | % | 11.7 | % | |||||
| Others |
5.2 | % | 6.1 | % | 6.2 | % | 4.0 | % | 6.8 | % | |||||
| By Device |
3Q04 |
2Q04 |
1Q04 |
4Q03 |
3Q03 |
||||||||||
| Logic (including copper interconnect) |
77.6 | % | 73.5 | % | 72.4 | % | 71.6 | % | 60.0 | % | |||||
| Memory |
17.5 | % | 20.8 | % | 21.6 | % | 24.5 | % | 34.0 | % | |||||
| Other (mask making & probing) |
4.9 | % | 5.7 | % | 6.0 | % | 3.9 | % | 6.0 | % | |||||
| By Customer Type |
3Q04 |
2Q04 |
1Q04 |
4Q03 |
3Q03 |
||||||||||
| Fabless semiconductor companies |
35.3 | % | 36.1 | % | 36.6 | % | 30.8 | % | 31.1 | % | |||||
| Integrated device manufacturers (IDM) |
56.3 | % | 54.8 | % | 54.0 | % | 62.7 | % | 49.2 | % | |||||
| System companies and others |
8.4 | % | 9.1 | % | 9.4 | % | 6.5 | % | 19.7 | % | |||||
| By Geography |
3Q04 |
2Q04 |
1Q04 |
4Q03 |
3Q03 |
||||||||||
| North America |
41.8 | % | 44.0 | % | 41.4 | % | 36.2 | % | 38.8 | % | |||||
| Asia Pacific (ex. Japan) |
31.5 | % | 26.5 | % | 27.2 | % | 28.6 | % | 38.2 | % | |||||
| Japan |
15.6 | % | 16.2 | % | 16.3 | % | 15.5 | % | 13.3 | % | |||||
| Europe |
11.1 | % | 13.3 | % | 15.1 | % | 19.7 | % | 9.7 | % | |||||
| Wafer revenue analysis |
|||||||||||||||
| By Technology (logic, memory & copper interconnect only) |
3Q04 |
2Q04 |
1Q04 |
4Q03 |
3Q03 |
||||||||||
| 0.13µm |
11.9 | % | 9.9 | % | 10.1 | % | 10.4 | % | 15.0 | % | |||||
| 0.15µm |
13.2 | % | 13.3 | % | 15.7 | % | 17.5 | % | 10.0 | % | |||||
| 0.18µm |
46.2 | % | 48.6 | % | 44.4 | % | 34.7 | % | 19.7 | % | |||||
| 0.25µm |
6.4 | % | 8.3 | % | 8.3 | % | 10.6 | % | 33.7 | % | |||||
| 0.35µm |
22.3 | % | 19.9 | % | 21.5 | % | 26.8 | % | 21.6 | % | |||||
| By Logic Only(1) |
3Q04 |
2Q04 |
1Q04 |
4Q03 |
3Q03 |
||||||||||
| 0.13µm |
1.8 | % | 0.9 | % | 0.0 | % | 0.0 | % | 0.0 | % | |||||
| 0.15µm |
4.6 | % | 3.9 | % | 4.4 | % | 1.9 | % | 0.3 | % | |||||
| 0.18µm |
56.2 | % | 63.0 | % | 58.5 | % | 52.9 | % | 40.3 | % | |||||
| 0.25µm |
6.1 | % | 3.1 | % | 5.0 | % | 3.4 | % | 15.1 | % | |||||
| 0.35µm |
31.3 | % | 29.1 | % | 32.1 | % | 41.8 | % | 44.3 | % | |||||
Note:
| (1) | Excluding 0.13µm copper interconnects |
| • | Sales from the communications products segment grew faster than other applications in 3Q04 compared to 2Q04. |
| • | Percentage of sales from logic wafers, including copper interconnects, increased to 77.6% of sales in 3Q04, as compared to 73.5% in 2Q04 and 60.0% in 3Q03. |
| • | IDM companies accounted for 56.3% of sales in 3Q04, as compared to 54.8% in 2Q04. |
| • | Percentage of sales generated from Asia Pacific (ex. Japan) customers increased to 31.5% in 3Q04, as compared to 26.5% in 2Q04, primarily due to the Greater China region, which accounted for 6.6% of total sales in 3Q04. |
