Amkor Reports Second Quarter 2009 Results
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Amkor Reports Second Quarter 2009 Results

CHANDLER, Ariz. — (BUSINESS WIRE) — 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:

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.

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  



Contact:

Amkor Technology, Inc., Chandler
Joanne Solomon
Corporate Vice President & CFO
480-821-5000 ext. 5416
Email Contact