First Quarter 2014

  • Net sales $696 million
  • Gross margin 18.5%
  • Net income $21 million
  • Earnings per diluted share $0.09

CHANDLER, Ariz. - April 28, 2014 - 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, 2014, with net sales of $696 million, net income of $21 million, and earnings per diluted share of $0.09.

"First quarter results were stronger than we anticipated, driven by incremental demand for advanced packages," said Steve Kelley, Amkor's president and chief executive officer.  "We made solid progress in winning key mobile device opportunities, expanding our customer base and driving improved profitability."

Selected financial information for the first quarter 2014 is as follows:
Net Sales: $696 million, down 8% from $755 million in the prior quarter, and up 1% from $688 million in the  first  quarter of 2013
Gross Margin: 18.5%, compared to 19.9% in the prior quarter, and 16.7% in the first quarter of 2013
Net Income: $21 million, compared to  $41 million in the prior quarter, and $13 million in the first quarter of 2013
Earnings Per Diluted Share: $0.09, compared to $0.18 in the prior quarter, and $0.07 in the first quarter of 2013

"Our gross margin improved 180 basis points and earnings per share increased 29% over the first quarter 2013 primarily due to improved capacity utilization and lower cost of goods sold," said Joanne Solomon, Amkor's executive vice president and chief financial officer.

Cash and cash equivalents were $629 million, and total debt was $1.7 billion, at March 31, 2014.  In April, we reduced our debt by $116 million and improved our leverage with the conversion of the remaining $56 million of our convertible notes into common stock and the prepayment of $60 million of our foreign debt.

Business Outlook


“Driven by stronger customer forecasts for mobile devices and continued momentum from our growth initiatives, our expectations for the second quarter and full year 2014 have improved considerably,” noted Kelley.  “Accordingly, we are raising our expectations for full year 2014 capital expenditures to around $575 million to capture these growth opportunities."

Based upon currently available information, we have the following expectations for the second quarter 2014:
  • Net sales of $735 million to $785 million, up 6% to 13% from the prior quarter
  • Gross margin of 18% to 21%
  • Net income of $18 million to $43 million, or $0.08 to $0.18 per diluted share
  • Full year 2014 capital expenditures of around $575 million


Conference Call Information


Amkor will conduct a conference call on Monday, April 28, 2014, at 5:00 p.m. Eastern 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 website: www.amkor.com.  You may also access the call by dialing 1-866-225-8754 or 1-480-629-9819.  A replay of the call will be made available at Amkor's website or by dialing 1-800-406-7325 or 1-303-590-3030 (access pass code #4679945).  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 at Amkor's website: www.amkor.com.
 

Contacts:


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

Greg Johnson
Senior Director, Investor Relations and Corporate Communications
480-786-7594
greg.johnson@amkor.com

SELECTED OPERATING DATA

Since the fourth quarter 2013, we have reported net sales data by the following categories: advanced products and mainstream products.  We have also provided quarterly and annual net sales and packaged units for 2012 and 2013 under these revised net sales reporting categories at the Investor Relations section of our website at www.amkor.com.

 

Q1 2014

 

 

Q4 2013

 

 

Q1 2013

 

Net Sales Data:

 

 

 

 

 

 

 

 

Net sales (in millions):

 

 

 

 

 

 

 

 

Advanced products*

$

302

 

 

 

$

346

 

 

 

$

370

 

 

Mainstream products**

394

 

 

 

409

 

 

 

318

 

 

Total net sales

$

696

 

 

 

$

755

 

 

 

$

688

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Packaging services

85

 

%

 

85

 

%

 

86

 

%

Test services

15

 

%

 

15

 

%

 

14

 

%

 

 

 

 

 

 

 

 

 

 

 

 

Net sales from top ten customers

60

 

%

 

63

 

%

 

63

 

%

 

 

 

 

 

 

 

 

 

 

 

 

Packaged units (in millions):

 

 

 

 

 

 

 

 

 

 

 

Advanced products*

650

 

 

 

816

 

 

 

579

 

 

Mainstream products**

3,217

 

 

 

3,261

 

 

 

1,722

 

 

Total packaged units

3,867

 

 

 

4,077

 

 

 

2,301

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

Communications (handsets, tablets, handheld devices, wireless LAN)

53

 

%

 

55

 

%

 

59

 

%

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

15

 

%

 

14

 

%

 

14

 

%

Automotive, industrial and other (infotainment, safety, performance, comfort)

12

 

%

 

11

 