| • | Percentage of wafer revenues from 0.18µm and below technologies remained relatively unchanged with 71.3% of sales in 3Q04, as compared with 71.8% in 2Q04 and 44.7% in 3Q03. |
Capacity:
wafers per month at the end of the period in 8” wafers
| Fab / (Wafer Size) |
3Q04 |
2Q04 | ||
| Fab 1 (8”) |
38,820 | 33,675 | ||
| Fab 2 (8”) |
34,824 | 31,098 | ||
| Fab 7 (8”) |
10,322 | 6,000 | ||
| Total monthly wafer fabrication capacity |
83,966 | 70,773 | ||
| Copper Interconnects: |
||||
| Fab 3 (8”) |
15,077 | 10,099 | ||
| Total monthly copper interconnect capacity |
15,077 | 10,099 | ||
| • | As of the end of 3Q04, monthly capacity increased to 99,043 wafers, as the Company continued to ramp up Fabs 1, 2, 3, and 7. |
Shipment and utilization:
| 8” wafers |
3Q04 |
2Q04 |
1Q04 |
4Q03 |
3Q03 |
||||||||||
| Wafer shipments including copper interconnects |
263,808 | 201,534 | 174,325 | 153,125 | 130,780 | ||||||||||
| Utilization rate(1) |
99 | % | 99 | % | 99 | % | 97 | % | 93 | % | |||||
Note:
| (1) | Capacity utilization based on total wafer out divided by estimated capacity |
| • | Wafer shipments increased to 263,808 units of 8-inch wafers in 3Q04 up 30.9% QoQ from 201,534 units of 8-inch wafers in 2Q04, and up 101.7%YoY from 130,780 8-inch wafers in 3Q03. |
| • | The utilization rate remained at 99%. |
| Blended average selling price trend | Logic average selling price trend (excluding 0.13µm copper interconnects) | |
 |
 | |
| The blended ASP decreased to $991 in 3Q04 from $1,034 in 2Q04 and increased from $771 in 3Q03, mainly due to the shift to production of more mature logic wafers. | The logic ASP (excluding 0.13µm copper interconnects) increased to $1,091 in 3Q04 from $1,089 in 2Q04 and $883 in 3Q03, mainly due to the production of more 0.15µm and below logic wafers, the adoption of more advanced process technologies, and the establishment of the Company in the market. | |
2. Detailed financial analysis
Gross profit analysis
| Amounts in US$ thousands |
3Q04 |
2Q04 |
QoQ |
3Q03 |
YoY |
||||||||||
| Cost of sales |
(202,387 | ) | (159,507 | ) | 26.9 | % | (96,768 | ) | 109.1 | % | |||||
| Depreciation |
(108,214 | ) | (83,990 | ) | 28.8 | % | (47,476 | ) | 127.9 | % | |||||
| Other manufacturing costs |
(94,173 | ) | (75,517 | ) | 24.7 | % | (49,292 | ) | 91.1 | % | |||||
| Gross Profit |
72,510 | 61,482 | 17.9 | % | 10,373 | 599.0 | % | ||||||||
| Gross Margin |
26.4 | % | 27.8 | % | 9.7 | % | |||||||||
| • | Cost of sales increased to $202.4 million in 3Q04, up 26.9% QoQ from $159.5 million in 2Q04 primarily due to the increase in wafer shipments. |
| • | Gross profit increased to $72.5 million in 3Q04, up 17.9% QoQ from $61.5 million in 2Q04 and 599.0% YoY from $10.4 million in 3Q03. |
| • | Gross margin decreased to 26.4% in 3Q04 from 27.8% in 2Q04, primarily due to the 4.2% decrease in ASP offset by improvements in manufacturing efficiency. |
