-- 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.
Overview:
* Sales increased to $383.8 million in 4Q06, up 15.2% from 4Q05 and up
4.0% sequentially.
* ASP increased to $904 in 4Q06 from $891 in 3Q06 and $885 from 4Q05.
* Revenue from 90 nanometer contributed 14.4% of total wafer revenue in
4Q06 as compared to 4.9% in 3Q06.
* Gross margins of 6.6% in 4Q06 from 8.9% in 3Q06.
* The Company recorded a disposal gain of $41.7 million from the sale of
properties in 4Q06.
* Net income of $1.2 million in 4Q06, compared to a net loss of $15.0
million in 4Q05 and net loss of $35.1 million in the previous quarter.
SHANGHAI, China, Jan. 31 /Xinhua-PRNewswire/ -- 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 December 31, 2006. Sales increased 4.0% in the fourth quarter of 2006 to $383.8 million from $368.9 million in the third quarter. The Company reported an increase in capacity to 182,250 8-inch equivalent wafers per month and a utilization rate of 86.6% in the fourth quarter of 2006. Gross margins were 6.6% in the fourth quarter of 2006 compared to 8.9% in the third quarter of 2006. Net income of $1.2 million in the fourth quarter of 2006, compared to a net loss of $15.0 million in the fourth quarter of 2005 and a net loss of $35.1 million in the third quarter of 2006.
"SMIC posted record revenues of $1.46 billion dollars in 2006, which represented a 25% increase year over year," said Dr. Richard Chang, Chief Executive Officer of SMIC. "Gross profit grew by 68% year over year to $150.7 million dollars. We were able to reduce our net loss by 64% year over year and managed to increase EBITDA by 25% year over year to $911.1 million dollars.
Our fourth quarter revenue from advanced technology nodes demonstrates SMIC's ability to meet the needs of a growing customer base. The positive product mix shift resulted in 90 nanometer and 130 nanometer technologies contributing 57.4% of total wafer revenues, up from their 46.1% contribution in the third quarter.
There was particular strength in the PC related ICs, DTV, MP3/4, and Bluetooth applications. Also, we had eight new Mainland China customer wins during the fourth quarter.
SMIC will keenly focus on generating profitability for our shareholders. We will continue to develop our capabilities according to our technology roadmap in a fiscally responsible manner. Our 65nm technology development is progressing smoothly. The Chengdu and Wuhan projects allow us to continue to grow our business while managing our internal capital expenditure in an efficient manner. These projects will allow us to better serve our international customers while positioning ourselves closer to potential Chinese customers.
In the fourth quarter, the strategic decision to sell some of SMIC's matured technology machinery and equipment further lowered our future depreciation expenses and enabled the Company to expand towards more advanced technologies. We plan to have controlled capital expenditures of $720 million for 2007.
For the first quarter of 2007, we are expecting more than 17% of our total wafer revenue to come from 90nm sales. We believe the continued prudent development of advanced technology nodes for leading customers positions SMIC for continual growth and improved profitability in 2007."
Conference Call / Webcast Announcement
Date: January 31, 2007
Time: 8:00 a.m. Shanghai time
Dial-in numbers and pass code: U.S. 1-617-597-5342 or HK 852-3002-1672 (Pass code: SMIC).
A live webcast of the 2006 fourth quarter 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: 981) is one of the leading semiconductor foundries in the world and the largest and most advanced foundry in Mainland China, providing integrated circuit (IC) manufacturing service at 0.35mm to 90nm and finer line technologies. Headquartered in Shanghai, China, SMIC operates three 200mm fabs in Shanghai and one in Tianjin, and one 300mm fab in Beijing, the first of its kind in Mainland China. SMIC has customer service and marketing offices in the U.S., Italy, and Japan as well as a representative office in Hong Kong. For additional 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, including statements concerning SMIC's plans to develop its capabilities, build its China customer base and expand its capacity, anticipated decreases in depreciation expenses, the percentage of total wafer revenue expected to come from 90nm sales, SMIC's ability to grow and improve profitability in 2007, and statements under "Capex Summary" and "First Quarter 2007 Guidance" 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 annual report on 20-F, as amended, filed with the SEC on June 29, 2006, 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.
