For the full year 2006, Amkor's net sales were a record $2.7 billion, up 30% over 2005. Amkor's full year 2006 net income was a record $170 million, or $0.90 per diluted share. For 2005, Amkor had a net loss of $137 million, or ($0.78) per share, which included a charge of $50 million for legal settlements.
"One year ago we commenced a process of refocusing Amkor for long-term success, with a commitment to streamline our corporate organization, enhance operational effectiveness, improve profitability and strengthen our cash flow," said James Kim, Chairman and Chief Executive Officer. "During the past year our management team kept a sharp focus on these objectives. We maintained a disciplined approach to capital spending; we enriched our product mix; we leveraged our technological leadership; we significantly increased our Flip Chip related business; we successfully expanded our test and bumping capabilities in Singapore; we are building scale in China; we improved gross and operating margins; and we continued to reposition our capital structure and reduce debt.
"I am pleased with the operating performance we achieved in 2006 and the corresponding improvement in our financial results. We have made excellent progress in reaching our objectives and I believe we have established a solid foundation for long-term profitable growth," said Kim.
"Our fourth quarter saw continued strong demand in 3D package solutions and Flip Chip packages for high performance applications, including all three major game consoles, networking and communications modules, offset by a decline in demand for packages supporting wireless and other mobile devices," said Kim. "Our test business strengthened during the fourth quarter as we continued to build scale in Singapore and increase our capabilities in Korea."
"Following an extended period of exceptionally strong growth, we expect to experience a seasonal decline in the first quarter of 2007," said Kim. "As we go through 2007, we will continue to exercise discipline in our capital investments, with an ongoing focus on improving our productivity, building our capabilities in technology and key growth areas, and strengthening our IT systems. I believe this will position Amkor to achieve sustainable profitability and generate positive free cash flow, which should allow us to further de-lever our capital structure."
"While fourth quarter sales were in the mid range of guidance, our gross margin of 25.3% was better than expected, principally as a result of a change in product mix," said Ken Joyce, Amkor's Chief Financial Officer.
"Our growth in Flip Chip business during the quarter was partially masked by a mix-shift, as a greater proportion of substrates were consigned by customers, instead of procured by Amkor. The associated reduction in materials reduced the average selling price for Flip Chip packages but increased gross margin."
"SG&A expenses for professional fees associated with the investigations of our historical stock options granting practices were approximately $2.5 million in the fourth quarter, compared with $10.2 million in the third quarter," said Joyce. "During the fourth quarter, we also increased our employee bonus and profit sharing accruals in recognition of our improved financial performance. Excluding the impact of these adjustments, fourth quarter SG&A was up slightly from the third quarter."
"Capital additions totaled $55 million in the fourth quarter and $299 million for the full year. Our capacity expansion has been focused on strategic growth areas, including wafer bump, wafer level packaging, Flip Chip and test," said Joyce. "We are currently targeting first quarter 2007 capital additions of $70 million and full year capital additions in the range of $250 - $300 million. We are prepared to adjust these figures depending on business conditions."
"We have achieved positive free cash flow for the past five quarters, and given our current view of business conditions, we anticipate this trend should continue throughout 2007," said Joyce. "We plan to use existing cash resources to retire the remaining $142 million in 5% convertible notes at maturity in March 2007."
For 2007, we anticipate an effective tax rate of 10% which reflects the utilization of U.S. and foreign net operating loss carryforwards and tax holidays in certain of our foreign jurisdictions. At December 31, 2006, Amkor had U.S. net operating losses available for carryforward totaling $363 million expiring through 2025. Additionally, at December 31, 2006, we had $51 million of non-U.S. operating losses available for carryforward, expiring through 2011.
Selected operating data for the fourth quarter 2006 is included in a section before the financial tables.
Business Outlook
On the basis of our customers' forecasts, we have the following expectations for the first quarter of 2007:
-- Sales down 4% to 8% from the fourth quarter of 2006
-- Gross margin of approximately 22% to 23%
-- Net income in the range of $0.13 to $0.18 per diluted share
Amkor will conduct a conference call on February 7, 2007 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: 11081233.
