First Quarter 2012

  • Net sales $655 million
  • Gross margin 16%
  • Net income $12 million
  • Earnings per diluted share $0.06

CHANDLER, Ariz. - April 26, 2012 - Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of semiconductor packaging and test services, today announced financial results for the first quarter ended March 31, 2012, with net sales of $655 million, net income of $12 million, and earnings per diluted share of $0.06.  Net income includes a charge of $7 million (of which $5 million was recorded in cost of sales and $2 million in selling, general and administrative expenses), and earnings per diluted share includes a charge of $0.03, for restructuring costs associated with reductions in our workforce in Japan.

"First quarter results came in at the high end of our expectations," said Ken Joyce, Amkor's president and chief executive officer.  "Our strong position in wireless communications continues to drive our business and we saw notable improvement in our test services segment.  We also benefited from additional leadframe packaging business from some customers whose supply chains were disrupted by the flooding in Thailand during the fourth quarter of 2011.”

Selected financial information for the first quarter 2012 is as follows:

  • Net Sales: $655 million, down 4% from $684 million in the prior quarter, and down 1% from $665 million in the first quarter of 2011
  • Gross Margin: 16%, compared to 16% in the prior quarter, and 19% in the first quarter of 2011
  • Net Income: $12 million, down from $25 million in the prior quarter, and down from $25 million in the first quarter of 2011
  • Earnings Per Diluted Share: $0.06, down from $0.11 in the prior quarter, and down from $0.10 in the first quarter of 2011

“Capital additions were $124 million during the first quarter, primarily in support of specific business for customers in smartphones and tablets,” said Joanne Solomon, Amkor's executive vice president and chief financial officer.

Amkor's Board of Directors previously authorized $300 million for the repurchase of our common stock; $150 million in August 2011 and $150 million in February 2012.  During the first quarter 2012 the company repurchased 1.0 million shares at a purchase price of $4.5 million, for a total of 29.6 million shares at a purchase price of $133.4 million since the program commenced.

Cash and cash equivalents were $381 million, and net debt was $974 million, at March 31, 2012.

Selected operating data for the first quarter 2012 is included in a section below before the financial statements.

Business Outlook


Based upon the currently available information, we have the following expectations for the second quarter 2012:

  • Net sales of $670 million to $700 million, up 2% to 7% from the prior quarter
  • Gross margin of 16% to 18%
  • Net income of $17 million to $36 million, or $0.08 to $0.16 per diluted share
  • Capital additions of around $200 million for the second quarter, and around $550 million for the full year

“We expect solid growth in the second half of 2012,” noted Joyce.  “Several of our major customers that sell into smartphones and tablets have substantially increased their demand forecasts with us and we are raising our estimate of 2012 capital additions to around $550 million to meet these specific new opportunities.  However, our sales and capital additions may vary depending on a number of factors including the supply of 28 nanometer wafers for some of our customers.”

Conference Call Information


Amkor will conduct a conference call on April 26, 2012, at 5:00 p.m. Eastern Daylight Time.  This call may include material information not included in this press release.  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 1-888-561-1799.  A replay of the call will be made available at Amkor's web site or by dialing 800-406-7325 (access pass code #4532650).  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 packaging and test services to semiconductor companies and electronics OEMs.  More information about Amkor is available from the company's filings with the Securities and Exchange Commission 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, all of the statements made under "Business Outlook" above.  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;
  • the effect of the global economy on credit markets, financial institutions, customers, suppliers and consumers;
  • timing and volume of orders relative to production capacity and inability to achieve high capacity utilization rates;
  • volatility of consumer demand and weakness in forecasts from our customers for products incorporating our semiconductor packages;
  • dependence on key customers;
  • the performance of our business, economic and market conditions, the cash needs and investment opportunities for the business, the need for additional capacity and facilities to service customer demand and the availability of cash flow from operations or financing;
  • the supply of 28 nanometer wafers;
  • 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 or access to other sources of liquidity 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;
  • competition, competitive pricing and declines in average selling prices;
  • fluctuations in manufacturing yields;
  • 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 and compliance with 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, 2011 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


 

