CHANDLER, Ariz.-- 13 FEBRUARY 2008 --Amkor Technology, Inc. (NASDAQ: AMKR) today reported its financial results for the fourth quarter and year ended December 31, 2007.
Net sales of $747 million for the fourth quarter of 2007 were up 8.4% from the third quarter of 2007 and up 9.4% from the fourth quarter of 2006. Fourth quarter net income was $94 million, up 54.5% from the third quarter of 2007 and 58.6% from the fourth quarter of 2006. Fourth quarter earnings per diluted share was $0.46, up 53.3% from $0.30 in both the third quarter of 2007 and fourth quarter of 2006.
For the full year 2006 and 2007, Amkor’s net sales were $2.7 billion. Amkor’s full year 2007 net income of $220 million was up $50 million, or 29.3%, from $170 million for the full year 2006. Full year 2007 earnings per diluted share was $1.11, up 23.3% from $0.90 for the full year 2006.
“We exceeded both our sales and profitability targets in the fourth quarter of 2007 with stronger than expected customer demand primarily for high-end wireless communications, computing and gaming applications,” said James Kim, Amkor’s chairman and chief executive officer. "Our strong fourth quarter performance demonstrates that our business model is working, as we enrich our product mix, leverage our advanced packaging technologies and maintain a disciplined approach to capital spending.”
“We anticipate solid first quarter 2008 sales when compared with historical levels,” said Kim. “However, in view of exceptionally strong sales in the fourth quarter of 2007, we expect first quarter 2008 sales to be down 7% to 9% sequentially, which is generally in line with seasonal expectations.”
“Net sales for the fourth quarter of 2007 increased $58 million or 8.4% sequentially, while unit shipments increased 4.2% with higher unit volumes across most of our product lines,” said Joanne Solomon, Amkor’s chief financial officer. “Fourth quarter 2007 sales reflect the increasing importance of our advanced packaging technologies and the benefit of our investments in flip chip and wafer level packaging, 3D packaging and test. For the full year 2007 compared with 2006, unit shipments were down slightly reflecting a shift in our mix from traditional leadframe packages to advanced technologies including flip chip and 3D packaging,” said Solomon.
Gross margin in the fourth quarter of 2007 was 27.2%, up from 24.7% in the third quarter of 2007 and 25.3% in the fourth quarter of 2006. The improvement principally reflects the operating leverage of higher revenues and the enriched product mix. Amkor generated $367 million of free cash flow in 2007, an increase of $159 million or 76% from the $208 million of free cash flow generated in 2006.
“Total debt at the end of 2007 was $1.8 billion down $241 million from the prior year. Our cash balance at the end of 2007 was $410 million. We will repay $88 million of 9.25% senior notes at maturity on February 15, 2008 and repay approximately $64 million of maturing debt held by our subsidiaries throughout 2008. Net interest expense for 2007 decreased $31 million from 2006 reflecting the results of ongoing debt reduction efforts and selective refinancing of high cost debt in prior periods,” said Solomon.
“Capital additions totaled $101 million in the fourth quarter of 2007 and $294 million for the full year,” said Solomon. “Capital additions as a percentage of revenues, or capital intensity, were 10.7% for 2007 compared with 11.0% for 2006. We expect our capital intensity for 2008 to be around 11% to 14% of revenues, of which approximately 70% is expected to be in support of packaging, 20% for test and 10% for infrastructure. For the first quarter of 2008 we expect around $110 million of capital additions which are focused on specific opportunities for our largest customers and ongoing infrastructure investments. We currently expect our capital spending will be weighted more heavily in the first half of 2008 as a result of investments to expand our wafer bumping capacity.”
The effective income tax rate for 2007 was 5.4%, and the anticipated effective tax rate for 2008 is approximately 10%. This increase is primarily attributable to the full utilization of foreign net operating loss carry-forwards and tax credit carry-forwards in Taiwan. At December 31, 2007, Amkor had U.S. net operating losses available for carry-forward totaling $364 million, expiring through 2027, and $48 million of non-U.S. operating losses available for carry-forward, expiring through 2012.
Selected operating data for the fourth quarter 2007 is included in a section before the financial tables.
