SMIC Reports 2013 Fourth Quarter Results

Operating Expenses (Income) Analysis

R&D expenses increased to $46.3 million in 4Q13, compared to $37.6 million in 3Q13. The increase was primarily due to an increase in R&D expenses associated with higher R&D activities from quarter to quarter and a decrease in funding of R&D contracts from the government in 4Q13 of $4.3 million compared to 3Q13.
General and administrative expenses increased to $36.6 million in 4Q13, up 48.1 % QoQ from $24.7 million in 3Q13, mainly due to 1) increased bad debt expense recognized in 4Q13 and 2) a bonus accrual relating to an increase in employee productivity in 4Q13.
Other operating income was $6.4 million in 4Q13, compared to $8.2 million in 3Q13. The change was mainly due to 1) a decrease of gain arising from the disposal of part of the Company-owned living quarters in Shanghai, and 2) gain arising from the deconsolidation of Brite Semiconductor Corporation and its subsidiaries due to loss of control.

Other Income (expense), Net

Amounts in US$ thousands	4Q13	3Q13	QoQ	4Q12	YoY
Other income (expense), net	7,756	(4,681)	-	(2,591)	-
Interest income	2,206	1,394	58.2%	1,276	72.9%
Finance costs	(5,789)	(8,673)	-33.3%	(10,449)	-44.6%
Foreign exchange gains or losses	6,228	2,404	159.1%	4,434	40.5%
Other gains or losses	4,607	(357)	-	2,044	125.4%
Share of profits of associates	504	551	-8.5%	104	384.6%

The change of other gains or losses was mainly due to 1) lower revenue from our schools as a result of summer vacation in 3Q13 and 2) a reversal of impairment loss from an available-for-sale investment which was recognized in 3Q13 due to subsequent recovery of the cost.

Depreciation and Amortization

Amounts in US$ thousands	4 Q1 3	3 Q1 3	QoQ	4 Q1 2	YoY
Depreciation and amortization	138,721	136,725	1.5%	140,021	-0.9%

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