Operating expense analysis
| Amounts in US$ thousands |
3Q04 |
2Q04 |
QoQ |
3Q03 |
YoY |
||||||||||
| Total operating expense |
(29,972 | ) | (25,091 | ) | 19.5 | % | (21,502 | ) | 39.4 | % | |||||
| Research and development |
(20,688 | ) | (13,533 | ) | 52.9 | % | (8,272 | ) | 150.1 | % | |||||
| General and administrative |
(3,831 | ) | (6,019 | ) | -36.3 | % | (8,896 | ) | -56.9 | % | |||||
| Selling and marketing |
(1,899 | ) | (1,940 | ) | -2.1 | % | (2,747 | ) | -30.9 | % | |||||
| Amortization of deferred stock compensation |
(3,554 | ) | (3,599 | ) | -1.3 | % | (1,587 | ) | 123.9 | % | |||||
| • | Total operating expenses increased to $30.0 million in 3Q04, up 19.5% QoQ from $25.1 million in 2Q04, and 39.4% YoY from $21.5 million in 3Q03. |
| • | R&D expenses increased to $20.7 million in 3Q04, up 52.9% QoQ from $13.5 million in 2Q04, primarily due to non-recurring start up engineering costs associated with Fab 4 (Beijing) and 90nm research and development activities. |
Other income (expenses)
| Amounts in US$ thousands |
3Q04 |
2Q04 |
QoQ |
3Q03 |
YoY |
||||||||||
| Other income (expenses) |
(3,195 | ) | (2,225 | ) | 43.6 | % | 2,672 | — | |||||||
| Interest income |
3,106 | 2,733 | 13.6 | % | 1,563 | 98.7 | % | ||||||||
| Interest expense |
(3,614 | ) | (2,760 | ) | 31.0 | % | (207 | ) | 1,645.9 | % | |||||
| Other, net |
(2,687 | ) | (2,198 | ) | 22.2 | % | 1,316 | — | |||||||
| Deemed dividend |
— | — | — | (34,586 | ) | — | |||||||||
| • | Other non-operating loss of $3.2 million in 3Q04 due primarily to foreign exchange losses of $3.6 million. |
| • | Interest income increased to $3.1 million in 3Q04 due primarily to higher interest rates. |
3. Liquidity
| Amounts in US$ thousands |
3Q04 |
2Q04 | ||
| Cash and cash equivalents |
950,165 | 1,198,592 | ||
| Short term investments |
90,823 | 90,464 | ||
| Accounts receivable |
187,235 | 131,708 | ||
| Inventory |
134,757 | 113,563 | ||
| Others |
33,371 | 40,459 | ||
| Total current assets |
1,396,351 | 1,574,786 | ||
| Accounts payable |
717,756 | 699,587 | ||
| Current portion of long-term debt |
191,984 | 95,992 | ||
| Others |
85,245 | 54,443 | ||
| Total current liabilities |
994,985 | 850,022 | ||
| Cash Ratio |
1.0x | 1.4x | ||
| Quick Ratio |
1.3x | 1.7x | ||
| Current Ratio |
1.4x | 1.9x | ||
| • | Cash and cash equivalents decreased to $950.2 million from $1,198.6 million, primarily due to capital expenditure purchases relating to the ramp up of Fabs 1, 2, 3, 4, and 7. |
Receivable/Inventory days outstanding trends
Capital Structure
| Amounts in US$ thousands |
3Q04 |
2Q04 |
||||
| Cash and cash equivalents |
950,165 | 1,198,592 | ||||
| Short-term investment |
90,823 | 90,464 | ||||
| Short-term borrowings |
20,000 | — | ||||