 

Q1 2012

 

 

Q4 2011

 

 

Q1 2011

 

Sales Data (prior periods were revised for a refinement of our classifications):

 

 

 

 

 

 

 

 

Packaging services (in millions):

 

 

 

 

 

 

 

 

Chip scale package

$

250

 

 

 

$

276

 

 

 

$

231

 

 

Leadframe

168

 

 

 

158

 

 

 

169

 

 

Ball grid array

117

 

 

 

128

 

 

 

145

 

 

Other packaging

47

 

 

 

53

 

 

 

53

 

 

Packaging services

582

 

 

 

615

 

 

 

598

 

 

Test services

73

 

 

 

69

 

 

 

67

 

 

Total sales

$

655

 

 

 

$

684

 

 

 

$

665

 

 

 

 

 

 

 

 

 

 

 

Packaging services:

 

 

 

 

 

 

 

 

Chip scale package

38

 

%

 

40

 

%

 

35

 

%

Leadframe

26

 

%

 

23

 

%

 

25

 

%

Ball grid array

18

 

%

 

19

 

%

 

22

 

%

Other packaging

7

 

%

 

8

 

%

 

8

 

%

Packaging services

89

 

%

 

90

 

%

 

90

 

%

Test services

11

 

%

 

10

 

%

 

10

 

%

Total sales

100

 

%

 

100

 

%

 

100

 

%

 

 

 

 

 

 

 

 

 

Packaged units (in millions):

 

 

 

 

 

 

 

 

Chip scale package

409

 

 

 

445

 

 

 

478

 

 

Leadframe

1,457

 

 

 

1,287

 

 

 

1,572

 

 

Ball grid array

40

 

 

 

40

 

 

 

48

 

 

Other packaging

14

 

 

 

9

 

 

 

15

 

 

Total packaged units

1,920

 

 

 

1,781

 

 

 

2,113

 

 

 

 

 

 

 

 

 

 

 

Net sales from top ten customers

65

 

%

 

66

 

%

 

57

 

%

 

 

 

 

 

 

 

 

 

Capacity Utilization

 

 

 

 

 

 

 

 

Packaging

73

 

%

 

73

 

%

 

71

 

%

Test

78

 

%

 

74

 

%

 

71

 

%

 

 

 

 

 

 

 

 

 

End Market Distribution Data (an approximation including representative devices and applications based on a sampling of our largest customers):

 

 

 

 

 

 

 

 

Communications (cell phones, tablets, wireless LAN, handheld devices)

47

 

%

 

49

 

%

 

43

 

%

Consumer (gaming, television, set top boxes, portable media, digital cameras)

20

 

%

 

21

 

%

 

23

 

%

Computing (PCs, laptops, hard disk drives, servers, displays, printers, peripherals)

13

 

%

 

11

 

%

 

12

 

%

Networking (network servers, routers, switches)

11

 

%

 

11

 

%

 

12

 

%

Other (auto, industrial)

9

 

%

 

8

 

%

 

10

 

%

Total

100

 

%

 

100

 

%

 

100

 

%

 

 

 

 

 

 

 

 

 

Gross Margin Data:

 

 

 

 

 

 

 

 

Net sales

100

 

%

 

100

 

%

 

100

 

%

Cost of sales:

 

 

 

 

 

 

 

 

Materials

45

 

%

 

45

 

%

 

43

 

%

Labor

14

 

%

 

14

 

%

 

14

 

%

Other manufacturing

25

 

%

 

25

 

%

 

24

 

%

Gross margin

16

 

%

 

16

 

%

 

19

 

%

 

 

Q1 2012

 

 

Q4 2011

 

 

Q1 2011

 

 

(In millions, except per share data)

 

Capital Investment Data:

 

 

 

 

 

 

 

 

Property, plant and equipment additions

$

124

 

 

 

$

128

 

 

 

$

105

 

 

Net change in related accounts payable and deposits

(3

)

 

 

14

 

 

 

9

 

 

Purchases of property, plant and equipment

$

121

 

 

 

$

142

 

 

 

$

114

 

 

Depreciation and amortization

$

88

 