On the basis of customers’ forecasts, we have the following expectations for the first quarter of 2008:
Amkor will conduct a conference call on February 13, 2008 at 5:00 p.m. eastern time. The call can be accessed by dialing 303-262-2190, or by visiting the investor relations page of our website: www.amkor.com or CCBN’s website: www.companyboardroom.com. An archive of the webcast can be accessed through the same links, and will be available until our next quarterly earnings conference call. An audio replay of the call will be available for 48 hours following the conference call by dialing 303-590-3000 passcode: 11105972.
Amkor is a leading provider of semiconductor assembly and test services. The company offers semiconductor companies and electronics OEMs a complete set of microelectronics design and manufacturing services. More information on Amkor is available from the company’s SEC filings and on Amkor’s website: www.amkor.com.
Forward Looking Statement Disclaimer
This press release contains forward-looking statements within the meaning of federal securities laws. All statements other than statements of historical fact are considered forward looking statements including, without limitation, statements regarding the following: our focus on enriching product mix, leveraging our advanced packaging technologies and continuing a disciplined approach to capital spending; our expectations regarding capital intensity and the allocation of capital expenditures among our businesses; the expected dollar amount of our capital additions and the focus of our capital spending; the timing of our capital spending during the year; expectations regarding our effective tax rate for 2008, and the statements regarding sales, gross margin and net income per diluted share contained under Business Outlook. These forward-looking statements involve a number of risks, uncertainties, assumptions and other factors that could affect future results and cause actual results and events to differ materially from historical and expected results and those expressed or implied in the forward looking statements, including, but not limited to, the following: the highly unpredictable nature of the semiconductor industry; inability to achieve high capacity utilization rates; volatility of consumer demand for products incorporating our semiconductor packages; weakness in the forecasts of Amkor’s customers; customer modification of and follow through with respect to forecasts provided to Amkor; curtailment of outsourcing by our customers; our substantial indebtedness and restrictive covenants; failure to realize sufficient cash flow to fund capital expenditures; deterioration of the U.S. or other economies; the highly unpredictable nature and costs of litigation and other legal activities and the risk of adverse results of such matters; the outcome of the pending SEC investigation; worldwide economic effects of terrorist attacks, natural disasters and military conflict; competitive pricing and declines in average selling prices; timing and volume of orders relative to production capacity; fluctuations in manufacturing yields; competition; dependence on international operations and sales; dependence on raw material and equipment suppliers and changes in raw material costs; exchange rate fluctuations; dependence on key personnel; difficulties in managing growth; enforcement of intellectual property rights; environmental and other governmental regulations; and technological challenges.
Other important risk factors that could affect the outcome of the events set forth in these statements and that could affect our operating results and financial condition are discussed in the company’s Annual Report on Form 10-K for the year ended December 31, 2006 and in the company’s subsequent filings with the Securities and Exchange Commission made prior to or after the date hereof. Amkor undertakes no obligation to review or update any forward looking statements to reflect events or circumstances occurring after the date of this press release.
AMKOR TECHNOLOGY, INC.
Selected Financial Data
Capital Investment Data:
|Net change in related accounts payable and deposits||(25||)||(20||)||9||(58||)||17|
|Payments for property, plant and equipment||$||76||$||58||$||64||$||236||$||316|
|Depreciation and amortization||$||72||$||70||$||71||$||283||$||274|
Free Cash Flow Data:
|Net cash provided by operating activities||$||189||$||160||$||143||$||603||$||524|
|Less payments for property, plant and equipment||(76||)||(58||)||(64||)||(236||)||(316||)|
|Free cash flow*||$||113||$||102||$||79||$||367||$||208|
*We define free cash flow as net cash provided by operating activities less payments for property, plant and equipment. Free cash flow is not defined by generally accepted accounting principles. However, we believe free cash flow to be relevant and useful information to our investors because it provides them with additional information in assessing our liquidity, capital resources and financial operating results. Our management uses free cash flow in evaluating our liquidity, our ability to service debt and our ability to fund capital expenditures. However, this measure should be considered in addition to, and not as a substitute for, or superior to, cash flows or other measures of financial performance prepared in accordance with generally accepted accounting principles, and our definition of free cash flow may not be comparable to similarly titled measures reported by other companies.
