• Net sales $749 million
  • Gross margin 24%
  • Net income $59 million
  • Earnings per diluted share $0.23 (includes $0.06 loss related to refinancings, partially offset by $0.02 gain from release of tax valuation allowance)

CHANDLER, Ariz. – August 4, 2010 – Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of semiconductor assembly and test services, today announced financial results for the second quarter ended June 30, 2010, with net sales of $749 million, net income of $59 million, and earnings per diluted share of $0.23.  Earnings per diluted share includes a $0.06 loss related to refinancings, partially offset by a $0.02 gain from the release of a tax valuation allowance.

“Our record-level net sales and solid gross margin in the second quarter exceeded our expectations,” said Ken Joyce, Amkor's president and chief executive officer.  “Demand was broad-based across a wide range of applications, with notable growth in ball grid array and chip scale package solutions in support of our consumer and communications end markets.  These results demonstrate the strength of our business model in servicing growing global demand for electronic devices that feature ever greater communication and computing capabilities and provide high speed mobile access to data-rich content.”  

Select financial information for the second quarter 2010 is as follows:

  • Net Sales:  $749 million, up 16% from $646 million in the prior quarter, and up 48% from $507 million in the second quarter of 2009  
  • Gross Margin:  24%, compared to 21% in the prior quarter and 20% in the second quarter of 2009  
  • Net Income:  $59 million, up from $44 million in the prior quarter, and up from $9 million in the second quarter of 2009  
  • Earnings Per Diluted Share:  $0.23, up from $0.18 in the prior quarter, and up from $0.05 in the second quarter of 2009  

“In order to lower our borrowing costs and mitigate future refinancing and liquidity risks, we extended the maturities of our nearest term notes and refinanced, at a lower interest rate, some of our highest cost debt,” said Joanne Solomon, Amkor’s executive vice president and chief financial officer.  “We recognized a loss of approximately $18 million, with no net tax effect, or $0.06 per diluted share, due primarily to premiums paid to retire existing debt.  We also recognized a gain of $5 million, or $0.02 per diluted share, from the release of a valuation allowance on certain deferred tax assets due to improved profitability in certain of our foreign operations.”

Unit shipments of 2.7 billion during the second quarter 2010 were up 11% from the first quarter, principally driven by strong demand for leadframe and chip scale packaging services.  This unit growth and resulting high utilization drove the higher than expected gross margin.

“Capital additions were $158 million during the second quarter, in support of continued growth in our chip scale package, ball grid array and other advanced technologies,” continued Solomon.  “Free cash flow for the second quarter was $11 million as a result of our higher level of investments for our customers.”

Cash and cash equivalents were $438 million, and total debt was $1.4 billion, at June 30, 2010.

Selected operating data for the second quarter 2010 is included in a section before the financial tables.

Business Outlook


“We continue to see solid demand across the business into 2011,” said Joyce.  “To support our customers’ needs, we are expanding our capacity to meet that demand, including a nearly 200,000 square foot expansion of our K4 manufacturing site in Gwangju, South Korea.  We are also investing to ramp advanced technologies, such as fine pitch copper pillar flip chip and through mold via.  As such, we have increased our estimate of full year capital additions to around $500 million, or a capital intensity of between 16% and 17% of net sales, of which approximately $270 million is expected to be spent in the second half of 2010.”

Based upon the currently available information, we have the following expectations for the third quarter of 2010:

  • Net sales of $787 million to $817 million, up 5% to 9% from the prior quarter
  • Gross margin between 25% and 26%
  • Net income of $96 million to $113 million, or $0.36 to $0.42 per diluted share
  • Capital additions of approximately $195 million

Conference Call Information


Amkor will conduct a conference call on August 4, 2010, 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 877-941-2928.  A replay of the call will be made available at Amkor’s web site or by dialing 800-406-7325 (access pass code #4327244).  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, the following: statements regarding expected demand, the expected dollar amount and timing of our capital additions, our capacity expansion to meet customer demand, the investment in and ramp of advanced technologies, the expected level of capital intensity, and the statements made regarding our current business outlook for the third quarter of 2010, including our expected net sales, gross margin, net income 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:

  • 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;
  • 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;
  • 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, 2009 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
480-821-5000, ext. 5416
joanne.solomon@amkor.com

AMKOR TECHNOLOGY, INC.
Selected Operating Data
             
Sales Data:   Q2 2010   Q1 2010   Q2 2009
             
Packaging services (in millions):            
Chip scale package   $ 234     $ 205     $ 164  
Ball grid array    
194
      155       121  
Leadframe     202       179       127  
Other packaging     48       42       36  
Packaging services    
678
      581       448  
Test services     71       65       59  
Total sales   $
749
    $ 646     $ 507  
             