 

 

$

87

 

 

 

$

83

 

 

 

 

 

 

 

 

 

 

 

Free Cash Flow Data:

 

 

 

 

 

 

 

 

Net cash provided by operating activities

$

56

 

 

 

$

141

 

 

 

$

120

 

 

Less purchases of property, plant and equipment

(121

)

 

 

(142

)

 

 

(114

)

 

Free cash flow*

$

(65

)

 

 

$

(1

)

 

 

$

6

 

 

 

 

 

 

 

 

 

 

 

Earnings per Share Data:

 

 

 

 

 

 

 

 

Net income attributable to Amkor - basic

$

12

 

 

 

$

25

 

 

 

$

25

 

 

 

 

 

 

 

 

 

 

 

Adjustment for dilutive securities on net income:

 

 

 

 

 

 

 

 

Interest on 6.0% convertible notes due 2014, net of tax

4

 

 

 

4

 

 

 

4

 

 

Net income attributable to Amkor - diluted

$

16

 

 

 

$

29

 

 

 

$

29

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic**

168

 

 

 

177

 

 

 

194

 

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

Stock options and unvested restricted shares

 

 

 

 

 

 

1

 

 

6.0% convertible notes due 2014

83

 

 

 

83

 

 

 

83

 

 

Weighted average shares outstanding - diluted

251

 

 

 

260

 

 

 

278

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Amkor per common share:

 

 

 

 

 

 

 

 

Basic

$

0.07

 

 

 

$

0.14

 

 

 

$

0.13

 

 

Diluted

$

0.06

 

 

 

$

0.11

 

 

 

$

0.10

 

 

 

*

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 U.S. GAAP.  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, free cash flow has certain limitations, including that it does not represent the residual cash flow available for discretionary expenditures since other, non-discretionary expenditures, such as mandatory debt service, are not deducted from the measure. The amount of mandatory versus discretionary expenditures can vary significantly between periods.

 

 

 

This measure should be considered in addition to, and not as a substitute for, or superior to, other measures of liquidity or financial performance prepared in accordance with U.S. GAAP, such as net cash provided by operating activities.  Furthermore, our definition of free cash flow may not be comparable to similarly titled measures reported by other companies.

 

 

**

Amkor's Board of Directors previously authorized $300 million for the repurchase of our common stock; $150 million in August 2011 and $150 million in February 2012.  During the first quarter, we repurchased 1.0 million shares of common stock for a purchase price of $4.5 million.  As of March 31, 2012, we had repurchased a total of 29.6 million shares under the stock repurchase program for a purchase price of $133.4 million.

 

 

For the Three Months Ended
March 31,

 

 

2012

 

2011

 

(In thousands, except per share data)

Net sales

$

655,010

 

 

$

664,950

 

Cost of sales

550,029

 

 

538,264

 

Gross profit

104,981

 

 

126,686

 

Operating expenses:

 

 

 

Selling, general and administrative

57,255

 

 

64,558

 

Research and development

13,425

 

 

12,129

 

Total operating expenses

70,680

 

 

76,687

 

Operating income

34,301

 

 

49,999

 

Other expense (income):

 

 

 

Interest expense

18,586

 

 

18,789

 

Interest expense, related party

3,492

 

 

2,580

 

Interest income

(889

)

 

(587

)

Foreign currency loss

790

 

 

1,731

 

Equity in earnings of unconsolidated affiliate

(1,988

)

 

(1,518

)

Other income, net

(634

)

 

(144

)

Total other expense, net

19,357

 

 

20,851

 

Income before income taxes

14,944

 

 

29,148

 

Income tax expense

3,362

 

 

3,382

 

Net income

11,582

 

 

25,766

 

Net loss (income) attributable to noncontrolling interests

192

 

 

(663

)

Net income attributable to Amkor

$

11,774

 

 

$

25,103

 

 

 

 

 

Net income attributable to Amkor per common share:

 

 

 

Basic

$

0.07

 

 

$

0.13

 

Diluted

$

0.06

 

 

$

0.10

 

 

 

 

 

Shares used in computing per common share amounts:

 

 

 