|Wirebond - leadframe||31||%||33||%||34||%||33||%||37||%|
|Wirebond - laminate||40||%||40||%||38||%||39||%||38||%|
|Flip chip and wafer level processing||18||%||16||%||17||%||17||%||15||%|
|Packaged units (in billions)||2.4||2.3||2.2||8.7||8.8|
|Net sales from top ten customers||49||%||48||%||46||%||47||%||44||%|
End Market Distribution Data (an approximation based on a sampling of our largest customers):
|AMKOR TECHNOLOGY, INC.|
|CONSOLIDATED STATEMENTS OF INCOME|
|For the Three Months Ended||For the Year Ended|
|December 31,||December 31,|
|(in thousands, except per share data)|
|Cost of sales||543,976||509,879||2,057,572||2,053,600|
|Selling, general and administrative||62,142||62,494||251,249||250,142|
|Research and development||10,720||9,337||41,650||38,735|
|Gain on sale of specialty test operations||-||-||(1,717||)||-|
|Provision for legal settlements and contingencies||-||-||-||1,000|
|Total operating expenses||72,862||71,831||291,182||289,877|
|Other (income) expense:|
|Interest expense, net||28,489||36,477||124,099||154,807|
|Interest expense, related party||1,562||1,563||6,250||6,477|
|Foreign currency loss||1,015||1,783||8,961||13,255|
|Debt retirement costs||1||-||15,876||27,389|
|Other (income) expense, net||1,632||(836||)||668||661|
|Total other expense, net||32,699||38,987||155,854||202,589|
Income before income taxes
and minority interests
|Income tax expense||3,024||2,743||12,597||11,208|
Income before minority interests
|Minority interests, net of tax||(663||)||(524||)||(2,376||)||(1,202||)|
|Net income per common share:|
Shares used in computing net income per common share:
|AMKOR TECHNOLOGY, INC.|
|CONSOLIDATED BALANCE SHEETS|
|Cash and cash equivalents||$||410,070||$||244,694|
|Trade, net of allowances||393,493||380,888|
|Other current assets||27,290||39,650|
|Total current assets||987,414||837,857|
|Property, plant and equipment, net||1,455,111||1,443,603|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Short-term borrowings and current portion of long-term debt||$||152,489||$||185,414|
|Trade accounts payable||359,313||291,847|
|Total current liabilities||677,073||622,762|
|Long-term debt, related party||100,000||100,000|
|Pension and severance obligations||208,387||170,070|
|Other non-current liabilities||33,935||30,008|
Common stock, $0.001 par value, 500,000 shares authorized, issued and outstanding of 181,799 in 2007 and 178,109 in 2006
|Additional paid-in capital||1,482,186||1,441,194|
|Accumulated other comprehensive loss||(6,223||)||(6,062||)|
|Total stockholders’ equity||654,619||393,920|
|Total liabilities and stockholders’ equity||$||3,192,606||$||3,041,264|
|AMKOR TECHNOLOGY, INC.|
|CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS|
|For the Year Ended|
|Cash flows from operating activities:|
|Depreciation and amortization||283,267||273,845|
|Debt retirement costs||6,876||27,389|
|Other operating activities and non-cash items||21,002||28,899|
|Changes in assets and liabilities||72,421||23,413|
|Net cash provided by operating activities||603,430||523,630|
|Cash flows from investing activities:|
|Payments for property, plant and equipment||(236,240||)||(315,873||)|
|Proceeds from the sale of property, plant and equipment||5,192||4,449|
|Other investing activities||(251||)||(3,373||)|
|Net cash used in investing activities||(231,299||)||(314,797||)|
|Cash flows from financing activities:|
|Borrowings under revolving credit facilities||86,150||233,212|
|Payments under revolving credit facilities||(109,296||)||(237,933||)|
|Proceeds from issuance of long-term debt||300,000||590,000|
|Payments of long-term debt||(518,913||)||(744,392||)|
|Payments for debt issuance costs||(3,441||)||(15,094||)|
|Proceeds from issuance of stock through stock compensation plans||37,050||4,976|
|Net cash used in financing activities||(208,450||)||(169,231||)|
|Effect of exchange rate fluctuations on cash and cash equivalents||1,695||(1,483||)|
|Net increase in cash and cash equivalents||165,376||38,119|
|Cash and cash equivalents, beginning of period||244,694||206,575|
|Cash and cash equivalents, end of period||$||410,070||$||244,694|
Amkor Technology, Inc., Chandler
Corporate Vice President & CFO
480-821-5000 ext. 5416