| Current portion of long-term debt |
191,984 | 95,992 | ||||
| Long-term debt |
544,454 | 413,965 | ||||
| Total debt |
756,438 | 509,957 | ||||
| Net cash |
284,550 | 779,099 | ||||
| Shareholders’ equity |
3,112,912 | 3,065,507 | ||||
| Total debt to equity ratio |
24.3 | % | 16.6 | % | ||
| • | Total debt increased to $756.4 million in 3Q04 compared with $510.0 million in 2Q04. |
| • | Total debt-to-equity ratio increased to 24.3% in 3Q04 from 16.6% in 2Q04. |
4. Cashflow & Capex
| Amounts in US$ thousands |
3Q04 |
2Q04 |
||||
| Net income |
39,343 | 34,165 | ||||
| Depreciation & amortization |
122,636 | 101,790 | ||||
| Amortization of acquired intangible assets |
3,508 | 3,532 | ||||
| Net change in cash |
(248,428 | ) | (174,480 | ) | ||
Capex plans
| • | Planned capital expenditures for 2004 increased to approximately $2,000 million. |
5. 4Q04 outlook and guidance
| • | Wafer shipments expected to increase by 15-20%. |
| • | Utilization to expected to be in the mid to high 90%s. |
| • | Blended ASP expected to decline by 5-7%. |
| • | Percentage of sales from 0.18µm and below, including copper interconnects, expected to decrease by a mid single digit percentage point. |
| • | Gross margins expected to remain similar to 3Q04. |
| • | Operating expenses as a percentage of sales expected to increase to mid to high teens. |
| • | Capital expenditures of approximately $350-400 million. |
| • | Depreciation and amortization of approximately $150-160 million. |
| • | Deferred compensation charge of approximately $7 million, of which approximately $4 million will be charged to operating expenses and $3 million in cost of sales. |
6. Recent announcements
| • | Unusual Price and Volume Movement and Articles Regarding the Production of 90nm Chips [2004-10-10] |
| • | Statement in the Form as Prescribed in Rules 13.10 Note (2) of the Listing Rules [2004-10-07] |
| • | Announcement Pursuant to Rules 2.07A and 2.07B [2004-09-30] |
| • | The First 12-inch Wafer Fab in China Mainland Starts Production Successfully [2004-09-25] |
| • | SMIC held Technology Symposium 2004 [2004-09-03] |
| • | Interim Results for the Six Months Ended June 30, 2004 [2004-09-01] |
| • | SMIC Launches 0.18m High Voltage Single-Chip LCD Driver Technology [2004-08-27] |
| • | SMIC will vigorously defend against new claims from TSMC and advocates fair competition [2004-08-24] |
| • | MOSYS’ Ultra-High Reliability 1T-SRAM-R Technology Verified on SMIC 0.13-micron Logic Process [2004-07-28] |
| • | Toppan and SMIC Sign a Joint Venture Agreement [2004-07-21] |
| • | Mentor Graphics Offers Technology Design Kit and Design Flow for SMIC 0.18-micron Mixed-Signal Process. [2004-07-08] |
Please visit SMIC’s website www.smics.com for further details regarding the above announcements.
