Third Quarter Highlights
- Net sales $734 million
- Gross margin 17.2%
- Net income $28 million
- Earnings per diluted share $0.12
TEMPE, Ariz. — (BUSINESS WIRE) — October 26, 2015 — Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of semiconductor packaging and test services, today announced financial results for the third quarter ended September 30, 2015.
"Third quarter revenues were at the higher end of our expectations and roughly flat to Q2,” said Steve Kelley, Amkor's president and chief executive officer. “Third quarter profit exceeded expectations, largely due to favorable exchange rates and a richer mix of assembly and test services."
GAAP Results | |||||||
Q3 2015 | Q2 2015 | Q3 2014 | |||||
($ in millions, except per share data) |
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Net sales | $734 | $737 | $813 | ||||
Gross margin | 17.2% | 15.6% | 18.8% | ||||
Net income* | $28 | $10 | $47 | ||||
Earnings per diluted share* | $0.12 | $0.04 | $0.20 | ||||
*Second quarter 2015 results include a $9 million ($0.04 per diluted share) charge for the early extinguishment of debt related to the redemption of all $345 million aggregate principal amount of Amkor's outstanding 7.375% Senior Notes due 2018.
Cash and cash equivalents were $430 million, and total debt was $1.4 billion, at September 30, 2015.
Business Outlook
“In response to the generally soft end market demand for electronic devices, we expect customers to cautiously manage inventories through the fourth quarter of 2015,” said Kelley. “We are tightly controlling capital expenditures and working capital in line with the demand environment. Accordingly, we are reducing our estimate of full year 2015 capital expenditures from around $550 million to around $525 million, including around $150 million of spending for our new K5 facility."
Based upon currently available information, we have the following expectations for the fourth quarter 2015:
- Net sales of $660 million to $710 million, down 3% to 10% from the prior quarter
- Gross margin of 13% to 17%
- Net loss of $4 million to net income of $12 million, or ($0.02) to $0.05 per share
Conference Call Information
Amkor will conduct a conference call on Monday, October 26, 2015, 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 1-877-645-6380 or 1-404-991-3911. A replay of the call will be made available at Amkor's website or by dialing 1-855-859-2056 or 1-404-537-3406 (conference ID 58799565). The webcast is also being distributed over NASDAQ OMX's investor distribution network to both institutional and individual investors. Institutional investors can access the call via NASDAQ OMX's 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.
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AMKOR TECHNOLOGY, INC. |
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Selected Operating Data |
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Q3 2015 | Q2 2015 | Q3 2014 | ||||||||||||||
Net Sales Data: | ||||||||||||||||
Net sales (in millions): | ||||||||||||||||
Advanced products* | $ | 365 | $ | 362 | $ | 411 | ||||||||||
Mainstream products** | 369 | 375 | 402 | |||||||||||||
Total net sales | $ | 734 | $ | 737 | $ | 813 | ||||||||||
Packaging services | 85 | % | 85 | % | 86 | % | ||||||||||
Test services | 15 | % | 15 | % | 14 | % | ||||||||||
Net sales from top ten customers | 61 | % | 62 | % | 60 | % | ||||||||||
Packaged units (in millions): | ||||||||||||||||
Advanced products* | 1,305 | 1,275 | 1,012 | |||||||||||||
Mainstream products** | 2,750 | 2,703 | 3,545 | |||||||||||||
Total packaged units | 4,055 | 3,978 | 4,557 | |||||||||||||
End Market Distribution Data (an approximation including representative devices
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Communications (smart phones, tablets, handheld devices, wireless LAN) | 55 | % | 56 | % | 56 | % | ||||||||||
Automotive, industrial and other (infotainment, safety, performance, comfort) | 13 | % | 12 | % | 11 | % | ||||||||||
Consumer (televisions, set top boxes, gaming, portable media, digital cameras) | 12 | % | 12 | % | 13 | % | ||||||||||
Networking (servers, routers, switches) | 12 | % | 11 | % | 11 | % | ||||||||||
Computing (PCs, hard disk drives, printers, peripherals, servers) | 8 | % | 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 | % | 37.5 | % | ||||||||||