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: expectations regarding a seasonal decline in the first quarter of 2007; plans to exercise discipline in our capital investments, focus on improving productivity, build capabilities in technology and key growth areas, and strengthen IT systems; expectations regarding 2007 capital expenditures; expectations to achieve positive free cash flow throughout 2007; plans to use cash resources to retire the convertible notes due 2007; expectations regarding the effective tax rate for full year 2007 and the level of operating loss carryforwards; and the statements regarding sales, gross margin and net income per diluted share 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 highly unpredictable nature of the semiconductor industry; 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 expenditures; deterioration of the U.S. or other economies; 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; 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; 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/A for the year ended December 31, 2005, Form 10-Q/A for the quarter ended March 31, 2006, Form 10-Q for the quarters ended June 30, 2006 and September 30, 2006, 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. (selected operating data and tables to follow)
Selected operating data for the fourth quarter and full year 2006
4th Quarter Full Year
-- Capital additions $55 million $299 million
Net decrease in related accounts
payable and deposits $9 million $17 million
------------- --------------
Payments for property, plant &
equipment $64 million $316 million
============= ==============
-- Depreciation and amortization $71 million $274 million
-- Free cash flow (a) $79 million $208 million
(a) Reconciliation of free cash flow to
the most directly comparable GAAP
measure:
Net cash provided by operating
activities $143 million $524 million
Less payments for property, plant
and equipment ($64 million) ($316 million)
------------- --------------
Free cash flow from continuing
operations $79 million $208 million
============= ==============
We define free cash flow as net cash provided by operating activities less payments for 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 expenditures. However, this measure should be considered in addition to, and not as a substitute, 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.
For the Fourth Quarter of 2006:
-- Capacity utilization was approximately 79%
-- Fourth quarter assembly unit shipments were 2.2 billion, down 2% from Q3 2006
Full year 2006 assembly units were 8.8 billion, up 18% from the full year 2005
-- Our top ten customers accounted for 46% of net sales
-- End market distribution (an approximation based on a sampling of our largest customers):
Communications 36%
Consumer 33%
Computing 21%
Other 10%
-- As a percentage of net sales:
Laminate packages 50%
Leadframe packages 34%
Other 5%
Test 11%
(tables to follow)
AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
For the For the
Three Months Ended Year Ended
December 31, December 31,
------------------- -----------------------
2006 2005 2006 2005
--------- --------- ----------- -----------
(In thousands, except per share data)
Net sales $683,011 $643,492 $2,728,560 $2,099,949
Cost of sales 509,879 487,821 2,053,600 1,744,178
--------- --------- ----------- -----------
Gross profit 173,132 155,671 674,960 355,771
--------- --------- ----------- -----------
Operating expenses:
Selling, general and
administrative 62,494 56,262 250,142 243,319
Research and development 9,337 9,653 38,735 37,347
Provision for legal
settlements and
contingencies - - 1,000 50,000
Gain on sale of
specialty test
operations - (4,408) - (4,408)
--------- --------- ----------- -----------
Total operating
expenses 71,831 61,507 289,877 326,258
--------- --------- ----------- -----------
Operating income 101,301 94,164 385,083 29,513
--------- --------- ----------- -----------
Other (income) expense:
Interest expense, net 36,477 42,584 154,807 165,351
Interest expense,
related party 1,563 521 6,477 521
Foreign currency loss
(gain), net 1,783 4,688 13,255 9,318
Debt retirement costs,
net - - 27,389 -
Other (income) expense,
net (836) (3,024) 661 (389)
------------------- ----------- -----------
Total other expense,
net 38,987 44,769 202,589 174,801