SMIC Financials
Semiconductor Manufacturing International Corporation
CONSOLIDATED BALANCE SHEET
(In US dollars)
| As of the end of |
||||||
| September 30, 2004 (unaudited) |
June 30, 2004 (unaudited) |
|||||
| ASSETS | ||||||
| Current assets: |
||||||
| Cash and cash equivalents |
950,164,909 | 1,198,592,423 | ||||
| Short term investments |
90,823,297 | 90,463,911 | ||||
| Accounts receivable, net off allowances of $421,681 and $356,826 respectively |
187,235,125 | 131,707,549 | ||||
| Inventories |
134,757,006 | 113,562,540 | ||||
| Prepaid expense and other current assets |
8,495,044 | 7,867,504 | ||||
| Assets held for sale |
24,875,320 | 32,591,632 | ||||
| Total current assets |
1,396,350,701 | 1,574,785,559 | ||||
| Land use rights, net |
34,630,167 | 34,803,658 | ||||
| Plant and equipment |
3,785,221,468 | 3,159,564,426 | ||||
| Accumulated depreciation |
(623,572,186 | ) | (501,436,777 | ) | ||
| Plant and equipment, net |
3,161,649,282 | 2,658,127,649 | ||||
| Acquired intangible assets, net |
59,720,325 | 61,777,449 | ||||
| TOTAL ASSETS |
4,652,350,474 | 4,329,494,315 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| Current liabilities: |
||||||
| Short-term borrowings |
20,000,000 | — | ||||
| Current portion of long-term debt |
191,983,707 | 95,991,900 | ||||
| Accounts payable |
717,756,459 | 699,586,755 | ||||
| Accrued expenses and other current liabilities |
65,244,711 | 54,443,275 | ||||
| Total current liabilities |
994,984,877 | 850,021,930 | ||||
| Long-term liabilities: |
||||||
| Long-term debt |
544,453,946 | 413,965,135 | ||||
| Total long-term liabilities |
544,453,946 | 413,965,135 | ||||
| Total liabilities |
1,539,438,823 | 1,263,987,065 | ||||
| Commitments |
||||||
| Stockholders' equity: |
||||||
| Ordinary shares, $0.0004 par value, 50,000,000,000 shares authorized, shares issued and outstanding 18,228,120,120 and 18,224,817,010 respectively |
7,291,249 | 7,289,927 | ||||
| Warrants |
50,297 | 124,920 | ||||
| Additional paid-in capital |
3,291,017,646 | 3,294,693,501 | ||||
| Notes receivable from stockholders |
(876,911 | ) | (1,891,580 | ) | ||
| Accumulated other comprehensive income |
776,915 | 400,320 | ||||
| Deferred stock compensation |
(60,178,603 | ) | (70,597,602 | ) | ||
| Accumulated deficit |
(125,168,942 | ) | (164,512,236 | ) | ||
| Total stockholders' equity |
3,112,911,651 | 3,065,507,250 | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
4,652,350,474 | 4,329,494,315 | ||||
Semiconductor Manufacturing International Corporation
CONSOLIDATED STATEMENT OF OPERATIONS
(In US dollars)
| For the three months ended |
||||||
| September 30, 2004 (unaudited) |
June 30, 2004 (unaudited) |
|||||
| Sales |
274,897,225 | 220,988,561 | ||||
| Cost of sales |
(199,163,928 | ) | (156,952,228 | ) | ||
| Cost of sales - Amortization of deferred stock compensation |
(3,223,528 | ) | (2,554,781 | ) | ||
| Gross profit |
72,509,769 | 61,481,552 | ||||
| Operating expenses: |
||||||
| Research and development |
(20,688,265 | ) | (13,532,637 | ) | ||
| General and administrative |
(3,831,441 | ) | (6,019,392 | ) | ||
| Selling and marketing |
(1,899,002 | ) | (1,940,035 | ) | ||
| Amortization of deferred stock compensation* |
(3,553,558 | ) | (3,599,151 | ) | ||
| Total operating expense |
(29,972,266 | ) | (25,091,215 | ) | ||
| Income from operations |
42,537,503 | 36,390,337 | ||||
| Other income (expenses): |
||||||
| Interest income |
3,107,173 | 2,732,629 | ||||
| Interest expense |
(3,614,187 | ) | (2,759,605 | ) | ||
| Others, net |
(2,687,195 | ) | (2,197,963 | ) | ||
| Total other income, net |
(3,194,209 | ) | (2,224,939 | ) | ||