Labor | 14.9 | % | 15.7 | % | 14.1 | % | ||||||||||
Other manufacturing | 31.1 | % | 31.5 | % | 29.6 | % | ||||||||||
Gross margin | 17.2 | % | 15.6 | % | 18.8 | % | ||||||||||
Earnings per Share Data: | ||||||||||||||||
Net income attributable to Amkor common stockholders - basic and diluted | $ | 28 | $ | 10 | $ | 47 | ||||||||||
Weighted average shares outstanding - basic | 237 | 237 | 236 | |||||||||||||
Effect of dilutive securities: | ||||||||||||||||
Stock options and restricted share awards | — | — | 1 | |||||||||||||
Weighted average shares outstanding - diluted | 237 | 237 | 237 | |||||||||||||
Net income attributable to Amkor per common share: | ||||||||||||||||
Basic | $ | 0.12 | $ | 0.04 | $ | 0.20 | ||||||||||
Diluted | $ | 0.12 | $ | 0.04 | $ | 0.20 | ||||||||||
*Advanced products include flip chip and wafer-level processing and related test services |
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**Mainstream products include wirebond packaging and related test services |
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AMKOR TECHNOLOGY, INC. |
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CONSOLIDATED STATEMENTS OF INCOME |
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(Unaudited) |
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For the Three Months Ended
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For the Nine Months Ended
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2015 | 2014 | 2015 | 2014 | ||||||||||||||
(In thousands, except per share data) | |||||||||||||||||
Net sales | $ | 734,362 | $ | 812,824 | $ | 2,213,959 | $ | 2,276,327 | |||||||||
Cost of sales | 607,762 | 659,607 | 1,837,314 | 1,843,576 | |||||||||||||
Gross profit | 126,600 | 153,217 | 376,645 | 432,751 | |||||||||||||
Selling, general and administrative | 54,232 | 61,600 | 173,609 | 191,698 | |||||||||||||
Research and development | 21,073 | 16,437 | 59,119 | 59,561 | |||||||||||||
Total operating expenses | 75,305 | 78,037 | 232,728 | 251,259 | |||||||||||||
Operating income | 51,295 | 75,180 | 143,917 | 181,492 | |||||||||||||
Interest expense | 17,695 | 23,780 | 64,317 | 70,039 | |||||||||||||
Interest expense, related party | 1,243 | 1,243 | 3,727 | 3,727 | |||||||||||||
Other (income) expense, net | (11,576 | ) | (9,626 | ) | (4,784 | ) | (15,289 | ) | |||||||||
Total other expense, net | 7,362 | 15,397 | 63,260 | 58,477 | |||||||||||||
Income before taxes and equity in earnings of unconsolidated affiliate | 43,933 | 59,783 | 80,657 | 123,015 | |||||||||||||
Income tax expense | 16,568 | 14,985 | 27,198 | 32,425 | |||||||||||||
Income before equity in earnings of unconsolidated affiliate | 27,365 | 44,798 | 53,459 | 90,590 | |||||||||||||
Equity in earnings of J-Devices | 1,656 | 3,372 | 15,460 | 29,169 | |||||||||||||
Net income | 29,021 | 48,170 | 68,919 | 119,759 | |||||||||||||
Net income attributable to noncontrolling interests | (847 | ) | (1,073 | ) | (2,386 | ) | (2,508 | ) | |||||||||
Net income attributable to Amkor | $ | 28,174 | $ | 47,097 | $ | 66,533 | $ | 117,251 | |||||||||
Net income attributable to Amkor per common share: | |||||||||||||||||
Basic | $ | 0.12 | $ | 0.20 | $ | 0.28 | $ | 0.51 | |||||||||
Diluted | $ | 0.12 | $ | 0.20 | $ | 0.28 | $ | 0.50 | |||||||||
Shares used in computing per common share amounts: | |||||||||||||||||
Basic | 236,888 | 236,337 | 236,813 | 228,733 | |||||||||||||
Diluted | 236,974 | 237,509 | 237,168 | 236,672 | |||||||||||||
Net income for the nine months ended September 30, 2014 includes a net gain of $18 million ($0.08 per diluted share) related to the sale of Amkor's Japanese subsidiary to J-Devices, its joint venture in Japan. In connection with the sale, Amkor recognized $9 million principally from the realization of accumulated foreign currency translation gains (reflected in Other (income) expense, net) and an additional $9 million from its equity interest in the gain realized by J-Devices on the transaction (reflected in Equity in earnings of J-Devices).
Net income for the nine months ended September 30, 2015 includes a $9 million ($0.04 per diluted share) charge for the early extinguishment of debt related to the redemption of all $345 million aggregate principal amount of Amkor's outstanding 7.375% Senior Notes due 2018.