Packaging services:            
Chip scale package     31 %     31 %     32 %
Ball grid array     26 %     24 %     24 %
Leadframe     27 %     28 %     25 %
Other packaging    
6
%     7 %     7 %
Packaging services    
90
%     90 %     88 %
Test services    
10
%     10 %     12 %
Total sales     100 %     100 %     100 %
             
Packaged units (in millions):            
Chip scale package     580       455       412  
Ball grid array     61       50       46  
Leadframe     2,093       1,954       1,229  
Other packaging     7       8       6  
Total packaged units     2,741       2,467       1,693  
             
Net sales from top ten customers     55 %     54 %     54 %
Capacity utilization     87 %     84 %     66 %
             
End Market Distribution Data (an approximation including representative devices and applications based on a sampling of our largest customers. Prior periods were revised for an expanded sampling methodology and refinement of our classifications):
             
Communications (cell phones, Ethernet, WiMAX, wireless LAN, Bluetooth)     34 %     37 %     39 %
Consumer (gaming, set top boxes, TV, portable media)     30 %     26 %     31 %
Computing (PCs, servers, displays, hard disk drive, printers, other peripherals)     14 %     14 %     12 %
Networking (infrastructure, routers, network servers)     13 %     14 %     12 %
Other (auto, industrial)     9 %     9 %     6 %
Total     100 %     100 %     100 %
             
AMKOR TECHNOLOGY, INC.
Selected Operating Data (continued)
             
    Q2 2010   Q1 2010   Q2 2009
Gross Margin Data:            
Net sales     100 %     100 %     100 %
Cost of sales:            
Materials     42 %     42 %     41 %
Labor     13 %     13 %     13 %
Other manufacturing     21 %     24 %     26 %
Gross margin     24 %     21 %     20 %
             
Packaging services gross margin     24 %     21 %     21 %
Test services gross margin     27 %     23 %     23 %
             
Earnings per Share Data:   (in millions, except per share data)
             
Net income (loss) attributable to Amkor - basic   $
59
    $ 44     $ 9  
Adjustment for dilutive securities on net income (loss):            
Interest on 2.5% convertible notes due 2011, net of tax     -       -       -  
Interest on 6.25% convertible notes due 2013, net of tax     2       2       -  
Interest on 6.0% convertible notes due 2014, net of tax     4       4       4  
Net income (loss) attributable to Amkor - diluted   $
65
    $ 50     $ 13  
             
Weighted average shares outstanding - basic     183       183       183  
Effect of dilutive securities:            
Stock options and unvested restricted shares     1       1       -  
2.5% convertible notes due 2011     3       3       -  
6.25% convertible notes due 2013     13       13       -  
6.0% convertible notes due 2014     83       83       83  
Weighted average shares outstanding - diluted     283       283       266  
             
Net income (loss) attributable to Amkor per common share:            
Basic   $ 0.32     $ 0.24     $ 0.05  
Diluted   $ 0.23     $ 0.18     $ 0.05  
             
Capital Investment Data:            
Property, plant and equipment additions   $ 158     $ 73     $ 27  
Net change in related accounts payable and deposits     (82 )     (6 )     -  
Purchases of property, plant and equipment   $ 76     $ 67     $ 27  
Depreciation and amortization   $ 78     $ 76     $ 77  
             
Free Cash Flow Data:            
Net cash provided by operating activities   $ 87     $ 104     $ 96  
Less purchases of property, plant and equipment     (76 )     (67 )     (27 )
Free cash flow*
  $ 11     $ 37     $ 69  
 
                       
*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 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 additions. 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.
 
AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
                         
        For the Three Months       For the Six Months
        Ended June 30,       Ended June 30,
        2010   2009       2010   2009
        (In thousands, except per share data)
                         
Net sales       $
749,165
    $ 506,516         $
1,394,903
    $ 895,292  
Cost of sales         569,966       404,129           1,078,748       744,866  
Gross profit        
179,199
      102,387          
316,155
      150,426  
                         
Operating expenses:                        
Selling, general and administrative         66,356       52,445           122,652       102,513  
Research and development         12,095       10,035           23,768       20,182  
Total operating expenses         78,451       62,480           146,420       122,695  
Operating income        
100,748
      39,907          
169,735
      27,731  
Other (income) expense:                        
Interest expense         24,410       27,438           46,779       54,015  
Interest expense, related party         3,813       3,812           7,625       5,374  
Interest income         (847 )     (612 )         (1,580 )     (1,044 )
Foreign currency (gain) loss         (421 )     5,970           554       (6,098 )
Loss (gain) on debt retirement, net         17,807       (7,888 )         17,807       (16,884 )
Equity in earnings of unconsolidated affiliate         (1,608 )     -           (2,709 )     -  
Other (income) expense, net         (149 )     (10 )         (390 )     49  
Total other expense, net         43,005       28,710           68,086       35,412  
                         
