Chandler, Ariz., August 5, 2008 – Amkor Technology, Inc. (NASDAQ: AMKR) today reported its financial results for the second quarter ended June 30, 2008.

Second quarter net sales of $691 million were down sequentially 1% from the first quarter of 2008 and up 6% from the second quarter of 2007. Second quarter net income was $65 million, down 9% from the first quarter of 2008 and up 110% from the second quarter of 2007. Second quarter earnings per diluted share was $0.33, down $0.03 from the first quarter of 2008 and up $0.17 from the second quarter of 2007. Second quarter net income includes a $10 million gain, with no net tax effect, or $0.05 per diluted share, from a real estate sale. During the second quarter of 2007, Amkor recorded charges, with no net tax effect, of $16 million, or $0.08 per diluted share, in connection with a refinancing transaction.

“Net sales decreased $9 million or 1% sequentially, while overall unit shipments were down 3% compared to the first quarter of 2008,” said James Kim, Amkor’s chairman and chief executive officer. “Second quarter 2008 sales reflect continued revenue growth for 3D packaging, flip chip and wafer-level packaging and test services. However, this growth was more than offset by reduced sales of our leadframe packaging and certain of our laminate packaging services.”

“The decline in revenues compared to our prior guidance was due primarily to the production disruptions we experienced as a result of our ERP implementation in the Philippines as customers reduced inventory levels, utilized alternative sources and delayed orders,” said Ken Joyce, Amkor’s president and chief operating officer. “Although normal production capabilities have been restored, we believe our net sales were negatively impacted by approximately $10 million to $15 million by the ERP disruption. We also experienced some weakness from the first quarter in computing, legacy gaming and certain wireless applications,” said Joyce.

“As we look ahead, we are cautious about increasing softness in the consumer markets and global economic uncertainty. For the third quarter of 2008, we expect revenues to grow sequentially by 4% to 6%, which is below the level of historical seasonality due to uncertainty around consumer demand,” said Kim.

“Gross margin for the second quarter was 23%, down from 25% in the first quarter of 2008 and 25% in the second quarter of 2007, reflecting the impact of lower than expected sales and an overall product mix of packages with higher material cost,” said Joanne Solomon, Amkor’s chief financial officer. “Approximately $5 million of the sequential decline in gross profit is attributable to the $9 million reduction in second quarter sales from the first quarter. As part of ongoing efforts initiated earlier this year to improve factory performance and manage costs, we plan to reduce the workforce in our factories by more than 600 employees in the third quarter of 2008. We estimate that $10 million will be charged to cost of sales and $1 million will be charged to selling, general and administrative expense in the third quarter for these programs,” said Solomon.

Second quarter net income included a foreign currency gain of $12 million, principally due to the depreciation of the Korean won and the resulting re-measurement of Amkor’s Korean employee benefit plan liability. Amkor’s effective income tax rate for the second quarter was 6% and the anticipated effective tax rate for the full year 2008 is approximately 7%.

“Capital additions for the quarter totaled $122 million, which was less than we anticipated due to delays in timing and reduction in scope of certain capital projects during the quarter. We work with our customers to align our product development roadmaps and expand our capacity in direct response to where they are experiencing strong demand,” said Solomon. “We expect capital additions to be approximately $125 million in the third quarter of 2008, after which we expect capital additions to decline for the remainder of the year. For the full year 2008, we expect our capital expenditures to be approximately 14% of revenues.”

“We generated $1 million of free cash flow in the second quarter, compared to $92 million in the first quarter of 2008 and $80 million in the second quarter of 2007,” added Solomon. “While the sequential decline in operating income was only $11 million, the timing of cash payments for interest expense and capital additions had a significant impact on our free cash flow for the quarter.”

Selected operating data for the second quarter of 2008 is included in a section before the financial tables.

Business Outlook

On the basis of customers’ forecasts, we have the following expectations for the third quarter of 2008:

  • Sales – Up 4% to 6% from the second quarter of 2008
  • Gross Margin – between 23% - 24%
  • Net income – in the range of $0.24 to $0.28 per diluted share


The outlook for gross margin and net income includes the impact of anticipated charges in the third quarter of 2008 related to employee workforce reductions. The charges to cost of sales and selling, general and administrative for these reductions are expected to be approximately $10 million and $1 million, respectively. Amkor will conduct a conference call on August 5, 2008 at 5:00 p.m. eastern time. This call is being webcast by Thomson Financial and can be accessed at Amkor’s web site at www.amkor.com. You may also access the call by dialing 303-262-2130. A replay of the call will be made available at Amkor’s web site or by dialing 303-590-3000 (access passcode #11116655). The webcast is also being distributed over Thomson Financial’s Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through Thomson Financial individual investor center at www.companyboardroom.com or by visiting any of the investor sites in Thomson Financial’s Individual Investor Network. Institutional investors can access the call via Thomson Financial’s password-protected event management site, StreetEvents (www.streetevents.com).

