CHANDLER, Ariz.-- February 10, 2010 --Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of semiconductor assembly and test services, today reported its financial results for the quarter and year ended December 31, 2009.

Fourth quarter net sales of $668 million were up 8% sequentially from the third quarter of 2009 and up 22% from the fourth quarter of 2008. Gross margin improved to 26% for the fourth quarter, compared to 25% for the third quarter of 2009 and 18% for the fourth quarter of 2008. Fourth quarter net income was $88 million or $0.33 per diluted share, compared to $81 million or $0.31 per diluted share in the third quarter of 2009 and a net loss of $623 million, or $3.40 loss per share, in the fourth quarter of 2008. Net income for the third quarter of 2009 included income tax benefits of $34 million or $0.12 per diluted share, primarily from the release of a tax valuation allowance at a subsidiary in Korea. The net loss for the fourth quarter of 2008 included a $671 million goodwill impairment charge, or $3.67 per share.

Full year 2009 net sales were $2.2 billion, down 18% from $2.7 billion for 2008. Gross margin was 22% for 2009, compared to 21% for 2008. Net income for the full year 2009 was $156 million or $0.67 per diluted share compared to a net loss of $457 million for 2008 or $2.50 loss per share, which included the goodwill impairment charge noted above.

“Customer demand remained strong in the fourth quarter as we delivered our best quarterly results in 2009. Our net sales of $668 million were better than expected, representing an 8% improvement from the third quarter,” said Ken Joyce, Amkor’s president and chief executive officer. “Our disciplined spending and cost control efforts, together with strong operating leverage in the second half of the year, have driven solid profitability and free cash flow generation during the worst industry downturn in many years,” added Joyce.

“We began the year with an unprecedented drop in sales as the electronics industry significantly cut inventories in response to the global recession. The markets have rebounded more quickly than most people anticipated at the start of the year, and the current outlook is positive as we enter 2010. Looking ahead to the first quarter of 2010, we expect net sales to be down between 2% and 6% from a strong fourth quarter of 2009, with gross margin of 22% to 24%,” said Joyce.

“We are currently operating at or near capacity in many of our product lines,” noted Joyce. “In order to support improved customer demand, we expect to invest at higher levels in 2010 compared with 2009, with spending weighted more towards the first half of the year. Our overall capital intensity is expected to be around 14%.”

“Unit shipments of 2.4 billion during the fourth quarter were up 4% from the third quarter, principally driven by the strength of leadframe wire bond packaging services,” said Joanne Solomon, Amkor’s chief financial officer. “Revenue growth of 8% was more than the unit growth of 4% reflecting strong demand for flip chip and wire bond chip scale and ball grid array packaging services with higher average sales prices. We saw broad demand across our product lines during the fourth quarter, including our services for the communications and consumer end markets, with notable sequential growth in networking.”

“We generated $88 million in free cash flow in the full year 2009, our fourth consecutive year of positive free cash flow, despite paying $148 million to reduce our Korean severance obligations and to resolve a patent license dispute,” noted Solomon. “During the fourth quarter, we repurchased $23 million of our 7.125% senior notes due 2011 and $15 million of our 7.75% senior notes due 2013 and we ended the quarter with a cash balance of $395 million and total debt of $1.4 billion.”

“Capital additions for the fourth quarter of 2009 were $69 million and $198 million for the full year 2009 with full year capital intensity of 9%. We expect capital additions for the first quarter of 2010 to be approximately $100 to $125 million. Our planned capital additions are focused on expanding capacity in support of customer demand for a number of advanced packaging and test areas, including flip chip and wire bond chip scale packaging and wafer bumping,” said Solomon.

Selected operating data for the fourth quarter and full year 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 first quarter of 2010:

  • Net sales down 2% to 6% from the fourth quarter of 2009
  • Gross margin between 22% and 24%
  • Net income – in the range of $0.17 to $0.22 per diluted share


Conference Call Information

Amkor will conduct a conference call on February 10, 2010 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 877-941-2332. A replay of the call will be made available at Amkor’s web site or by dialing 800-406-7325 (access passcode # 4200074). 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, the following: statements regarding the expected dollar amount, focus and timing of our capital additions and the expected level of capital intensity; and the statements made regarding our current outlook as we enter 2010 and our expected 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;
  • dependence on key customers;
  • 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 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, 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:   Q4 2009   Q3 2009   Q4 2008   2009   2008
                       
Packaging services (in millions):                    
Chip scale package   $ 224     $ 206     $ 151     $ 695     $ 697  
Ball grid array     142       129       152       500       751  
Leadframe     184       172       144       587       753  
Other packaging     47       42       33       152       144  
Packaging services     597       549       480       1,934       2,345  
Test services     71       67       69       245       314  
Total sales   $ 668     $ 616     $ 549     $ 2,179     $ 2,659  
                       