Income (loss) before income taxes        
57,743
      11,197          
101,649
      (7,681 )
Income tax (benefit) expense         (1,200 )     1,833           (1,367 )     4,914  
Net income (loss)        
58,943
      9,364          
103,016
      (12,595 )
Net loss (income) attributable to noncontrolling interests         107       (141 )         331       (274 )
Net income (loss) attributable to Amkor       $
59,050
    $ 9,223         $
103,347
    $ (12,869 )
                         
Net income (loss) attributable to Amkor per common share:                        
Basic       $ 0.32     $ 0.05         $ 0.56     $ (0.07 )
Diluted       $ 0.23     $ 0.05         $
0.41
    $ (0.07 )
                         
Shares used in computing per common share amounts:                        
Basic         183,274       183,036           183,250       183,036  
Diluted         282,644       265,846           282,551       183,036  
                                         
AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
               
          June 30,   December 31,
          2010   2009
          (In thousands)
ASSETS              
Current assets:              
Cash and cash equivalents         $ 437,803     $ 395,406  
Restricted cash           2,679       2,679  
Accounts receivable:          
 
     
Trade, net of allowances          
411,273
      328,252  
Other           15,310       18,666  
Inventories           182,288       155,185  
Other current assets           47,572       32,737  
Total current assets          
1,096,925
      932,925  
               
Property, plant and equipment, net           1,442,508       1,364,630  
Intangibles, net           17,084       9,975  
Investments           22,522       19,108  
Restricted cash           12,923       6,795  
Other assets           101,096       99,476  
Total assets         $
2,693,058
    $ 2,432,909  
               
LIABILITIES AND EQUITY              
Current liabilities:              
Short-term borrowings and current portion of long-term debt         $ 144,500     $ 88,944  
Trade accounts payable           489,850       361,263  
Accrued expenses           169,766       155,630  
Total current liabilities           804,116       605,837  
               
Long-term debt           1,049,335       1,095,241  
Long-term debt, related party           250,000       250,000  
Pension and severance obligations           86,445       83,067  
Other non-current liabilities           6,015       9,063  
Total liabilities           2,195,911       2,043,208  
               
Equity:              
Amkor stockholders' equity:              
Preferred stock           -       -  
Common stock, $0.001 par value, 500,000 shares
authorized, issued and outstanding of 183,367 in 2010
and 183,171 in 2009
             
          183       183  
Additional paid-in capital           1,502,894       1,500,246  
Accumulated deficit          
(1,018,894
)     (1,122,241 )
Accumulated other comprehensive income           7,037       5,021  
Treasury stock, at cost, 37 shares in 2010           (234 )     -  
Total Amkor stockholders' equity          
490,986
      383,209  
Noncontrolling interests in subsidiaries           6,161       6,492  
Total equity          
497,147
      389,701  
Total liabilities and equity         $
2,693,058
    $ 2,432,909  
                       
AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
           
        For the Six Months Ended
        June 30,
        2010   2009
        (In thousands)  
Cash flows from operating activities:              
Net income (loss)       $
103,016
    $ (12,595 )
Depreciation and amortization         154,406       156,507  
Loss (gain) on debt retirement, net
        10,562       (16,884 )
Other operating activities and non-cash items         (4,697 )     5,407  
Changes in assets and liabilities        
(72,779
)     (99,077 )
Net cash provided by operating activities         190,508       33,358  
               
Cash flows from investing activities:              
Purchases of property, plant and equipment         (142,928 )     (69,955 )
Proceeds from the sale of property, plant and equipment         1,062       687  
Financing lease payment from unconsolidated affiliate         7,767       -  
Other investing activities         (9,782 )     (3,086 )
Net cash used in investing activities         (143,881 )     (72,354 )
               
Cash flows from financing activities:              
Borrowings under revolving credit facilities         3,261       -  
Payments under revolving credit facilities         (34,253 )     -  
Proceeds from issuance of short-term working capital facility
        15,000       15,000  
Payments of short-term working capital facility         (15,000 )  
-
 
Proceeds from issuance of long-term debt         611,007       100,000  
Proceeds from issuance of long-term debt, related party        
-
      150,000  
Payments of long-term debt, net of redemption premiums and discounts         (577,259 )     (186,156 )
Payments for debt issuance costs         (7,579 )     (8,539 )
Proceeds from issuance of stock through share-based compensation plans
        587       15  
Net cash (used in) provided by financing activities         (4,236 )     70,320  
               
Effect of exchange rate fluctuations on cash and cash equivalents         6       (346 )
               
Net increase in cash and cash equivalents         42,397       30,978  
Cash and cash equivalents, beginning of period         395,406       424,316  
Cash and cash equivalents, end of period       $ 437,803     $ 455,294