%

 

8

 

%

Networking (servers, routers, switches)

10

 

%

 

11

 

%

 

10

 

%

Computing (desk tops, PCs, hard disk drive, printers, peripherals, servers)

10

 

%

 

9

 

%

 

9

 

%

Total

100

 

%

 

100

 

%

 

100

 

%

 

 

 

 

 

 

 

 

 

 

 

 

Gross Margin Data:

 

 

 

 

 

 

 

 

 

 

 

Net sales

100.0

 

%

 

100.0

 

%

 

100.0

 

%

Cost of sales:

 

 

 

 

 

 

 

 

 

 

 

Materials

36.8

 

%

 

37.2

 

%

 

42.5

 

%

Labor

14.7

 

%

 

14.6

 

%

 

14.8

 

%

Other manufacturing

30.0

 

%

 

28.3

 

%

 

26.0

 

%

Gross margin

18.5

 

%

 

19.9

 

%

 

16.7

 

%

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per Share Data:

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Amkor - basic

$

20

 

 

 

$

41

 

 

 

$

13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustment for dilutive securities on net income:

 

 

 

 

 

 

 

 

 

 

 

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

1

 

 

 

1

 

 

 

4

 

 

Net income attributable to Amkor - diluted

$

21

 

 

 

$

42

 

 

 

$

17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

216

 

 

 

216

 

 

 

152

 

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

6.0% convertible notes due 2014

19

 

 

 

19

 

 

 

83

 

 

Weighted average shares outstanding - diluted

235

 

 

 

235

 

 

 

235

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Amkor per common share:

 

 

 

 

 

 

 

 

 

Basic

$

0.09

 

 

 

$

0.19

 

 

 

$

0.09

 

 

Diluted

$

0.09

 

 

 

$

0.18

 

 

 

$

0.07

 

 

 

*Advanced products include flip chip and wafer-level processing and related test services

**Mainstream products include wirebond packaging and related test services and since July 1, 2013 include the results of our newly acquired power discrete business in Malaysia which has a high volume of units relative to revenue

 

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

 

For the Three Months Ended
March 31,

 

2014

 

2013

 

(In thousands, except per share data)

Net sales

$

696,044

 

 

$

687,529

 

Cost of sales

567,224

 

 

572,576

 

Gross profit

128,820

 

 

114,953

 

Selling, general and administrative

62,424

 

 

59,559

 

Research and development

21,045

 

 

14,306

 

Total operating expenses

83,469

 

 

73,865

 

Operating income

45,351

 

 

41,088

 

Interest expense

23,722

 

 

22,078

 

Interest expense, related party

1,242

 

 

3,492

 

Other expense (income), net

36

 

 

(2,222

)

Total other expense, net

25,000

 

 

23,348

 

Income before taxes and equity in earnings of unconsolidated affiliate

20,351

 

 

17,740

 

Income tax expense

4,929

 

 

4,029

 

Income before equity in earnings of unconsolidated affiliate

15,422

 

 

13,711

 

Equity in earnings of J-Devices

5,761

 

 

55

 

Net income

21,183

 

 

13,766

 

Net income attributable to noncontrolling interests

(550

)

 

(384

)

Net income attributable to Amkor

$

20,633

 

 

$

13,382

 

 

 

 

 

 

 

Net income attributable to Amkor per common share:

 

 

 

 

 

Basic

$

0.09

 

 

$

0.09

 

Diluted

$

0.09

 

 

$

0.07

 

 

 

 

 

 

 

Shares used in computing per common share amounts:

 

 

 

 

 

Basic

216,757

 

 

152,411

 

Diluted

235,497

 

 

235,087

 

 

 

CONSOLIDATED BALANCE SHEETS
(Unaudited)

 

March 31,
 2014

 

December 31,
 2013

 

(In thousands)

ASSETS

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

628,585

 

 

$

610,442

 

Restricted cash

2,681

 

 

2,681

 

Accounts receivable, net of allowances

406,797

 

 

385,542

 

Inventories

197,297

 

 

200,423

 

Other current assets

45,399

 

 

33,328

 

Total current assets

1,280,759

 

 

1,232,416

 

Property, plant and equipment, net

2,033,396

 

 

2,006,553

 

Investments

114,119

 

 

105,214

 

Restricted cash

2,193

 

 

2,234

 

Other assets

72,872

 

 

80,881

 

Total assets

$

3,503,339

 

 

$

3,427,298

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

Current liabilities:

 

 

 

 

 

