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Chip foundry giant UMC to restate past earnings

Chip foundry giant UMC to restate past earnings

Chip giant UMC plans to restate its full year earnings for 2002, 2003, and 2004

United Microelectronics (UMC), the world's second largest contract chip maker, has announced it plans to restate full year financial results for 2002 through to 2004 because they did not conform to US accounting rules.

The proposed changes to its US filings include calculations that would swing its full year 2002 results to a loss, and dramatically increases the size of its loss in 2004.

The errors, which included calculation errors related to non-cash charges, employee stock bonuses and adjustments to goodwill, were discovered as UMC prepared responses to questions by the US Securities and Exchange Commission (SEC) related to its full year 2004 results, UMC said in a statement.

The Taiwanese chip maker reported net income of $NT294 million ($US8.79 million) in 2002, a figure it plans to change to a loss of $NT222 million, according to the statement. For 2004, the company will revise down its full year loss to $NT14.24 billion from a previously stated loss of just $NT4.75 billion. UMC will revise up its net income in 2003 to $NT12.33 billion from its originally stated $NT10.48 billion.

In one example, the company said it discovered an error in the US calculation of its 2004 employee stock bonuses. UMC used an incorrect stock market price to determine the value of the stock bonus, and likely understated the amount by $NT211 million under US generally accepted accounting principles, the company said.

UMC's filing highlights the trouble international companies that have shares listed in the US face when conforming to different sets of accounting standards.

UMC said it did not need to restate results based on accounting rules in Taiwan.

It's also a sign the SEC remains vigilant in tracking company filings. A number of high profile accounting scandals, such as at Enron and WorldCom earlier this decade, prompted financial reporting rule changes in the US, as well as increased vigilance by regulators.


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