Packaging services:                    
Chip scale package     33 %     33 %     27 %     32 %     26 %
Ball grid array     21 %     21 %     28 %     23 %     28 %
Leadframe     28 %     28 %     26 %     27 %     29 %
Other packaging     7 %     7 %     6 %     7 %     5 %
Packaging services     89 %     89 %     87 %     89 %     88 %
Test services     11 %     11 %     13 %     11 %     12 %
Total sales     100 %     100 %     100 %     100 %     100 %
                       
Packaged units (in millions):                    
Chip scale package     519       481       380       1,652       1,661  
Ball grid array     53       57       59       205       298  
Leadframe     1,856       1,802       1,307       5,773       6,593  
Other packaging     7       7      

3

      24       14  
Total packaged units     2,435       2,347      

1,749

      7,654       8,566  
                       
Net sales from top ten customers     55 %     54 %     52 %     53 %     50 %
Capacity utilization     84 %     82 %     61 %        
                       

End Market Distribution Data (an approximation based on a sampling of our largest customers. Prior periods were revised for an expanded sampling methodology and refinement of our classifications):

 
                       
Communications     39 %     40 %     34 %        
Consumer     26 %     28 %     28 %        
Computing     13 %     13 %     16 %        
Networking     13 %     12 %     15 %        
Other     9 %     7 %     7 %        
Total     100 %     100 %     100 %        
                       
Earnings per Share Data:   Q4 2009   Q3 2009   Q4 2008   2009   2008
      (in millions, except per share data)
                       
Net income (loss) attributable to Amkor - basic   $ 88     $ 81     $ (623 )   $ 156     $ (457 )
Adjustment for dilutive securities on net income (loss):                    
Interest on 2.5% convertible notes due 2011, net of tax     -       -       -       2       -  
Interest on 6.25% convertible notes due 2013, net of tax     2       2       -       7       -  
Interest on 6.0% convertible notes due 2014, net of tax     4       4       -       12       -  
Net income (loss) attributable to Amkor - diluted   $ 94     $ 87     $ (623 )   $ 177     $ (457 )
                       
Weighted average shares outstanding - basic     183       183       183       183       183  
Effect of dilutive securities:                    
Stock options     -       -       -       -       -  
2.5% convertible notes due 2011     3       3       -       5       -  
6.25% convertible notes due 2013     13       13       -       13       -  
6.0% convertible notes due 2014     83       83       -       62       -  
Weighted average shares outstanding - diluted     282       282       183       263       183  
                       
Net income (loss) attributable to Amkor per common share:                    
Basic   $ 0.48     $ 0.44     $ (3.40 )   $ 0.85     $ (2.50 )
Diluted   $ 0.33     $ 0.31     $ (3.40 )   $ 0.67     $ (2.50 )
                       
Capital Investment Data:                    
Property, plant and equipment additions   $ 69     $ 78     $ 32     $ 198     $ 342  
Net change in related accounts payable and deposits     (7 )     (36 )     37       (24 )     44  
Purchases of property, plant and equipment   $ 62     $ 42     $ 69     $ 174     $ 386  
Depreciation and amortization   $ 75     $ 74     $ 80     $ 306     $ 310  
                       
Free Cash Flow Data:                    
Net cash provided by operating activities   $ 106     $ 123     $ 149     $ 262     $ 606  
Less purchases of property, plant and equipment     (62 )     (42 )     (69 )     (174 )     (386 )
Free cash flow*   $ 44     $ 81     $ 80     $ 88     $ 220  
                                         

 


 *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 Twelve Months

    Ended December 31,     Ended December 31,
    2009   2008     2009   2008
    (In thousands, except per share data)
                   
Net sales   $ 667,612     $ 548,712       $ 2,179,109  

 

$ 2,658,602  
Cost of sales     492,258       451,088         1,698,713  

 

  2,096,864  
Gross profit     175,354       97,624         480,396  

 

  561,738  
                   
Operating expenses:                  
Selling, general and administrative     54,775       58,399         210,907  

 

  251,756  
Research and development     10,907       13,192         44,453  

 

  56,227  
Goodwill impairment     -       671,117         -  

 

  671,117  
Gain on sale of real estate     (135 )     -         (281 )

 

  (9,856 )
Total operating expenses     65,547       742,708         255,079  

 

  969,244  
Operating income (loss)     109,807       (645,084 )       225,317  

 

  (407,506 )
Other (income) expense:                  
Interest expense, net     22,593       26,114         100,029  

 

  109,980  
Interest expense, related party     3,813       1,563         13,000  

 

  6,250  
Foreign currency loss (gain)     1,178       (16,957 )       3,339  

 

  (61,057 )
Loss (gain) on debt retirement, net     570       (35,987 )       (15,088 )

 

  (35,987 )
Equity in earnings of unconsolidated affiliate     (2,373 )     -         (2,373 )

 

