CHANDLER, Ariz. – October 27, 2009 -- Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of semiconductor assembly and test services, today reported its financial results for the quarter ended September 30, 2009.

Third quarter net sales of $616 million were up 22% sequentially from the second quarter of 2009 and down 14% from the third quarter of 2008. Third quarter net income was $81 million or $0.31 per diluted share, compared to $9 million or $0.05 per diluted share in the second quarter.

Net income for the third quarter of 2009 includes income tax benefits of $34 million or $0.12 per diluted share primarily from the release of a tax valuation allowance at our subsidiary in Korea. Net income for the third quarter of 2008 was $29 million, or $0.15 per diluted share. Net income for the third quarter of 2008 included a charge of $52 million or $0.25 per diluted share, relating to the resolution of a patent license dispute.

“We performed well in the third quarter, delivering strong results,” said Ken Joyce, chief executive officer of Amkor. “Net sales increased 22%, reflecting higher than typical seasonal growth, primarily driven by demand for communications and consumer applications. We achieved gross margin of 25% for the quarter, up sequentially from 20% in the second quarter of 2009, as we benefited from higher levels of capacity utilization and our earlier cost reduction efforts. As the global economy continues to improve, we are prudently investing in expanding capacity for our advanced interconnect technologies in close alignment with customer product roadmaps.”

“Looking ahead to the fourth quarter, we expect net sales to be flat, plus or minus 2%, from the third quarter of 2009 and gross margin of 23% to 25% based on current forecasts from our customers,” added Joyce.

“We generated $81 million in free cash flow in the third quarter and ended the quarter with a cash balance of $447 million and total debt of just under $1.5 billion,” said Joanne Solomon, Amkor’s chief financial officer. “During the third quarter, we repurchased $25 million of our 7.125% senior notes due 2011 and $49 million of our 7.75% senior notes due 2013. We have an aggregate of $86 million of debt coming due through the end of 2010, and the remaining $119 million of our 7.125% notes and 2.5% convertible notes mature in 2011.”

“Third quarter 2009 capital additions were $78 million. We expect capital additions for the fourth quarter to be approximately $70 million and approximately $200 million for the full year 2009 with full year capital intensity of approximately 9%. Our third quarter 2009 and planned capital additions are primarily related to expanding our capacity in response to increased levels of customer demand,” said Solomon.

Selected operating data for the third quarter of 2009 is included in a section before the financial tables.

Business Outlook

Based upon the latest available information, we have the following expectations for the fourth quarter of 2009:

  • Net sales flat, plus or minus 2%, from the third quarter of 2009
  • Gross margin between 23% and 25%
  • Net income – in the range of $0.17 to $0.23 per diluted share


Conference Call Information

Amkor will conduct a conference call on October 27, 2009 at 5:00 p.m. eastern time. This call is being webcast and can be accessed at Amkor’s web site at www.amkor.com. You may also access the call by dialing 888-561-1799. A replay of the call will be made available at Amkor’s web site or by dialing 800-406-7325 (access passcode # 4169497). 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 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 regarding the following: expectations regarding net sales and gross margin in the fourth quarter of 2009; the expected dollar amount and focus of our capital additions and the expected level of capital intensity; and the statements made under Business Outlook including those regarding net sales, gross margin and net income. 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;
  • 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 additions;
  • the effects of a recession 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 reduce 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 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, 2008 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 Operating Data

                       
Sales Data:   Q3 2009     Q2 2009     Q3 2008
                       
Packaging services:                    
Wirebond - leadframe     28 %         25 %         29 %
Wirebond - laminate     44 %         43 %         40 %
Flip chip and wafer level processing     17 %         20 %         20 %
Packaging services     89 %         88 %         89 %
Test services     11 %         12 %         11 %
Total sales     100 %         100 %         100 %
                       
Packaged units (in millions):                    