| Net income |
39,343,294 | 34,165,398 | ||||
| Deemed dividends on preference shares |
— | — | ||||
| Income attributable to holders of ordinary shares |
39,343,294 | 34,165,398 | ||||
| Net income per ordinary share, basic |
0.0022 | 0.0019 | ||||
| Net income per ADS, basic(1) |
0.1095 | 0.0955 | ||||
| Net income per ordinary share, diluted |
0.0022 | 0.0019 | ||||
| Net income per ADS, diluted(1) |
0.1079 | 0.0941 | ||||
| Shares used in calculating basic net income per ordinary share (in millions) |
17,961 | 17,897 | ||||
| Shares used in calculating diluted net income per ordinary share (in millions) |
18,225 | 18,147 | ||||
| *Amortization of deferred stock compensation related to: |
||||||
| Research and development |
1,346,112 | 1,301,740 | ||||
| General and administrative expenses |
1,667,791 | 1,671,587 | ||||
| Selling and marketing |
539,655 | 625,824 | ||||
| Total |
3,553,558 | 3,599,151 | ||||
| (1) | 1 ADS equals 50 ordinary shares. |
Semiconductor Manufacturing International Corporation
CONSOLIDATED STATEMENT OF CASH FLOWS
(In US dollars)
| For the three months ended |
||||||
| September 30, 2004 (unaudited) |
June 30,2004 (unaudited) |
|||||
| Operating activities: |
||||||
| Income attributable to holders of ordinary shares |
39,343,294 | 34,165,398 | ||||
| Deemed dividends on preference shares |
— | — | ||||
| Net income |
39,343,294 | 34,165,398 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||
| Gain (loss) on disposal of plant and equipment |
(486,231 | ) | 20,676 | |||
| Bad debt expense |
64,855 | 280,391 | ||||
| Depreciation and amortization |
122,635,996 | 101,789,774 | ||||
| Amortization of acquired intangible assets |
3,507,555 | 3,531,649 | ||||
| Amortization of deferred stock compensation |
6,777,086 | 6,153,932 | ||||
| Changes in operating assets and liabilities: |
||||||
| Accounts receivable |
(55,592,431 | ) | (15,175,779 | ) | ||
| Inventories |
(21,194,466 | ) | (28,083,387 | ) | ||
| Prepaid expense and other current assets |
115,508 | 10,148,004 | ||||
| Accounts payable |
8,805,299 | 21,703,089 | ||||
| Accrued expenses and other current liabilities |
15,264,958 | 7,876 | ||||
| Net cash provided by operating activities |
119,241,423 | 134,541,623 | ||||
| Investing activities: |
||||||
| Purchases of plant and equipment |
(617,011,320 | ) | (351,833,464 | ) | ||
| Purchases of aquired intangible assets |
(728,529 | ) | (2,611,626 | ) | ||
| Purchase of short-term investments |
— | (64,132,303 | ) | |||
| Sale of short-term investments |
— | 1,005,977 | ||||
| Sale of investments held to maturity |
— | 3,004,297 | ||||
| Proceeds received for assets held for sale |
3,025,118 | 1,530,794 | ||||
| Proceeds from disposal of plant and equipment |
52,196 | 440,078 | ||||
| Net cash used in investing activities |
(614,662,535 | ) | (412,596,247 | ) | ||
| Financing activities: |
||||||
| Proceeds from long-term debt |
226,480,618 | 16,066,960 | ||||
| Proceeds from short-term debt |
20,000,000 | — | ||||
| Proceeds from exercise of employee stock option |
495,772 | 32,166,207 | ||||
| Collection of subscription receivables |
— | 93,000,000 | ||||
| Change in deposit received from stockholders |
— | (37,772,810 | ) | |||
| Net cash provided by financing activities |
246,976,390 | 103,460,357 | ||||
| Effect of foreign exchange rate changes |
17,208 | 114,441 | ||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
(248,427,514 | ) | (174,479,826 | ) | ||
| CASH AND CASH EQUIVALENTS, beginning of period |
1,198,592,423 | 1,373,072,249 | ||||
| CASH AND CASH EQUIVALENTS, end of period |
950,164,909 | 1,198,592,423 | ||||