  -  
Other income, net     (36 )     (49 )       (113 )

 

  (1,004 )
Total other expense (income), net     25,745       (25,316 )       98,794  

 

  18,182  
Income (loss) before income taxes     84,062       (619,768 )       126,523  

 

  (425,688 )
Income tax (benefit) expense     (3,820 )     5,237         (29,760 )

 

  31,788  
Net income (loss)     87,882       (625,005 )       156,283  

 

  (457,476 )
Net loss (income) attributable to noncontrolling interests     104       1,927         (303 )

 

  781  
Net income (loss) attributable to Amkor   $ 87,986     $ (623,078 )     $ 155,980  

 

$ (456,695 )
                   

Net income (loss) attributable to Amkor per common share:

                 
Basic   $ 0.48    

$

(3.40 )     $ 0.85  

 

$ (2.50 )
Diluted   $ 0.33    

$

(3.40 )     $ 0.67  

 

$ (2.50 )
                   
Shares used in computing per common share amounts:                  
Basic     183,134       183,035         183,067  

 

  182,734  
Diluted     282,495       183,035         263,379  

 

  182,734  

 

AMKOR TECHNOLOGY, INC.

CONSOLIDATED BALANCE SHEETS
(Unaudited)
         
    December 31,   December 31,
    2009   2008
    (In thousands)
ASSETS        
Current assets:        
Cash and cash equivalents   $ 395,406     $ 424,316  
Restricted cash     2,679       4,880  
Accounts receivable:        
Trade, net of allowances     328,252       259,630  
Other     18,666       14,183  
Inventories     155,185       134,045  
Other current assets     32,737       23,862  
Total current assets     932,925       860,916  
         
Property, plant and equipment, net     1,364,630       1,473,763  
Intangibles, net     9,975       11,546  
Investments     19,108       -  
Restricted cash     6,795       1,696  
Other assets     99,476       36,072  
Total assets   $ 2,432,909     $ 2,383,993  
         
LIABILITIES AND EQUITY        
Current liabilities:        
Short-term borrowings and current portion of long-term debt   $ 88,944     $ 54,609  
Trade accounts payable     361,263       241,684  
Accrued expenses     155,630       258,449  
Total current liabilities     605,837       554,742  
         
Long-term debt     1,095,241       1,338,751  
Long-term debt, related party     250,000       100,000  
Pension and severance obligations     83,067       116,789  
Other non-current liabilities     9,063       30,548  
Total liabilities     2,043,208       2,140,830  
         
Equity:        
Amkor stockholders' equity:        
Preferred stock     -       -  

Common stock, $0.001 par value, 500,000 shares authorized, issued and outstanding of 183,171 in 2009 and 183,035 in 2008

    183       183  
Additional paid-in capital     1,500,246       1,496,976  
Accumulated deficit     (1,122,241 )     (1,278,221 )
Accumulated other comprehensive income     5,021       18,201  
Total Amkor stockholders’ equity     383,209       237,139  
Noncontrolling interests in subsidiaries     6,492       6,024  
Total equity     389,701       243,163  
Total liabilities and equity   $ 2,432,909     $ 2,383,993  

 

AMKOR TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
    For the Twelve Months Ended
    December 31,
    2009   2008
    (In thousands)
Cash flows from operating activities:        
Net income (loss)   $ 156,283     $ (457,476 )
Impairment of goodwill     -       671,117  
Depreciation and amortization     305,510       309,920  
Gain on debt retirement, net     (15,088 )     (35,987 )
Other operating activities and non-cash items     (17,595 )     22,511  
Changes in assets and liabilities     (167,385 )     95,733  
Net cash provided by operating activities     261,725       605,818  
         
Cash flows from investing activities:        
Purchases of property, plant and equipment     (173,496 )     (386,239 )
Proceeds from the sale of property, plant and equipment     3,116       15,480  
Purchase of equipment leased to unconsolidated affiliate     (44,681 )     -  
Investment in unconsolidated affiliate     (16,736 )     -  
Proceeds from sale of securities     -       2,460  
Other investing activities     (9,081 )     (3,081 )
Net cash used in investing activities     (240,878 )     (371,380 )
         
Cash flows from financing activities:        
Borrowings under revolving credit facilities     41,410       619  
Payments under revolving credit facilities     (10,171 )     (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     (338,104 )     (233,814 )
Payments for debt issuance costs     (8,479 )     -  
Proceeds from issuance of stock through stock compensation plans     693       10,203  
Net cash used in financing activities     (49,651 )     (223,625 )
         
Effect of exchange rate fluctuations on cash and cash equivalents     (106 )     3,433  
         
Net (decrease) increase in cash and cash equivalents     (28,910 )     14,246  
Cash and cash equivalents, beginning of period     424,316       410,070  
Cash and cash equivalents, end of period   $ 395,406     $ 424,316  

 

Contact:

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