CHANDLER, Ariz.—(BUSINESS WIRE)—April 26, 2006—
Amkor Technology, Inc. (Nasdaq:
AMKR) reported record
first quarter 2006 sales of $645 million, up 55% from the first
quarter of 2005 and up slightly from the fourth quarter of 2005.
Amkor's first quarter 2006 net income was $36 million, or $0.20 per
diluted share. For the first quarter of 2005 Amkor's net loss was $119
million, or ($0.68) per share, and included a provision for legal
settlements of $50 million, or ($0.28) per share.
"I am pleased with our results this quarter and believe that the
firm business conditions in Q1 have created a platform for Amkor to
achieve measured, profitable growth in 2006," said James Kim, Amkor's
Chairman and Chief Executive Officer. "We expect that tight supply
throughout the semiconductor industry, coupled with what we see as
more disciplined behavior toward capacity expansion, will restrain
upside production and dampen the amplitude of industry cyclicality. We
believe a less volatile business environment will better enable Amkor
to enrich our product mix, improve asset productivity, and increase
profitability and cash flow."
"During the first quarter we saw seasonally robust demand across a
broad range of end markets, with upsides for advanced packages, such
as MicroLeadFrame(R), System-in-Package and 3D packages for wireless
communications and consumer applications," said Kim. "Our strategic
alliance with IBM continues to develop very well."
"In February we announced a strategic expansion of our
electroplated wafer bumping operations in collaboration with Chartered
Semiconductor Manufacturing and other customers who operate in
Singapore," said Kim. "This initiative recognizes the increased
adoption of flip chip packaging and the leadership position in wafer
bumping technology we have gained through our Unitive subsidiary. In
conjunction with our existing test operations in Singapore, Amkor will
provide turnkey wafer bump and wafer probe services for leading edge
applications on 300mm wafers at advanced process nodes. We believe
there is strong market demand for our advanced bump and probe
capabilities, and expect our wafer bumping production build-out to be
largely supported by long-term supply agreements."
"First quarter sales of $645 million and gross margin of 24%
exceeded our guidance as customer demand remained firm during what is
typically a seasonally slow period," said Ken Joyce, Amkor's Chief
Financial Officer. "We are benefiting from a focused effort on
optimizing our asset allocation, improving labor and asset
productivity, disciplined capacity expansion and enriching our product
mix."
"First quarter gross profit includes a $4 million impairment
charge primarily related to our decision to close down a camera module
production line in Korea, where we have not achieved targeted returns
and associated cash flows," said Joyce.
"First quarter SG&A expenses were higher than previously planned,
principally attributable to greater than anticipated professional fees
and increased IT-related expenses," said Joyce. "In light of stronger
business conditions, we have decided to invest a portion of our
increased earnings to enhance our worldwide IT systems capabilities.
We are moving forward with a broad-based ERP implementation designed
to ensure that Amkor has the systems infrastructure necessary to
accommodate planned growth while managing an increasingly complex
supply chain."
"Over the past several quarters we have realized more than $16
million in annual payroll and associated benefits savings, and we
continue to move forward with programs to enhance operational
effectiveness and reduce costs. However, in light of the planned ERP
implementation and the ramp up of our new facilities in China and
Singapore, we currently anticipate that our year-over-year SG&A
savings, previously estimated at $25 to $30 million, will be closer to
$15 million," said Joyce. "We are committed to achieving meaningful
SG&A savings during 2006; the ultimate amount of these savings will
depend on overall business conditions."
"First quarter capital additions totaled $103 million. We continue
to budget full year 2006 capital additions of $300 million, which
includes approximately $50 million for facilities, including our new
factories in China and Singapore. In addition, we expect to undertake
a modest amount of further capacity expansion that would be funded by
customers under long-term supply agreements."
"During the first quarter we generated $39 million in free cash
flow, of which $30 million was used to effect open market purchases of
our 9.25% senior notes due February 2008," said Joyce. "We plan to
retire the outstanding balance of $132 million in 5.75% convertible
notes due June 1, 2006, and based on current forecasts believe we will
have sufficient liquidity available to satisfy the $146 million of 5%
convertible notes due March 2007. We are currently evaluating debt and
equity-linked financing alternatives to refinance a portion of our
intermediate-term maturities and expect to consummate one or more
refinancing transactions during the second quarter, depending on
market conditions."