About Amkor

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 stability within a challenging economy; our anticipated revenue growth; our anticipated level of debt repayment in 2008; our focus on continuing a disciplined approach to capital spending; our estimates of charges to cost of sales and selling, general and administrative expense in the third quarter of 2008; 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; the uncertainty regarding consumer demand and the global economy; and the statements regarding sales, gross margin, net income per diluted share and expected costs of anticipated workforce reductions 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, including our litigation with Tessera; 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, 2007 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.


Company Contact:
Joanne Solomon
Corporate Vice President & CFO
480-821-5000 ext. 5416
jsolo@amkor.com

Investor Relations Contact:
Claire McAdams
Investor Relations
530-274-0551
cmcad@amkor.com

AMKOR TECHNOLOGY, INC.
Selected Operating Data
             
    Q2 2008   Q1 2008   Q2 2007
Sales Data:            
Packaging services:            
Wirebond - leadframe     28 %     29 %     35 %
Wirebond - laminate     40 %     40 %     51 %
Flip chip and wafer level processing     20 %     19 %     3 %
Packaging services     88 %     88 %     89 %
Test services     12 %     12 %     11 %
Total sales     100 %     100 %     100 %
             
Packaged units (in billions)     2.1       2.2       2.1  
Net sales from top ten customers     49 %     50 %     48 %
Capacity utilization     73 %     80 %     80 %
             
End Market Distribution Data (an approximation based on a sampling of our largest customers):        
Communications     42 %     41 %     35 %
Consumer     32 %     32 %     30 %
Computing     16 %     17 %     25 %
Other     10 %     10 %     10 %
Total     100 %     100 %     100 %
             
Earnings per Share Data:            
    Q2 2008   Q1 2008   Q2 2007
    (in millions)
Net income basic   $ 65     $ 72     $ 31  
Adjustment for dilutive securities on net income:            
Interest on 2.5% convertible notes due 2011, net of tax     1       1       1  
Interest on 6.25% convertible notes due 2013, net of tax     2       2       2  
Net income diluted   $ 68     $ 75     $ 34  
             
Weighted average shares outstanding basic     183       182       180  
Effect of dilutive securities:            
Stock options     1       1       4  
2.5% convertible notes due 2011     13       13       13  
6.25% convertible notes due 2013     13       13       13  
Weighted average shares outstanding diluted     210       209       210  
 
    Q2 2008   Q1 2008   Q2 2007
Capital Investment Data:   (in millions)
Property, plant and equipment additions   $ 122     $ 95     $ 60  
Net change in related accounts payable and deposits     (20 )     (6 )     (9 )
Purchases of property, plant and equipment   $ 102     $ 89     $ 51  
Depreciation and amortization   $ 77     $ 74     $ 71  
             
Free Cash Flow Data:            
Net cash provided by operating activities   $ 103     $ 181     $ 131  
Less purchases of property, plant and equipment     (102 )     (89 )     (51 )
Free cash flow*   $ 1     $ 92     $ 80  

*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 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.

AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(Unaudited)
 
    For the Three Months Ended   For the Six Months Ended
    June 30,   June 30,
    2008   2007   2008   2007
    (In thousands, except per share data)
 
Net sales   $ 690,676     $ 652,486     $ 1,390,159     $ 1,303,474  
Cost of sales     531,745       490,794       1,055,076       994,444  
Gross profit     158,931       161,692       335,083       309,030  
                 