Wirebond - leadframe

    1,802           1,229           1,957  
Wirebond - laminate     419           330           390  
Flip chip and wafer level processing     126           134           157  
Total packaged units     2,347           1,693           2,504  
                       
Net sales from top ten customers     54 %         54 %         49 %
Capacity utilization     82 %         66 %         86 %
                       
End Market Distribution Data (an approximation based on a sampling of our largest customers):

Communications     50 %         49 %         42 %
Consumer     30 %         30 %         33 %
Computing     13 %         14 %         15 %
Other     7 %         7 %         10 %
Total     100 %         100 %         100 %
                       
                   
Earnings per Share Data:   Q3 2009       Q2 2009     Q3 2008
      (in millions, except per share data)
                       
Net income attributable to Amkor - basic   $ 81         $ 9         $ 29  
Adjustment for dilutive securities on net income:                    
Interest on 2.5% convertible notes due 2011, net of tax     -           -           1  
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           -  
Net income attributable to Amkor - diluted   $ 87         $ 13         $ 32  
                       
Weighted average shares outstanding - basic     183           183           183  
Effect of dilutive securities:                    
Stock options     -           -           1  
2.5% convertible notes due 2011     3           -           13  
6.25% convertible notes due 2013     13           -           13  
6.0% convertible notes due 2014     83           83           -  
Weighted average shares outstanding - diluted     282           266           210  
                       
Net income attributable to Amkor per common share:                  
Basic   $ 0.44  

 

    $ 0.05         $ 0.16  
Diluted   $ 0.31         $ 0.05         $ 0.15  
                       
                       
      Q3 2009       Q2 2009     Q3 2008
      (in millions)
Capital Investment Data:                    
Property, plant and equipment additions   $ 78         $ 27         $ 92  
Net change in related accounts payable and deposits     (36 )         -           34  
Purchases of property, plant and equipment   $ 42         $ 27         $ 126  
Depreciation and amortization   $ 74         $ 77         $ 79  
                       
Free Cash Flow Data:                    
Net cash provided by operating activities   $ 123         $ 96         $ 173  
Less purchases of property, plant and equipment     (42 )         (27 )         (126 )
Free cash flow*   $ 81         $ 69         $ 47  
                                 

*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 Nine Months
    Ended September 30,     Ended September 30,
    2009   2008     2009   2008
    (In thousands, except per share data)
                   
Net sales   $ 616,205     $ 719,731       $ 1,511,497     $ 2,109,890  
Cost of sales     461,589       590,700         1,206,455       1,645,776  
Gross profit     154,616       129,031         305,042       464,114  
                   
Operating expenses:                  
Selling, general and administrative     53,619       60,467         156,132       193,357  
Research and development     13,364       14,084         33,546       43,035  
Gain on sale of real estate     (146 )     -         (146 )     (9,856 )
Total operating expenses     66,837       74,551         189,532       226,536  
Operating income     87,779       54,480         115,510       237,578  
Other (income) expense:                  
Interest expense, net     24,465       30,119         77,436       83,866  
Interest expense, related party     3,813       1,562         9,187       4,687  
Foreign currency loss (gain)     8,259       (23,026 )       2,161       (44,100 )
Loss (gain) on debt retirement, net     1,226       -         (15,658 )     -  
Other income, net     (126 )     (256 )       (77 )     (955 )

Total other expense, net

    37,637       8,399         73,049       43,498  
Income before income taxes     50,142       46,081         42,461       194,080  
Income tax (benefit) expense     (30,854 )     16,313         (25,940 )     26,551  
Net income     80,996       29,768         68,401       167,529  
Net income attributable to noncontrolling interests     133       613         407       1,146  
Net income attributable to Amkor   $ 80,863     $ 29,155       $ 67,994     $ 166,383  
                   
Net income attributable to Amkor per common share:                  
Basic   $ 0.44     $ 0.16       $ 0.37     $ 0.91  
Diluted   $ 0.31     $ 0.15       $ 0.32     $ 0.84  
                   
Shares used in computing per common share amounts:                  
Basic     183,060       183,001         183,048       182,633  
Diluted     282,356       209,989         238,568       209,848  



AMKOR TECHNOLOGY, INC.

CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
   

September 30,
2009

   

December 31,
2008

   
(In thousands)
ASSETS          
Current assets:          
Cash and cash equivalents   $ 446,716       $ 424,316  
Restricted cash     2,679         4,880  
Accounts receivable:          
Trade, net of allowances     341,677         259,630  
Other     5,171         14,183  
Inventories     142,264         134,045  
Other current assets     42,316         23,862  
Total current assets     980,823         860,916  
           
Property, plant and equipment, net     1,372,578         1,473,763  
Intangibles, net     11,650         11,546  
Restricted cash     6,317         1,696  
Other assets     58,141         36,072  
Total assets   $ 2,429,509       $ 2,383,993  
           
LIABILITIES AND EQUITY          
Current liabilities:          
Short-term borrowings and current portion of long-term debt   $ 69,834       $ 54,609  
Trade accounts payable     324,981         241,684  
Accrued expenses     220,349         258,449  
Total current liabilities     615,164         554,742  
           
Long-term debt     1,149,300         1,338,751  
Long-term debt, related party     250,000         100,000  
Pension and severance obligations     94,812         116,789  
Other non-current liabilities     9,813         30,548  
Total liabilities     2,119,089         2,140,830  
           
Equity:          
Amkor stockholders' equity:          
Preferred stock     -         -  

Common stock, $0.001 par value, 500,000 shares authorized, issued and outstanding of 183,102 in 2009 and 183,035 in 2008

         
    183         183  
Additional paid-in capital     1,499,299         1,496,976  
Accumulated deficit     (1,210,227 )       (1,278,221 )
Accumulated other comprehensive income     14,606         18,201  
Total Amkor stockholders’ equity     303,861         237,139  

Noncontrolling interests in subsidiaries

    6,559         6,024  
Total equity     310,420         243,163  
Total liabilities and equity   $ 2,429,509       $ 2,383,993  



AMKOR TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
     
    For the Nine Months Ended
    September 30,
    2009   2008
    (In thousands)
         
Cash flows from operating activities:        
Net income   $ 68,401     $ 167,529  
Depreciation and amortization     230,887       229,501  
Gain on debt retirement, net     (15,658 )     -  
Other operating activities and non-cash items     (12,080 )     20,947  
Changes in assets and liabilities     (114,740 )     39,414  
Net cash provided by operating activities     156,810       457,391  
         
Cash flows from investing activities:        
Purchases of property, plant and equipment     (111,929 )     (317,109 )
Proceeds from the sale of property, plant and equipment     1,570       15,257  
Proceeds from sale of investment     -       2,460  
Other investing activities     (8,573 )     (702 )

Net cash used in investing activities

    (118,932 )     (300,094 )
         
Cash flows from financing activities:        
Borrowings under revolving credit facilities     -       619  
Payments under revolving credit facilities     -       (633 )
Proceeds from issuance of short-term debt     15,000       -  
Proceeds from issuance of long-term debt     100,000       -  
Proceeds from issuance of related party debt     150,000       -  
Payments of long-term debt     (272,214 )     (135,913 )
Payments for debt issuance costs     (8,479 )     -  
Proceeds from issuance of stock through stock compensation plans     348       10,201  
Net cash used in financing activities     (15,345 )     (125,726 )
         
Effect of exchange rate fluctuations on cash and cash equivalents     (133 )     2,197  
         
Net increase in cash and cash equivalents     22,400       33,768  
Cash and cash equivalents, beginning of period     424,316       410,070  
Cash and cash equivalents, end of period   $ 446,716     $ 443,838  

Contact:

Amkor Technology, Inc., Chandler
Joanne Solomon
Corporate Vice President & CFO
480-821-5000 ext. 5416
joanne.solomon@amkor.com