Litigation
The Company is subject to a pending lawsuit with Taiwan Semiconductor Manufacturing Company, Limited ("TSMC"), related to the intangible assets, with a net book value of $94.5 million, the Company recorded for patents licensed from TSMC and TSMC's covenant not to sue the Company regarding certain allegations of acts of trade secret misappropriation. Under SFAS 144, the Company is required to make a determination as to whether or not this pending litigation represents an event that requires a further analysis of whether such assets have been impaired. We believe that the lawsuit is at a very early stage, TSMC has not produced any evidence of misappropriation and we are still evaluating whether or not the litigation represents such an event. The Company expects further information to become available to us, which will aid us in making a determination. The outcome of any impairment analysis performed under SFAS 144 might result in a material impact on our financial positions and results of operations.
On September 13, 2006, the Company announced that in addition to filing a response (on September 12, 2006) strongly denying the allegations of TSMC in the United States lawsuit, the Company also filed a cross-complaint against TSMC, seeking, amongst other things, damages for TSMC's breach of contract and breach of implied covenant of good faith and fair dealing.
On November 16, 2006, the High Court in Beijing, the People's Republic of China accepted the filing of a complaint by the Company and its wholly-owned subsidiaries, Semiconductor Manufacturing International (Shanghai) Corporation and Semiconductor Manufacturing International (Beijing) Corporation regarding the unfair competition arising from the breach of bona fide (i.e., integrity, good faith) principle and commercial defamation by TSMC ("PRC Complaint"). In the PRC Complaint, the Company is seeking, amongst other things, an injunction to stop TSMC's infringing acts, public apology from TSMC to the Company and compensation from TSMC to the Company, including profits gained by TSMC from their infringing acts.
Summary of Fourth Quarter 2006 Operating Results
Amounts in US$ thousands, except for EPS and operating data
4Q06 3Q06 QoQ 4Q05 YoY
Sales 383,812 368,926 4.0% 333,052 15.2%
Cost of sales 358,452 336,160 6.6% 290,094 23.6%
Gross profit 25,360 32,766 -22.6% 42,958 -41.0%
Operating expenses 10,569 46,190 -77.1% 51,756 -79.6%
Income (Loss) from operations 14,791 (13,424) -- (8,798) --
Other income (expenses)，net (16,468) (20,947) -21.4% (5,852) 81.4%
Income tax credit (expense) 3,003 3,048 -1.5% (152) --
Net income (loss) after
income taxes 1,325 (31,323) -- (14,802) --
Minority interest 941 (2,674) -- (176) --
Share of loss of affiliate
company (1,044) (1,097) -4.8% -- --
Income (loss) attributable to
holders of ordinary shares
1,222 (35,094) -- (14,978) --
Gross margin 6.6% 8.9% 12.9%
Operating margin 3.9% -3.6% -2.6%
Net income (loss) per ordinary
share - basic(1) 0.0001 (0.0019) (0.0008)
Net income (loss) per ADS -
basic 0.0033 (0.0956) (0.0410)
Net income (loss) per ordinary
share - diluted(1) 0.0001 (0.0019) (0.0008)
Net income (loss) per ADS -
diluted 0.0033 (0.0956) (0.0410)
Wafers shipped (in 8"
wafers)(2) 424,395 413,985 2.5% 376,227 12.8%
ASP(3) $904 $891 1.5% $885 2.1%
Capacity utilization 86.6% 84.3% 93.0%
Note:
(1) Based on weighted average ordinary shares of 18,398 million (basic)
and 18,609 million (diluted) in 4Q06, 18,356 million in 3Q06 and
18,251 million in 4Q05
(2) Including copper interconnects
(3) Total sales/total wafers shipped
-- Sales increased to $383.8 million in 4Q06, up 4.0% QoQ from $368.9
million in 3Q06 and up 15.2% YoY from $333.1 million in 4Q05 primarily
due to increased 8-inch equivalent wafer shipments of 424,395, up 2.5%
QoQ from 413,985 in 3Q06 as well as an increase in the percentage of
shipment from advanced technology nodes.
