CHANDLER, Ariz.---Amkor Technology, Inc. (NASDAQ: AMKR ), a leading provider of semiconductor assembly and test services, today announced financial results for the first quarter ended March 31, 2011, with net sales of $665 million, net income of $25 million, and earnings per diluted share of $0.10.

“First quarter results were consistent with our expectations even though sales were reduced by approximately $6 million due to the impact of the Japan earthquake on our Kitakami operations,” said Ken Joyce, Amkor's president and chief executive officer. “Gross margin of 19% was at the top of our expected range. We saw typical seasonal softness during the quarter, and our strong position in gaming amplified these seasonal patterns. We also saw weakness in networking and certain consumer electronics due to inventory adjustments by some of our customers.”

Selected financial information for the first quarter 2011 is as follows:

  • Net Sales: $665 million, down 11% from $751 million in the prior quarter, and up 3% from $646 million in the first quarter 2010
  • Gross Margin: 19%, compared to 21% in the prior quarter and 21% in the first quarter 2010
  • Net Income: $25 million, down from $51 million in the prior quarter, and down from $44 million in the first quarter 2010
  • Earnings Per Diluted Share: $0.10, down from $0.20 in the prior quarter, and down from $0.18 in the first quarter 2010

“We delivered a solid gross margin of 19% despite the challenging demand environment, continued pressure from unfavorable foreign currency exchange rate movements, higher gold prices and the events in Japan,” said Joanne Solomon, Amkor’s executive vice president and chief financial officer. “We kept a tight focus on labor and other manufacturing costs during this seasonally slower time of the year.”

“Capital additions were $105 million during the first quarter, primarily in support of the communications area. We also delivered positive free cash flow results,” continued Solomon.

Cash and cash equivalents were $393 million, and net debt was $851 million, at March 31, 2011. In January 2011, all $100 million of our 6.25% Convertible Notes due 2013 were converted into 13.4 million shares of Amkor Common Stock.

Selected operating data for the first quarter 2011 are included in a section before the financial statements.

Business Outlook

“We remain optimistic about solid growth in the second half 2011, although there is less visibility due to the situation in Japan,” said Joyce. “Because of the current uncertainties in the electronics industry supply chain, we have reduced our sales expectations for the second quarter 2011 by $50 million,” added Joyce. “Our guidance for the second quarter is also negatively impacted by unexpected weakness in demand for wireless baseband chips by a single OEM.”

Based upon the currently available information, we have the following expectations for the second quarter 2011:

  • Net sales of $650 million to $700 million, down 2% to up 5% from the prior quarter
  • Gross margin between 16% and 20%
  • Net income of $8 million to $37 million, or $0.04 to $0.15 per diluted share
  • Capital additions of around $125 million for the second quarter, and capital additions of around $450 million for the full year

Conference Call Information

Amkor will conduct a conference call on April 28, 2011, at 5:00 p.m. Eastern Daylight Time. This call is being webcast and can be accessed at Amkor’s web site: www.amkor.com. You may also access the call by dialing 877-941-1465. A replay of the call will be made available at Amkor’s web site or by dialing 800-406-7325 (access pass code #4435872). The webcast is also being distributed over Thomson Reuters’ Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through Thomson Reuters’ individual investor center at www.companyboardroom.com or by visiting any of the investor sites in Thomson Reuters’ Individual Investor Network. Institutional investors can access the call via Thomson Reuters’ password-protected event management site, Street Events (www.streetevents.com).

About Amkor

Amkor is a leading provider of semiconductor assembly and test services to semiconductor companies and electronics OEMs. 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 made regarding: visibility and uncertainties in the electronics industry supply chain and reductions in our sales expectations due to the situation in Japan, weakness in demand for wireless baseband chips, the amount and timing of our capital additions in 2011, growth in the second half of the year, and our current business outlook for the second quarter 2011, including our expected net sales, gross margin, net income, earnings per diluted share and capital additions. 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:

  • Uncertainties in demand, disruptions in production and the electronic industry supply chain and potential increased costs arising out of the Japan earthquake and tsunami;
  • the highly unpredictable nature of the semiconductor industry;
  • the effect of the global economy on credit markets, financial institutions, customers, suppliers and consumers;
  • inability to achieve high capacity utilization rates;
  • volatility of consumer demand for products incorporating our semiconductor packages;
  • dependence on key customers;
  • weakness in the forecasts of our customers;
  • customer modification of and follow through with respect to forecasts provided to us;
  • changes in tax rates and taxes as a result of changes in tax law, the jurisdictions in which our income is determined to be earned and taxed, the outcome of tax audits and tax ruling requests, our ability to realize deferred tax assets and the expiration of tax holidays;
  • curtailment of outsourcing by our customers;
  • our substantial indebtedness and restrictive covenants;
  • failure to realize sufficient cash flow to fund capital additions;
  • the effects of a recession or other downturn in the U.S. and other economies worldwide;
  • disruptions or deficiencies in our controls resulting from the implementation of our new enterprise resource planning system;
  • the highly unpredictable nature and costs of litigation and other legal activities and the risk of adverse results of such matters;
  • worldwide economic effects of terrorist attacks, natural disasters and military conflict;
  • our ability to control costs;
  • 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 and precious metal 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, 2010 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.

Contact:
Amkor Technology, Inc., Chandler
Joanne Solomon
Executive Vice President & Chief Financial Officer
480-786-7878
joanne.solomon@amkor.com








* We define free cash flow as net cash provided by operating activities less purchases of property, plant and equipment. Free cash flow is not defined by GAAP.  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 additions.

However, this measure should be considered in addition to, and not as a substitute for, or superior to, other measures of financial performance prepared in accordance with GAAP, and our definition of free cash flow may not be comparable to similarly titled measures reported by other companies.