CHANDLER, Ariz. – July 29, 2009 -- Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of semiconductor assembly and test services, today reported its financial results for the quarter ended June 30, 2009.  
 
Second quarter net sales of $507 million were up 30% sequentially from the first quarter of 2009 and down 27% from the second quarter of 2008.  Second quarter net income was $9 million or $0.05 per diluted share, compared to a net loss of $22 million or $0.12 per share in the first quarter.  Net income for the second quarter of 2008 was $65 million, or $0.33 per diluted share.

 "I am pleased with our second quarter performance in a very difficult economic environment,” commented James Kim, Amkor’s chairman and chief executive officer. “Our strategy of managing and aligning costs with customer demand is working.  We achieved gross margin of 20% for the quarter, up sequentially from 12% in the first quarter of 2009, despite a $7 million charge to exit our manufacturing operations in Singapore.  At the same time, we continued our disciplined approach in making capital spending decisions, which allowed us to generate free cash flow and strengthen our cash position.” 

“We are seeing improvement in customer demand for the second half of 2009. Based on current customer forecasts, we expect third quarter 2009 net sales to increase 17% to 21% from the second quarter of 2009, reflecting higher than typical seasonal growth, and gross margin of 23% to 25%,” added Kim.   

“Overall unit shipments were up 43% sequentially with advanced laminate and flip chip packages up nearly 60%,” said Ken Joyce, Amkor’s president and chief operating officer.  “Net sales grew 30% driven by inventory adjustments by customers from historically low levels in the first quarter, strength of 3D packaging principally in support of wireless applications and improved demand for our leadframe packages.”

“We generated $69 million in free cash flow in the second quarter and ended the quarter with a cash balance of $455 million and total debt of just under $1.6 billion,” said Joanne Solomon, Amkor’s chief financial officer.  “We used $135 million of the proceeds from our recent $250 million convertible note offering to repurchase $144 million principal amount of debt due in 2011 and recorded a related $8 million net gain.  We have an aggregate of $97 million of debt coming due through the end of 2010, and the remaining $144 million of 7.125% notes and 2.5% convertible notes mature in 2011.”

“Second quarter 2009 capital additions were $27 million.  We expect capital additions for the third quarter to be approximately $70 million and we are increasing our estimated capital additions for the full year 2009 to approximately $150 million.  Our planned capital additions are primarily related to expanding our wafer bumping capacity in support of advanced interconnect technologies in response to increased level of customer demand,” said Solomon.

Selected operating data for the second 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 third quarter of 2009:

•    Net sales up 17% to 21% from the second quarter of 2009
•    Gross margin between 23% and 25%
•    Net income – in the range of $0.17 to $0.22 per diluted share
 
Conference Call Information

Amkor will conduct a conference call on July 29, 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 877-941-9205.  A replay of the call will be made available at Amkor’s web site or by dialing 800-406-7325 (access passcode # 4108562).  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: expectations regarding net sales and gross margin in the third quarter of 2009; customer demand for the second half of 2009;  plans to exit our manufacturing operations in Singapore; the expected dollar amount of our capital additions; 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; the outcome of the pending SEC investigation; 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.

Contact:

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

 

AMKOR TECHNOLOGY, INC.
Selected Operating Data

               
Sales Data:   Q2 2009   Q1 2009   Q2 2008
               
Packaging services:            
Wirebond - leadframe     25 %     27 %     28 %
Wirebond - laminate     43 %     39 %     40 %
Flip chip and wafer level processing     20 %     21 %     20 %
Packaging services     88 %     87 %     88 %
Test services     12 %     13 %     12 %
Total sales     100 %     100 %     100 %
               
Packaged units (in millions):            
Wirebond - leadframe     1,229       887       1,638  
Wirebond - laminate     330       208       339  
Flip chip and wafer level processing     134       85       141  
Total packaged units     1,693       1,180       2,118  
               
Net sales from top ten customers     54 %     51 %     49 %
Capacity utilization     66 %     45 %     73 %
               
End Market Distribution Data (an approximation based on a sampling of our largest customers):
Communications     49 %     46 %     42 %
Consumer     30 %     29 %     32 %
Computing     14 %     16 %     16 %
Other     7 %     9 %     10 %
Total     100 %     100 %     100 %
               
Earnings per Share Data:   Q2 2009   Q1 2009   Q2 2008
      (in millions, except per share data)
               
Net income (loss) attributable to Amkor - basic   $ 9     $ (22 )   $ 65  
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  

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

    4       -       -  
Net income (loss) attributable to Amkor - diluted   $ 13     $ (22 )   $ 68  
               
Weighted average shares outstanding - basic     183       183       183  
Effect of dilutive securities:            
Stock options     -       -       1  
2.5% convertible notes due 2011     -       -       13  
6.25% convertible notes due 2013     -       -       13  

6.0% convertible notes due 2014

    83       -       -  
Weighted average shares outstanding - diluted     266       183       210  
               
Net income (loss) attributable to Amkor per common share:            
Basic   $ 0.05     $ (0.12 )   $ 0.36  
Diluted   $ 0.05     $ (0.12 )   $ 0.33  
               
      Q2 2009   Q1 2009   Q2 2008
      (in millions)
Capital Investment Data:            
Property, plant and equipment additions   $ 27     $ 24     $ 122  
Net change in related accounts payable and deposits     -       19       (20 )
Purchases of property, plant and equipment   $ 27     $ 43     $ 102  
Depreciation and amortization   $ 77     $ 80     $ 77  
               