-- Cost of sales increased to $358.5 million in 4Q06, up 6.6% QoQ from
$336.2 million in 3Q06, primarily due to an increase in wafer
shipments, change in product mix, and higher depreciation expenses.
-- Gross profit decreased to $25.4 million in 4Q06, down 22.6% QoQ from
$32.8 million in 3Q06 and down 41.0% YoY from $43.0 million in 4Q05.
-- Gross margins decreased to 6.6% in 4Q06 from 8.9% in 3Q06 primarily
due to an increase in depreciation expenses and product mix change.
-- Total operating expenses excluding income from disposal of properties
were $52.3 million in 4Q06, an increase of 13.2% QoQ from $46.2
million in 3Q06.
-- R&D expenses decreased to $21.7 million in 4Q06, down 20.5% QoQ from
$27.3 million in 3Q06, primarily due to the transfer of certain
expenses to manufacturing costs upon commencing commercial production
of new technologies.
-- G&A expenses increased to $14.6 million in 4Q06 from $4.2 million in
3Q06 primarily due to a foreign exchange loss of $1.8 million in 4Q06
compared to a gain of $2.3 million in 3Q06 relating to operating
activities and a tax and legal fee reversal recorded in 3Q06.
-- Selling & marketing expenses increased to $4.7 million in 4Q06, up
30.9% QoQ from $3.6 million in 3Q06, primarily due to an increase in
engineering material expenses associated with selling activities.
-- The Company recorded a disposal gain of $41.7 million in 4Q06 from the
sale of properties.
-- The Company recorded an operating profit of $14.8 million in 4Q06 as
compared to an operating loss of $13.4 million in 3Q06 and an
operating loss of $8.8 million in 4Q05.
Analysis of Revenues
Sales Analysis
By Application 4Q06 3Q06 2Q06 1Q06 4Q05
Computer 36.3% 33.0% 30.6% 36.0% 34.8%
Communications 40.1% 37.1% 46.2% 45.8% 43.8%
Consumer 19.3% 25.2% 18.6% 13.3% 16.6%
Others 4.3% 4.7% 4.6% 4.9% 4.8%
By Device 4Q06 3Q06 2Q06 1Q06 4Q05
Logic (including copper interconnect) 57.4% 65.4% 66.6% 62.8% 65.3%
DRAM(1) 38.6% 30.1% 28.8% 32.4% 31.3%
Other (mask making & probing, etc.) 4.0% 4.5% 4.6% 4.8% 3.4%
By Customer Type 4Q06 3Q06 2Q06 1Q06 4Q05
Fabless semiconductor companies 36.1% 36.9% 49.8% 41.8% 43.2%
Integrated device manufacturers (IDM) 55.8% 50.4% 41.9% 52.8% 51.7%
System companies and others 8.1% 12.7% 8.3% 5.4% 5.1%
By Geography 4Q06 3Q06 2Q06 1Q06 4Q05
North America 36.3% 38.6% 46.7% 43.5% 39.2%
Asia Pacific (ex. Japan) 20.0% 25.4% 20.9% 21.3% 28.2%
Japan 11.3% 7.5% 4.9% 3.3% 3.6%
Europe 32.4% 28.5% 27.5% 31.9% 29.0%
Wafer Revenue Analysis
By Technology (logic, DRAM & copper
interconnect only) 4Q06 3Q06 2Q06 1Q06 4Q05
0.09um 14.4% 4.9% 0.9% -- --
0.13um 43.0% 41.2% 46.6% 46.6% 42.9%
0.15um 2.4% 7.2% 4.7% 8.7% 5.2%
0.18um 33.3% 36.1% 38.0% 35.7% 42.3%
0.25um 1.6% 2.6% 2.0% 1.6% 3.3%
0.35um 5.3% 8.0% 7.8% 7.4% 6.3%
By Logic Only(1) 4Q06 3Q06 2Q06 1Q06 4Q05
0.09um 14.7% 4.6% 0.2% -- --
0.13um(2) 14.0% 11.1% 22.3% 13.3% 10.9%
0.15um 4.2% 11.8% 7.2% 14.5% 8.6%
0.18um 54.8% 55.3% 55.8% 57.7% 65.3%
0.25um 2.8% 4.1% 2.5% 2.3% 4.8%
0.35um 9.5% 13.1% 12.0% 12.2% 10.4%
Note:
(1) Excluding 0.13mm copper interconnects
(2) Represents revenues generated from manufacturing full flow wafers
Capacity
Fab / (Wafer Size) 4Q06*
Shanghai Mega Fab (8")(1) 106,000
Beijing Mega Fab (12")(2) 56,250
Tianjin Fab (8") 20,000
Total monthly wafer fabrication capacity 182,250
Note:
* Wafers per month at the end of the period in 8" wafers
(1) Shanghai Mega Fab is now comprised of Fab 1, Fab 2, and Fab 3
(2) Beijing Mega Fab is now comprised of Fab 4, Fab 5, and Fab 6
-- As of the end of 4Q06, monthly capacity increased to 182,250 8-inch
equivalent wafers from 176,625 8-inch equivalent wafers as of the end
of 3Q06 mainly due to expansion at the Beijing Mega Fab.