AMKOR TECHNOLOGY, INC. |
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CONSOLIDATED BALANCE SHEETS |
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(Unaudited) |
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September 30,
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December 31,
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(In thousands) | |||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 430,444 | $ | 449,946 | |||||
Restricted cash | 2,000 | 2,681 | |||||||
Accounts receivable, net of allowances | 410,256 | 469,683 | |||||||
Inventories | 208,213 | 223,379 | |||||||
Other current assets | 53,858 | 52,259 | |||||||
Total current assets | 1,104,771 | 1,197,948 | |||||||
Property, plant and equipment, net | 2,284,901 | 2,206,476 | |||||||
Investments | 146,639 | 117,733 | |||||||
Restricted cash | 2,163 | 2,123 | |||||||
Other assets | 109,014 | 111,125 | |||||||
Total assets | $ | 3,647,488 | $ | 3,635,405 | |||||
LIABILITIES AND EQUITY | |||||||||
Current liabilities: | |||||||||
Short-term borrowings and current portion of long-term debt | $ | — | $ | 5,000 | |||||
Trade accounts payable | 279,260 | 309,025 | |||||||
Capital expenditures payable | 221,281 | 127,568 | |||||||
Accrued expenses | 251,650 | 258,997 | |||||||
Total current liabilities | 752,191 | 700,590 | |||||||
Long-term debt | 1,365,376 | 1,450,824 | |||||||
Long-term debt, related party | 75,000 | 75,000 | |||||||
Pension and severance obligations | 149,952 | 152,673 | |||||||
Other non-current liabilities | 101,564 | 125,382 | |||||||
Total liabilities | 2,444,083 | 2,504,469 | |||||||
Amkor stockholders’ equity: | |||||||||
Preferred stock | — | — | |||||||
Common stock | 283 | 282 | |||||||
Additional paid-in capital | 1,882,529 | 1,878,810 | |||||||
Accumulated deficit | (450,429 | ) | (516,962 | ) | |||||
Accumulated other comprehensive loss | (32,366 | ) | (32,867 | ) | |||||
Treasury stock | (213,576 | ) | (213,028 | ) | |||||
Total Amkor stockholders’ equity | 1,186,441 | 1,116,235 | |||||||
Noncontrolling interests in subsidiaries | 16,964 | 14,701 | |||||||
Total equity | 1,203,405 | 1,130,936 | |||||||
Total liabilities and equity | $ | 3,647,488 | $ | 3,635,405 | |||||
AMKOR TECHNOLOGY, INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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(Unaudited) |
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For the Nine Months Ended
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2015 | 2014 | ||||||
(In thousands) | |||||||
Cash flows from operating activities: | |||||||
Net income | $ | 68,919 | $ | 119,759 | |||
Depreciation and amortization | 371,968 | 340,089 | |||||
Loss on debt retirement | 2,530 | — | |||||
Gain on sale of subsidiary to J-Devices | — | (9,155 | ) | ||||
Other operating activities and non-cash items | (14,752 | ) | (27,811 | ) | |||
Changes in assets and liabilities | (5,299 | ) | (17,214 | ) | |||
Net cash provided by operating activities | 423,366 | 405,668 | |||||
Cash flows from investing activities: | |||||||
Payments for property, plant and equipment | (352,644 | ) | (442,308 | ) | |||
Proceeds from sale of property, plant and equipment | 5,212 | 2,170 | |||||
Cash received (transferred) on sale of subsidiary to J-Devices, net | 8,355 | (15,774 | ) | ||||
Investment in J-Devices | (12,908 | ) | — | ||||
Other investing activities | (869 | ) | (389 | ) | |||
Net cash used in investing activities | (352,854 | ) | (456,301 | ) | |||
Cash flows from financing activities: | |||||||
Borrowings under revolving credit facilities | 180,000 | — | |||||
Payments under revolving credit facilities | (100,000 | ) | — | ||||
Proceeds from issuance of long-term debt | 360,000 | 80,000 | |||||
Payments of long-term debt | (530,000 | ) | (140,000 | ) | |||
Payment of deferred consideration for an acquisition | — | (18,763 | ) | ||||
Proceeds from the issuance of stock through share-based compensation plans | 657 | 5,826 | |||||
Payments of tax withholding for restricted shares | (548 | ) | (1,348 | ) | |||
Payments of subsidiary dividends to noncontrolling interests | (123 | ) | — | ||||
Net cash used in financing activities | (90,014 | ) | (74,285 | ) | |||
Effect of exchange rate fluctuations on cash and cash equivalents | — | 68 | |||||
Net decrease in cash and cash equivalents | (19,502 | ) | (124,850 | ) | |||
Cash and cash equivalents, beginning of period | 449,946 | 610,442 | |||||
Cash and cash equivalents, end of period | $ | 430,444 | $ | 485,592 | |||
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:
- there can be no assurance that our new factory and research and development center in Korea will be completed, or that the actual scope, costs, timeline or benefits of the project will be consistent with our current expectations;
- 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 and generally soft end market demand for electronic devices;
- delays, lower manufacturing yields and supply constraints relating to wafers, particularly for advanced nodes 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 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, 2014 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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20151026006511/en/
Contact:
Amkor Technology, Inc.
Joanne Solomon
Executive Vice President & Chief Financial Officer
480-786-7878
Email Contact
Greg Johnson
Senior Director, Finance and Investor Relations
480-786-7594
Email Contact