Basic

167,866

 

 

194,067

 

Diluted

250,688

 

 

277,585

 

 

 

March 31,
2012

 

December 31, 2011

 

 

 

(In thousands)

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

381,132

 

 

$

434,631

 

Restricted cash

2,680

 

 

2,680

 

Accounts receivable:

 

 

 

Trade, net of allowances

345,764

 

 

298,543

 

Other

19,746

 

 

27,197

 

Inventories

205,400

 

 

198,427

 

Other current assets

37,683

 

 

35,352

 

Total current assets

992,405

 

 

996,830

 

Property, plant and equipment, net

1,691,540

 

 

1,656,214

 

Intangibles, net

7,260

 

 

8,382

 

Investments

36,567

 

 

36,707

 

Restricted cash

2,279

 

 

4,001

 

Other assets

74,161

 

 

70,913

 

Total assets

$

2,804,212

 

 

$

2,773,047

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

Current liabilities:

 

 

 

Short-term borrowings and current portion of long-term debt

$

53,027

 

 

$

59,395

 

Trade accounts payable

424,163

 

 

424,504

 

Accrued expenses

173,572

 

 

158,287

 

Total current liabilities

650,762

 

 

642,186

 

Long-term debt

1,076,640

 

 

1,062,256

 

Long-term debt, related party

225,000

 

 

225,000

 

Pension and severance obligations

125,413

 

 

129,096

 

Other non-current liabilities

19,003

 

 

13,288

 

Total liabilities

2,096,818

 

 

2,071,826

 

Equity:

 

 

 

Amkor stockholders' equity:

 

 

 

Preferred stock

 

 

 

Common stock

198

 

 

197

 

Additional paid-in capital

1,612,112

 

 

1,611,242

 

Accumulated deficit

(786,688

)

 

(798,462

)

Accumulated other comprehensive income

9,427

 

 

10,849

 

Treasury stock

(135,418

)

 

(130,560

)

Total Amkor stockholders' equity

699,631

 

 

693,266

 

Noncontrolling interests in subsidiaries

7,763

 

 

7,955

 

Total equity

707,394

 

 

701,221

 

Total liabilities and equity

$

2,804,212

 

 

$

2,773,047

 

 

 

For the Three Months Ended
March 31,

 

 

2012

 

2011

 

(In thousands)

Cash flows from operating activities:

 

 

 

Net income

$

11,582

 

 

$

25,766

 

Depreciation and amortization

88,446

 

 

83,442

 

Other operating activities and non-cash items

(1,772

)

 

4,896

 

Changes in assets and liabilities

(42,150

)

 

6,123

 

Net cash provided by operating activities

56,106

 

 

120,227

 

 

 

 

 

Cash flows from investing activities:

 

 

 

Purchases of property, plant and equipment

(121,087

)

 

(113,881

)

Proceeds from the sale of property, plant and equipment

621

 

 

278

 

Financing lease payment from unconsolidated affiliate

7,914

 

 

3,020

 

Other investing activities

1,683

 

 

(1,057

)

Net cash used in investing activities

(110,869

)

 

(111,640

)

 

 

 

 

Cash flows from financing activities:

 

 

 

Borrowings under short-term credit facilities

20,000

 

 

15,000

 

Payments under short-term credit facilities

(15,000

)

 

(15,000

)

Proceeds from issuance of long-term debt

158,742

 

 

 

Payments of long-term debt

(156,357

)

 

(20,413

)

Payments for repurchase of common stock

(4,505

)

 

 

Proceeds from the issuance of stock through share-based compensation plans

69

 

 

627

 

Payments of tax withholding for restricted shares

(353

)

 

(696

)

Net cash provided by (used in) financing activities

2,596

 

 

(20,482

)

 

 

 

 

Effect of exchange rate fluctuations on cash and cash equivalents

(1,332

)

 

(152

)

 

 

 

 

Net decrease in cash and cash equivalents

(53,499

)

 

(12,047

)

Cash and cash equivalents, beginning of period

434,631

 

 

404,998

 

Cash and cash equivalents, end of period

$

381,132

 

 

$

392,951