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

$

66,350

 

 

$

61,350

 

Trade accounts payable

416,789

 

 

365,334

 

Accrued expenses

258,558

 

 

264,252

 

Total current liabilities

741,697

 

 

690,936

 

Long-term debt

1,511,252

 

 

1,516,390

 

Long-term debt, related party

75,000

 

 

75,000

 

Pension and severance obligations

168,020

 

 

165,073

 

Other non-current liabilities

16,010

 

 

14,959

 

Total liabilities

2,511,979

 

 

2,462,358

 

 

 

 

 

 

 

Amkor stockholders’ equity:

 

 

 

 

 

Preferred stock

 

 

 

Common stock

262

 

 

262

 

Additional paid-in capital

1,813,940

 

 

1,812,530

 

Accumulated deficit

(626,715

)

 

(647,348

)

Accumulated other comprehensive income (loss)

3,694

 

 

(255

)

Treasury stock

(211,571

)

 

(211,449

)

Total Amkor stockholders’ equity

979,610

 

 

953,740

 

Noncontrolling interests in subsidiaries

11,750

 

 

11,200

 

Total equity

991,360

 

 

964,940

 

Total liabilities and equity

$

3,503,339

 

 

$

3,427,298

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 

For the Three Months Ended
March 31,

 

2014

 

2013

 

(In thousands)

Cash flows from operating activities:

 

 

 

 

 

Net income

$

21,183

 

 

$

13,766

 

Depreciation and amortization

108,338

 

 

97,148

 

Other operating activities and non-cash items

(4,274

)

 

(840

)

Changes in assets and liabilities

6,699

 

 

(11,400

)

Net cash provided by operating activities

131,946

 

 

98,674

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Purchases of property, plant and equipment

(95,999

)

 

(112,543

)

Proceeds from the sale of property, plant and equipment

726

 

 

24,614

 

Payments from J-Devices

 

 

8,843

 

Other investing activities

(266

)

 

(249

)

Net cash used in investing activities

(95,539

)

 

(79,335

)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Proceeds from issuance of long-term debt

80,000

 

 

33,000

 

Payments of long-term debt

(80,000

)

 

 

Payment of deferred consideration for an acquisition

(18,763

)

 

 

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

438

 

 

 

Payments of tax withholding for restricted shares

(122

)

 

(90

)

Net cash (used in) provided by financing activities

(18,447

)

 

32,910

 

 

 

 

 

 

 

Effect of exchange rate fluctuations on cash and cash equivalents

183

 

 

1,405

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

18,143

 

 

53,654

 

Cash and cash equivalents, beginning of period

610,442

 

 

413,048

 

Cash and cash equivalents, end of period

$

628,585

 

 

$

466,702

 

 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 and cyclicality of the semiconductor industry;
  • timing and volume of orders relative to production capacity and the inability to achieve high capacity utilization rates, control costs and improve profitability;
  • volatility of consumer demand, double booking by customers and deterioration in forecasts from our customers for products incorporating our semiconductor packages, including any slowdown in demand or changes in customer forecasts for smartphones or other mobile devices;
  • delays, lower manufacturing yields and supply constraints relating to the ramp to high volume manufacturing of 20 nanometer wafers and related technologies;
  • dependence on key customers and the impact of changes in our market share and prices for our services with those 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 effect of the global economy on credit markets, financial institutions, customers, suppliers and consumers, including the uncertain macroeconomic environment;
  • the highly unpredictable nature and costs of litigation and other legal activities and the risk of adverse results of such matters, including the final outcome in the pending patent license litigation and the impact of other legal proceedings;
  • the negative impact on economic growth resulting from the action or inaction of the U.S. government relating to federal income tax increases for individuals or corporations, the federal debt ceiling, the federal deficit and government spending restrictions or shutdowns;
  • changes in tax rates and taxes as a result of changes in U.S. or foreign 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 an economic slowdown in China, the U.S. and other major economies worldwide;
  • disruptions in our business or deficiencies in our controls resulting from the integration of newly acquired operations or the implementation and security of, and changes to, our enterprise resource planning, factory shop floor systems and other management information systems;
  • economic effects of terrorist attacks, natural disasters and military conflict;
  • competition, competitive pricing and declines in average selling prices;
  • fluctuations in manufacturing yields;
  • dependence on international operations and sales and exchange rate fluctuations;
  • dependence on raw material and equipment suppliers and changes in raw material and precious metal costs;
  • dependence on key personnel;
  • 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, 2013 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.