Shipment and Utilization
8" equivalent wafers 4Q06 3Q06 2Q06 1Q06 4Q05
Wafer
shipments
including
copper
interconnects 424,395 413,985 388,498 388,010 376,227
Utilization
rate(1) 86.6% 84.3% 93.5% 94.9% 93.0%
Note:
(1) Capacity utilization based on total wafer out divided by estimated
capacity
-- Wafer shipments increased to 424,395 units of 8-inch equivalent wafers
in 4Q06 up 2.5% QoQ from 413,985 units of 8-inch equivalent wafers in
3Q06, and up 12.8% YoY from 376,227 8-inch equivalent wafers in 4Q05.
Average Selling Price (ASP) Trend
The ASP increased to $904 in 4Q06 from $891 in 3Q06 mainly due to improving yield at the Beijing Mega Fab and a slightly stronger DRAM pricing environment.
Detailed Financial Analysis
Gross Profit Analysis
Amounts in US$ thousands 4Q06 3Q06 QoQ 4Q05 YoY
Cost of sales 358,452 336,160 6.6% 290,094 23.6%
Depreciation 210,045 196,993 6.6% 176,545 19.0%
Other manufacturing costs 148,407 139,167 6.6% 113,549 30.7%
Gross Profit 25,360 32,766 -22.6% 42,958 -41.0%
Gross Margin 6.6% 8.9% -- 12.9% --
-- Cost of sales increased to $358.5 million in 4Q06, up 6.6% QoQ from
$336.2 million in 3Q06, primarily due to an increase in wafer
shipments, change in product mix, and higher depreciation expenses.
-- Gross profit decreased to $25.4 million in 4Q06, down 22.6% QoQ from
$32.8 million in 3Q06 and down 41.0% YoY from $43.0 million in 4Q05.
-- Gross margins decreased to 6.6% in 4Q06 from 8.9% in 3Q06. This was
primarily due to an increase in depreciation expenses and product mix
change.
Operating Expense Analysis
Amounts in US$ thousands 4Q06 3Q06 QoQ 4Q05 YoY
Total operating expenses 10,569 46,190 -77.1% 51,756 -79.6%
Research and development 21,719 27,319 -20.5% 24,964 -13.0%
General and administrative 14,563 4,216 245.4% 9,803 48.6%
Selling and marketing 4,729 3,614 30.9% 6,349 -25.5%
Amortization of intangible
assets 11,292 11,041 2.3% 10,640 6.1%
Income from disposal of
properties (41,734) -- -- -- --
-- Total operating expenses excluding income from disposal of properties
were $52.3 million in 4Q06, an increase of 13.2% QoQ from $46.2
million in 3Q06.
-- R&D expenses decreased to $21.7 million in 4Q06, down 20.5% QoQ from
$27.3 million in 3Q06, primarily due to the transfer of certain
expenses to manufacturing costs upon commencing commercial production
of new technologies.
-- G&A expenses increased to $14.6 million in 4Q06 from $4.2 million in
3Q06, primarily due to a foreign exchange loss of $1.8 million in 4Q06
compared to a gain of $2.3 million in 3Q06 relating to operating
activities and a tax and legal fee reversal recorded in 3Q06.