------------------- ----------- -----------
Income (loss) before
income taxes
and minority interests 62,314 49,395 182,494 (145,288)
Income tax expense
(benefit) 2,743 (5,226) 11,208 (5,551)
--------- --------- ----------- -----------
Income (loss) before
minority interests 59,571 54,621 171,286 (139,737)
Minority interests, net of
tax (524) (685) (1,202) 2,502
--------- --------- ----------- -----------
Net income (loss) $59,047 $53,936 $170,084 $(137,235)
========= ========= =========== ===========
Net income (loss) per
common share:
Basic $0.33 $0.31 $0.96 $(0.78)
========= ========= =========== ===========
Diluted $0.30 $0.30 $0.90 $(0.78)
========= ========= =========== ===========
Shares used in computing
net income (loss) per
common share:
Basic 178,109 176,721 177,682 176,385
========= ========= =========== ===========
Diluted 205,124 181,220 199,556 176,385
========= ========= =========== ===========
AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31, December 31,
2006 2005
------------ ------------
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $244,694 $206,575
Restricted cash 2,478 -
Accounts receivable:
Trade, net of allowances 380,888 381,495
Other 5,969 5,089
Inventories, net 164,178 138,109
Other current assets 39,650 35,222
------------ ------------
Total current assets 837,857 766,490
Property, plant and equipment, net 1,443,603 1,419,472
Goodwill 671,900 653,717
Intangibles, net 29,694 38,391
Investments 6,675 9,668
Restricted cash 1,688 1,747
Other assets 49,847 65,606
------------ ------------
Total assets $3,041,264 $2,955,091
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current portion
of long-term debt $185,414 $184,389
Trade accounts payable 291,847 326,712
Accrued expenses 145,501 124,027
------------ ------------
Total current liabilities 622,762 635,128
Long-term debt 1,719,901 1,856,247
Long-term debt, related party 100,000 100,000
Pension and severance obligations 170,070 129,752
Other non-current liabilities 30,008 6,109
------------ ------------
Total liabilities 2,642,741 2,727,236
------------ ------------
Commitments and contingencies
Minority interests 4,603 3,950
------------ ------------
Stockholders' equity:
Preferred stock - -
Common stock 178 178
Additional paid-in capital 1,441,194 1,431,543
Accumulated deficit (1,041,390) (1,211,474)
Accumulated other comprehensive income
(loss) (6,062) 3,658
------------ ------------
Total stockholders' equity 393,920 223,905
------------ ------------
Total liabilities and stockholders'
equity $3,041,264 $2,955,091
============ ============
AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Year Ended
December 31,
----------------------
2006 2005
----------- ----------
(In thousands)
Cash flows from operating activities:
Net income (loss) $170,084 $(137,235)
Depreciation and amortization 273,845 248,637
Other operating activities and non-cash items 56,030 45,369
Changes in assets and liabilities 23,671 (59,614)
----------- ----------
Net cash provided by operating activities 523,630 97,157
----------- ----------
Cash flows from investing activities:
Payments for property, plant and equipment (315,873) (295,943)
Proceeds from the sale of property, plant and
equipment 4,449 1,596
Other investing activities (3,373) (12,663)
----------- ----------
Net cash used in investing activities (314,797) (307,010)
----------- ----------
Cash flows from financing activities:
Net change in bank overdrafts - (102)
Borrowings under revolving credit facilities 233,212 120,405
Payments under revolving credit facilities (237,933) (120,727)
Proceeds from issuance of long-term debt 590,000 216,317
Payments for debt issuance costs (15,099) (2,187)
Payments on long-term debt (744,392) (168,872)
Proceeds from issuance of stock through stock
compensation plans 4,981 2,804
----------- ----------
Net cash (used in) provided by financing
activities (169,231) 47,638
----------- ----------
Effect of exchange rate fluctuations on cash
and cash equivalents (1,483) (3,494)
----------- ----------
Net increase (decrease) in cash and cash
equivalents 38,119 (165,709)
Cash and cash equivalents, beginning of period 206,575 372,284
----------- ----------
Cash and cash equivalents, end of period $244,694 $206,575
=========== ==========
Contact:
Amkor Technology, Inc., Chandler
Jeffrey Luth
VP Corporate
Communications
480-821-5000 ext. 5130
Email Contact