For the remainder of 2006, we anticipate an effective tax rate of
7.5% which reflects the utilization of U.S. and foreign net operating
loss carryforwards and tax holidays in certain of our foreign
jurisdictions. At March 31, 2006, Amkor had U.S. net operating losses
available for carryforward totaling $357 million expiring through
2025. Additionally, at March 31, 2006, we had $85 million of non-U.S.
operating losses available for carryforward, expiring through 2011.
Selected operating data for the first quarter 2006 is included in
a section before the financial tables.
Business Outlook
The business environment remains encouraging. Compared with the
fourth quarter, our first quarter sales were up slightly, when it is
typically down 5% to 10%. Our customers' forecasts suggest modest
growth in the second quarter, with continued growth in the third
quarter. On the basis of current customer forecasts, we have the
following expectations for the second quarter of 2006:
-- Sales in the range of 2% to 4% above the first quarter of 2006
-- Gross margin in the range of 25% to 26%
-- Net income in the range of $0.24 to $0.28 per diluted share
Amkor will conduct a conference call on April 26, 2006 at 5:00
p.m. eastern time. The call can be accessed by dialing 303-262-2175 or
by visiting the investor relations page of our web site:
www.amkor.com
or CCBN's website,
www.companyboardroom.com. An archive of the webcast
can be accessed through the same links and will be available until our
next quarterly earnings conference call. An audio replay of the call
will be available for 48 hours following the conference call by
dialing 303-590-3000 passcode: 11053998.
About Amkor
Amkor is a leading provider of advanced semiconductor assembly and
test services. The company offers semiconductor companies and
electronics OEMs a complete set of microelectronic design and
manufacturing services. More information on Amkor is available from
the company's SEC filings and on Amkor's web site:
www.amkor.com.
Forward-Looking Statement Disclaimer
This press release contains forward-looking statements within the
meaning of federal securities laws, including, without limitation,
statements regarding the following: achieving measured, profitable
expansion in 2006; the continued growth of our relationship with IBM;
long-term supply agreements to support our planned build-out of wafer
bumping production; plans to move forward with a large-scale ERP
implementation; plans to enhance operational effectiveness and reduce
costs, including anticipated SG&A savings in 2006; budgeted capital
expenditures for 2006; plans to retire the outstanding convertible
notes due June 1, 2006 at maturity; having sufficient liquidity to
satisfy the $146 million of 5% convertible notes due March 2007; plans
to consummate one or more refinancing transactions during the second
quarter, subject to market conditions; and the statements contained
under Business Outlook. These forward-looking statements are subject
to a number of risks and uncertainties that could affect future
results and cause actual results and events to differ materially from
historical and expected results, including, but not limited to, the
following: the ability to access the capital markets and consummate
one or more refinancing transactions; the highly unpredictable nature
of the semiconductor industry; 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; deterioration of
the U.S. or other economies; the highly unpredictable nature of
litigation and the risk of adverse results of litigation against us;
our relationship with IBM; the satisfaction of conditions in the
agreements entered into in connection with the IBM transaction; the
incurrence of significant additional cost and expense necessary for
the increase in Amkor's capacity; our ability to achieve anticipated
SG&A savings in 2006; worldwide economic effects of terrorist attacks
and military conflict; competitive pricing and declines in average
selling prices; timing and volume of orders relative to the production
capacity; fluctuations in manufacturing yields; competition;
dependence on international operations and sales; dependence on raw
material and equipment suppliers; exchange rate fluctuations;
dependence on key personnel; the effect on operations of our
realignment of management; difficulties in managing growth;
enforcement of intellectual property rights; environmental
regulations; and technological challenges.
Further information on risk factors that could affect the outcome
of the events set forth in these statements and that could affect the
company's operating results and financial condition is detailed in the
company's filings with the Securities and Exchange Commission,
including Form 10-K for the year ended December 31, 2005, and current
reports on Form 8-K. Amkor undertakes no obligation to update
forward-looking statements to reflect events or circumstances
occurring after the date of this document.