-- Selling & marketing expenses increased to $4.7 million in 4Q06, up
30.9% QoQ from $3.6 million in 3Q06, primarily due to an increase in
engineering material expenses associated with selling activities.
-- The Company recorded a disposal gain of $41.7 million in 4Q06 from the
sale of properties.
Other Income (Expenses)
Amounts in US$ thousands 4Q06 3Q06 QoQ 4Q05 YoY
Other income (expenses) (16,468) (20,947) -21.4% (5,852) 181.4%
Interest income 3,311 2,970 11.5% 4,120 -19.6%
Interest expense (14,263) (12,247) 16.5% (11,792) 21.0%
Other, net (5,516) (11,670) -52.7% 1,820 --
-- Other non-operating loss of $16.5 million in 4Q06 as compared to a
loss of $20.9 million in 3Q06, primarily due to a decrease in foreign
exchange loss.
-- Interest expenses of $14.3 million in 4Q06, up 16.5% QoQ from $12.2
million in 3Q06.
Liquidity
Amounts in US$ thousands 4Q06 3Q06
Cash and cash equivalents 363,620 555,326
Short term investments 57,950 52,442
Accounts receivable 252,185 265,522
Inventory 275,179 243,957
Others 100,732 40,500
Total current assets 1,049,666 1,157,747
Accounts payable 309,129 353,325
Short-term borrowings 71,000 45,000
Current portion of long-term debt 103,987 47,160
Others 126,242 137,391
Total current liabilities 610,358 582,876
Cash Ratio 0.6x 1.0x
Quick Ratio 1.1x 1.5x
Current Ratio 1.7x 2.0x
-- Cash and cash equivalents at the end of 4Q06 decreased since part of
cash on hand was deployed to reduce bank borrowing during the quarter.
Capital Structure
Amounts in US$ thousands 4Q06 3Q06
Cash and cash equivalents 363,620 555,326
Short-term investment 57,951 52,442
Current portion of promissory note 29,242 29,493
Promissory note 77,602 91,314
Short-term borrowings 71,000 45,000
Current portion of long-term debt 103,987 47,160
Long-term debt 786,381 963,139
Total debt 961,368 1,055,299
Net cash (646,641) (568,338)
Shareholders' equity 3,007,938 2,999,854
Total debt to equity ratio 32.0% 35.2%
Cash Flow
Amounts in US$ thousands 4Q06 3Q06
Net income (loss) 1,222 (35,094)
Depreciation & amortization 239,478 225,755
Amortization of acquired intangible
assets 11,292 11,041
Net change in cash (191,706) (29,318)
Capex Summary
-- Capital expenditures for 4Q06 was $211.6 million.
-- Total planned capital expenditures for 2007 will be approximately $720
million and will be adjusted based on market conditions.
First Quarter 2007 Guidance
The following statements are forward looking statements which are based on current expectation and which involve risks and uncertainties, some of which are set forth under "Safe Harbor Statements" above.
-- Revenues expected to remain flat from the fourth quarter.
-- Gross margins expected to be in the 12% to 14% range.
-- Operating expense excluding any gain from disposal as a percentage of
sales expected to be in the mid-teens.
-- Free cash flow of around $30 million. Free cash flow is defined as
EBITDA less capex.
-- Capital expenditures expected to be approximately $170 million to $190
million and total capex for 2007 will be approximately $720 million.
-- Depreciation and amortization expected to be approximately $185
million to $195 million.
Beginning in the first quarter of 2007, the accounting estimate in the relation to the useful life of fab-related machinery and equipment will be modified. This change will have an effect on the gross margin and depreciation guidance. Currently, we use a five-year straight-line depreciation method. We consider the current useful life estimate overly conservative in light of the expected economic life of the equipment as well as the industry general practice. We will therefore change the useful life estimate to a five to seven year range, which is consistent with industry practice, and will more accurately reflect the economics associated with the ownership of the equipment.