Operating expenses:                
Selling, general and administrative     67,441       62,360       132,890       128,143  
Research and development     15,095       11,023       28,951       20,648  
Gain on sale of real estate     (9,856 )     -       (9,856 )     (3,116 )
Total operating expenses     72,680       73,383       151,985       145,675  
Operating income     86,251       88,309       183,098       163,355  
Other (income) expense:                
Interest expense, net     26,314       31,114       53,747       66,274  
Interest expense, related party     1,562       1,562       3,125       3,125  
Foreign currency (gain) loss     (11,597 )     4,562       (21,074 )     4,547  
Debt retirement costs, net     -       15,875       -       15,875  
Other (income) expense, net     107       (532 )     (699 )     (1,218 )
Total other expense     16,386       52,581       35,099       88,603  
Income before income taxes and minority interests     69,865       35,728       147,999       74,752  
Income tax expense     4,298       4,272       10,238       8,379  
Income before minority interests     65,567       31,456       137,761       66,373  
Minority interests, net of tax     (335 )     (466 )     (533 )     (793 )
Net income   $ 65,232     $ 30,990     $ 137,228     $ 65,580  
                 
Net income per common share:                
Basic   $ 0.36     $ 0.17     $ 0.75     $ 0.37  
Diluted   $ 0.33     $ 0.16     $ 0.68     $ 0.34  
                 
Shares used in computing net income per common share:                
Basic     182,759       180,392       182,446       179,456  
Diluted     210,138       209,868       209,785       208,282  
AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
         
    June 30,   December 31,
    2008   2007
    (In thousands)
ASSETS        
Current assets:        
Cash and cash equivalents   $ 409,112     $ 410,070  
Restricted cash     2,654       2,609  
Accounts receivable:        
Trade, net of allowances     384,126       393,493  
Other     5,603       4,938  
Inventories     153,027       149,014  
Other current assets     39,735       27,290  
Total current assets     994,257       987,414  
         
Property, plant and equipment, net     1,528,235       1,455,111  
Goodwill     679,918       673,385  
Intangibles, net     16,089       20,321  
Restricted cash     1,839       1,725  
Other assets     50,141       54,650  
Total assets   $ 3,270,479     $ 3,192,606  
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
Current liabilities:        
Short-term borrowings and current portion of long-term debt   $ 57,358     $ 152,489  
Trade accounts payable     412,523       359,313  
Accrued expenses     157,514       165,271  
Total current liabilities     627,395       677,073  
         
Long-term debt     1,485,505       1,511,570  
Long-term debt, related party     100,000       100,000  
Pension and severance obligations     193,799       208,387  
Other non-current liabilities     27,266       33,935  
Total liabilities     2,433,965       2,530,965  
         
Minority interests     8,194       7,022  
         
Stockholders equity:        
Preferred stock     -       -  
Common stock, $0.001 par value, 500,000 shares authorized, issued and outstanding of 182,961 in 2008 and 181,799 in 2007        
    183       182  
Additional paid-in capital     1,494,485       1,482,186  
Accumulated deficit     (684,298 )     (821,526 )
Accumulated other comprehensive income (loss)     17,950       (6,223 )
Total stockholders equity     828,320       654,619  
Total liabilities and stockholders equity   $ 3,270,479     $ 3,192,606  
AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
    For the Six Months Ended
    June 30,
    2008   2007
    (In thousands)
Cash flows from operating activities:        
Net income   $ 137,228     $ 65,580  
Depreciation and amortization     150,543       141,504  
Debt retirement costs     -       6,875  
Other operating activities and non-cash items     8,227       3,434  
Changes in assets and liabilities     (11,300 )     36,590  
Net cash provided by operating activities     284,698       253,983  
         
Cash flows from investing activities:        
Payments for property, plant and equipment     (190,870 )     (102,212 )
Proceeds from the sale of property, plant and equipment     14,968       4,566  
Proceeds from sale of investment     2,460       -  
Other investing activities     (496 )     (1,469 )
Net cash used in investing activities     (173,938 )     (99,115 )
         
Cash flows from financing activities:        
Borrowings under revolving credit facilities     619       61,836  
Payments under revolving credit facilities     (633 )     (79,448 )
Proceeds from issuance of long-term debt     -       300,000  
Payments for debt issuance costs     -       (3,437 )
Payments of long-term debt, including redemption premium payment     (124,074 )     (474,746 )
Proceeds from issuance of stock through stock compensation plans     9,776       34,466  
Net cash used in financing activities     (114,312 )     (161,329 )
         
Effect of exchange rate fluctuations on cash and cash equivalents     2,594       174  
         
Net decrease in cash and cash equivalents     (958 )     (6,287 )
Cash and cash equivalents, beginning of period     410,070       244,694  
Cash and cash equivalents, end of period   $ 409,112     $ 238,407  
         
Cash paid during the period for:        
Interest   $ 63,541     $ 71,142  
Income taxes   $ 13,194     $ 6,872