Free Cash Flow Data:            

Net cash provided by (used in) operating activities

  $ 96     $ (63 )   $

103

 
Less purchases of property, plant and equipment     (27 )     (43 )     (102 )
Free cash flow*   $ 69     $ (106 )   $

1

 

* 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,
    2009   2008     2009   2008
    (In thousands, except per share data)
                   
                   
Net sales   $ 506,516     $ 690,676       $ 895,292     $ 1,390,159  
Cost of sales     404,129       531,745         744,866       1,055,076  
Gross profit     102,387       158,931         150,426       335,083  
                   
Operating expenses:                  
Selling, general and administrative     52,445       67,441         102,513       132,890  
Research and development     10,035       15,095         20,182       28,951  
Gain on sale of real estate     -       (9,856)         -       (9,856)  
Total operating expenses     62,480       72,680         122,695       151,985  
Operating income     39,907       86,251         27,731       183,098  
Other (income) expense:                  
Interest expense, net     26,826       26,314         52,971       53,747  
Interest expense, related party     3,812       1,562         5,374       3,125  
Foreign currency loss (gain)     5,970       (11,597)         (6,098)       (21,074  
Gain on debt retirement, net     (7,888)       -         (16,884)       -  
Other (income) expense, net     (10)       107         49       (699)  
Total other expense, net     28,710       16,386         35,412       35,099  
Income (loss) before income taxes     11,197       69,865         (7,681)       147,999  
Income tax expense     1,833       4,298         4,914       10,238  
Net income (loss)     9,364       65,567         (12,595)       137,761  
Net income attributable to noncontrolling interests     141       335         274       533  
Net income (loss) attributable to Amkor   $ 9,223     $ 65,232       $ (12,869)     $ 137,228  
                   
Net income (loss) attributable to Amkor per common share:                  
Basic   $ 0.05     $ 0.36       $ (0.07)     $ 0.75  
Diluted   $ 0.05     $ 0.33       $ (0.07)     $ 0.68  
                   
Shares used in computing per common share amounts:                  
Basic     183,036       182,759         183,036       182,446  
Diluted     265,846       210,138         183,036       209,785  


AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
         
    June 30,   December 31,
    2009   2008
    (In thousands)
ASSETS        
Current assets:        
Cash and cash equivalents   $ 455,294     $ 424,316  
Restricted cash     2,678       4,880  
Accounts receivable:        
Trade, net of allowances     264,440       259,630  
Other     16,924       14,183  
Inventories     118,072       134,045  
Other current assets     25,483       23,862  
Total current assets     882,891       860,916  
         
Property, plant and equipment, net     1,371,177       1,473,763  
Intangibles, net     12,970       11,546  
Restricted cash     1,001       1,696  
Other assets     39,700       36,072  
Total assets   $ 2,307,739     $ 2,383,993  
         
LIABILITIES AND EQUITY        
Current liabilities:        
Short-term borrowings and current portion of long-term debt   $ 69,670     $ 54,609  
Trade accounts payable     230,617       241,684  
Accrued expenses     137,914       258,449  
Total current liabilities     438,201       554,742  
         
Long-term debt     1,234,505       1,338,751  
Long-term debt, related party     250,000       100,000  
Pension and severance obligations     126,217       116,789  
Other non-current liabilities     32,845       30,548  
Total liabilities     2,081,768       2,140,830  
         
Equity:        
Amkor stockholders' equity:        
Preferred stock     -       -  

Common stock, $0.001 par value, 500,000 shares authorized, issued and outstanding of 183,039 in 2009 and 183,035 in 2008

    183       183  
Additional paid-in capital     1,498,331       1,496,976  
Accumulated deficit     (1,291,090 )     (1,278,221 )
Accumulated other comprehensive income     12,231       18,201  
Total Amkor stockholders’ equity     219,655       237,139  
Noncontrolling interests in subsidiaries     6,316       6,024  
Total equity     225,971       243,163  
Total liabilities and equity   $ 2,307,739     $ 2,383,993  
AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
    For the Six Months Ended
    June 30,
    2009   2008
    (In thousands)
Cash flows from operating activities:        
Net (loss) income   $ (12,595)     $ 137,761  
Depreciation and amortization     156,507       150,543  
Gain on debt retirement, net     (16,884)       -  
Other operating activities and non-cash items     5,407       7,694  
Changes in assets and liabilities     (99,077)       (11,300)  
Net cash provided by operating activities     33,358       284,698  
         
Cash flows from investing activities:        
Purchases of property, plant and equipment     (69,955)       (190,870)  
Proceeds from the sale of property, plant and equipment     687       14,968  
Proceeds from sale of investment     -       2,460  
Other investing activities     (3,086)       (496)  
Net cash used in investing activities     (72,354)       (173,938)  
         
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 for debt issuance costs     (8,539)       -  
Payments of long-term debt     (186,156)       (124,074)  
Proceeds from issuance of stock through stock compensation plans     15       9,776  
Net cash provided by (used in) financing activities     70,320       (114,312)  
         
Effect of exchange rate fluctuations on cash and cash equivalents     (346)       2,594  
         
Net increase (decrease) in cash and cash equivalents     30,978       (958)  
Cash and cash equivalents, beginning of period     424,316       410,070  
Cash and cash equivalents, end of period   $ 455,294     $ 409,112