Depreciation and amortization expenses totaled NT$9.15 billion in 4Q08, compared to NT$9.22 billion in 3Q08. Depreciation within COGS decreased by 5% to NT$7.68 billion. General & administration and R&D expenses decreased largely because of expense control activities in 4Q08. The increase on sales & marketing expenses was mainly due to increase in IP amortization. As a result, total operating expenses decreased 10.2% to NT$3.07 billion. The total R&D expense was 10.6% of revenue in 4Q08.
Non-operating Income (Expenses)
(Amount: NT$ million) 4Q08 3Q08 4Q07
Net Non-operating Income (Exp.) (21,784) (2,105) 1,097
Net Interest Income (Expense) 115 108 143
Net Investment Income (Loss) (15,465) (2,860) (1,124)
Gain on Disposal of Investment 52 611 2,025
Exchange Gain (Loss) 345 735 108
Others (6,831) (699) (55)
Net non-operating losses during 4Q08 were NT$21.78 billion. Net investment losses were NT$15.47 billion, including NT$12.32 billion of investment losses accounted for under the equity method, NT$2.82 billion of other-than-temporary impairment losses on financial assets pursuant to ROC GAAP SFAS No.34, and a NT$387 million loss from valuation of ProMos shares. Gains on the disposal of investments were NT$52 million, mainly coming from the sale of ITE shares. Other losses included NT$4.07 billion impairment loss on goodwill and idle assets pursuant to SFAS No.35, and NT$2.68 billion loss from decline in market value of inventories pursuant to SFAS No.10.
Cash Flow Summary
For the 3-Month For the 3-Month
(Amount: NT$ million) Period Ended Period Ended
Dec. 31, 2008 Sep. 30, 2008
Cash Flow from Operations 12,729 13,792
Net Income (Loss) (23,510) (1,413)
Depreciation & Amortization 9,154 9,224
Changes in working capital 4,601 865
Others 22,484 5,116
Cash Flow from Investing (2,330) (2,143)
Capital Expenditures (1,471) (1,778)
Others (859) (365)
Cash Flow from Financing 508 (12,225)
Long term loan 700 --
Cash Dividend -- (9,383)
Purchase of treasury stock (191) (2,087)
Others (1) (755)
Effect of exchange rate 23 352
Net Cash Flow 10,930 (224)
Net cash inflow was NT$10.93 billion in 4Q08. Operating cash inflow was NT$12.73 billion. Most of the non-operating losses during 4Q08 were non-cash charges; they did not have any impact on the cash flow. Free cash flow (Note 2) for 4Q08 was NT$11.26 billion. Free cash flow for entire 2008 was NT$33.35 billion. Over the next 12 months, UMC expects to repay NT$66.7 million in term loans.
Note 2: Free cash flow = Operating cash flow - Capital expenditures
Current Assets
(Amount: NT$ billion) 4Q08 3Q08 4Q07
Cash & Cash Equivalents 36.12 25.19 37.45
Notes & Accounts Receivable 7.80 14.12 13.62
Days Sales Outstanding 54 53 51
Inventory 7.77 11.76 11.33
Avg. Inventory Turnover 55 55 47
Total Current Assets 54.61 54.89 68.25
Cash and cash equivalents increased NT$10.93 billion to NT$36.12 billion.
The decrease in notes & accounts receivable and inventory primarily reflected
the downward trend of the business. Average inventory turnover remained at 55
days at the end of 4Q08.
Liabilities
(Amount: NT$ billion) 4Q08 3Q08 4Q07
Total Current Liabilities 11.43 14.64 43.06
Accounts Payable 2.05 3.84 4.80
Short-term Credit / Bonds 0.07 0.00 22.89
Others 9.31 10.80 15.37
Long-term Liabilities 8.13 7.50 7.60
Total Liabilities 23.31 25.85 54.30
Debt to Equity 13% 13% 23%