Recent Highlights and Announcements
-- Saifun and SMIC to Collaborate on 8Gb Data Flash Using SMIC's Advanced
Process Technology (2006-11-23)
-- SMIC announces acceptance of filing of a complaint by the High Court
of Beijing, China against TSMC's breach of bona fide (ie. integrity,
good faith) principle and commercial defamation (2006-11-17)
-- CADENCE AND SMIC Collaborate to Address Wireless Design Challenges in
China (2006-11-9)
-- SMIC Reports 2006 Third Quarter Results (2006-10-31)
-- SMIC Holds 2006 Technology Symposium in Shenzhen (2006-10-13)
Please visit SMIC's website at http://www.smics.com/website/enVersion/Press_Center/pressRelease.jsp
for further details regarding the recent announcements.
Semiconductor Manufacturing International Corporation
CONSOLIDATED BALANCE SHEET
(In US dollars)
As of the end of
December 31, 2006 September 30, 2006
(unaudited) (unaudited)
ASSETS
Current assets:
Cash and cash equivalents 363,619,731 555,325,635
Short term investments 57,950,603 52,441,975
Accounts receivable, net of
allowances of $4,048,845 and
$ 4,068,373 respectively 252,184,975 265,522,541
Inventories 275,178,952 243,956,844
Prepaid expense and other current
assets 91,311,505 25,624,762
Assets held for sale 9,420,729 14,875,528
Total current assets 1,049,666,495 1,157,747,285
Land use rights, net 38,323,333 38,180,494
Plant and equipment, net 3,244,400,822 3,295,734,677
Acquired intangible assets, net 166,199,390 172,279,451
Equity investment 13,619,643 14,663,371
Other long-term prepayments 4,119,433 4,568,174
Deferred tax assets 25,286,900 22,014,394
TOTAL ASSETS 4,541,616,016 4,705,187,846
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 309,129,199 353,325,028
Accrued expenses and other
current liabilities 96,927,345 107,858,006
Short-term borrowings 71,000,000 45,000,000
Current portion of promissory note 29,242,001 29,492,873
Current portion of long-term debt 103,986,968 47,160,000
Income tax payable 72,417 39,875
Total current liabilities 610,357,930 582,875,782
Long-term liabilities:
Promissory note 77,601,657 91,314,355
Long-term debt 786,380,905 963,138,943
Long-term payables relating to
license agreements 16,992,950 21,597,408
Other long-term payables 3,333,333 6,666,667
Deferred tax liabilities 210,913 --
Total long-term liabilities 884,519,758 1,082,717,373
Total liabilities 1,494,877,688 1,665,593,155
Minority interest 38,800,666 39,741,186
Stockholders' equity:
Ordinary shares，$0.0004 par
value, 50,000,000,000
shares authorized, shares
issued and outstanding
18,432,756,463 and
18,402,634,216 respectively 7,373,103 7,361,054
Warrants 32,387 32,387
Additional paid-in capital 3,288,733,077 3,281,801,407
Accumulated other comprehensive
income 91,840 173,321
Accumulated deficit (288,292,745) (289,514,664)
Total stockholders' equity 3,007,937,662 2,999,853,505
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY 4,541,616,016 4,705,187,846
Semiconductor Manufacturing International Corporation
CONSOLIDATED STATEMENT OF OPERATIONS
(In US dollars)
For the three months ended
December 31, 2006 September 30, 2006
(unaudited) (unaudited)
Sales 383,812,708 368,926,309
Cost of sales 358,452,295 336,160,028
Gross profit 25,360,413 32,766,281
Operating expenses:
Research and development 21,719,578 27,319,652
General and administrative 14,562,807 4,215,807
Selling and marketing 4,728,691 3,613,868
Income from disposal of
properties (41,733,713) --
Amortization of acquired
intangible assets 11,292,059 11,041,090
Total operating expenses 10,569,422 46,190,417
Income (Loss) from operations 14,790,991 (13,424,136)
Other income (expenses):
Interest income 3,311,293 2,970,318
Interest expense (14,263,257) (12,247,344)
Exchange loss (7,091,494) (12,453,679)
Other income (expenses)，net 1,575,094 784,059
Total other income (expenses), net (16,468,364) (20,946,646)
Net loss before income tax (1,677,373) (34,370,782)
Income tax credit (expense) 3,002,499 3,047,443
Minority interest 940,520 (2,674,339)
Loss from equity investment (1,043,727) (1,096,796)
Net income (loss) attributable to
holders of ordinary shares 1,221,919 (35,094,474)
Net income (loss) per share, basic 0.0001 (0.0019)
Net income (loss) per ADS, basic(1) 0.0033 (0.0956)
Net income (loss) per share, diluted 0.0001 (0.0019)
Net income (loss) per ADS,
diluted(1) 0.0033 (0.0956)
Ordinary shares used in calculating
basic income (loss) per ordinary
share (in millions) 18,398 18,356
Ordinary shares used in calculating
diluted income (loss) per ordinary
share (in millions) 18,609 18,356
*Share-based compensation related to
each account balance as follows:
Cost of sales 2,734,870 2,840,286
Research and development 1,123,070 1,190,467
General and administrative 1,281,390 1,179,175
Selling and marketing 492,828 493,529
(1) 1 ADS equals 50 ordinary shares
Semiconductor Manufacturing International Corporation
CONSOLIDATED STATEMENT OF CASH FLOWS
(In US dollars)
For the three months ended
December 31, 2006 September 30, 2006
(Unaudited) (Unaudited)
Operating activities
Net income (loss) 1,221,919 (35,094,474)
Adjustments to reconcile net income
(loss) to net cash provided
by (used in) operating activities:
Minority interest (940,520) 2,674,339
Gain on disposal of plant and
equipment (41,733,713) (872,422)
Depreciation and amortization 239,478,464 225,754,616
Amortization of acquired intangible
assets 11,292,060 11,041,090
Amortization of deferred stock
compensation 5,632,156 5,703,457
Amortization of loan initiation fee 179,848 179,846
Non cash interest expense 1,365,081 1,368,710
Loss from equity investment 1,043,728 1,096,795
Changes in operating assets and
liabilities:
Accounts receivable, net 13,337,566 (8,274,203)
Inventories (31,222,108) (26,364,459)
Prepaid expense and other current
assets (2,932,945) (5,243,468)
Accounts payable 27,419,295 7,039,215
Accrued expenses and other current
liabilities (17,619,629) 24,167,325
Other long term liabilities (3,333,334) (3,333,333)
Income tax payable 32,542 19,327
Deferred tax assets and liabilities (3,061,593) (3,121,998)
Net cash provided by operating
activities 200,158,817 196,740,363
Investing activities:
Purchase of plant and equipment (276,468,642) (241,450,500)
Proceeds from disposal of plant and
equipment 532,214 2,327,095
Proceeds from living quarter sales 1,609,274 5,476,213
Purchases of acquired intangible
assets (4,327,949) (3,553,501)
Purchase of short-term investments (60,729,572) (74,329,245)
Sale of short-term investments 55,208,572 25,384,332
Net cash used in investing
activities (284,176,103) (286,145,606)
Financing activities:
Proceeds from short-term borrowing 31,000,000 75,717,105
Proceeds from long-term debt -- 132,395,944
Repayment of promissory notes (15,000,000) --
Repayment of long-term debt (119,931,070) --
Repayment of short-term debt (5,000,000) (149,000,934)
Proceeds from exercise of employee
stock options 1,319,483 990,365
Repurchase of restricted ordinary
shares (7,922) (14,589)
Net cash provided by (used in)
financing activities (107,619,509) 60,087,891
Effect of exchange rate changes (69,109) (420)
NET DECREASE IN CASH AND CASH
EQUIVALENTS (191,705,904) (29,317,772)
CASH AND CASH EQUIVALENTS, beginning
of period 555,325,635 584,643,407
CASH AND CASH EQUIVALENTS, end of
period 363,619,731 555,325,635
For more information, please contact:
Investor Contacts:
Peter Yu
Tel: +86-21-5080-2000 x11319
Email: peter_yu@smics.com
Mobile: +86-139-1894-0553
Douglas Hsiung
Tel: +86-21-5080-2000 x12804
Email: douglas_hsiung@smics.com
Mobile: +86-137-9527-2240
