Amkor Reports Third Quarter 2009 Results
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CHANDLER, Ariz.--(BUSINESS WIRE)-- Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of semiconductor assembly and test services, today reported its financial results for the quarter ended September 30, 2009.
Third quarter net sales of $616 million were up 22% sequentially from the second quarter of 2009 and down 14% from the third quarter of 2008. Third quarter net income was $81 million or $0.31 per diluted share, compared to $9 million or $0.05 per diluted share in the second quarter.
Net income for the third quarter of 2009 includes income tax benefits of $34 million or $0.12 per diluted share primarily from the release of a tax valuation allowance at our subsidiary in Korea. Net income for the third quarter of 2008 was $29 million, or $0.15 per diluted share. Net income for the third quarter of 2008 included a charge of $52 million or $0.25 per diluted share, relating to the resolution of a patent license dispute.
"We performed well in the third quarter, delivering strong results," said Ken Joyce, chief executive officer of Amkor. "Net sales increased 22%, reflecting higher than typical seasonal growth, primarily driven by demand for communications and consumer applications. We achieved gross margin of 25% for the quarter, up sequentially from 20% in the second quarter of 2009, as we benefited from higher levels of capacity utilization and our earlier cost reduction efforts. As the global economy continues to improve, we are prudently investing in expanding capacity for our advanced interconnect technologies in close alignment with customer product roadmaps."
"Looking ahead to the fourth quarter, we expect net sales to be flat, plus or minus 2%, from the third quarter of 2009 and gross margin of 23% to 25% based on current forecasts from our customers," added Joyce.
"We generated $81 million in free cash flow in the third quarter and ended the quarter with a cash balance of $447 million and total debt of just under $1.5 billion," said Joanne Solomon, Amkor's chief financial officer. "During the third quarter, we repurchased $25 million of our 7.125% senior notes due 2011 and $49 million of our 7.75% senior notes due 2013. We have an aggregate of $86 million of debt coming due through the end of 2010, and the remaining $119 million of our 7.125% notes and 2.5% convertible notes mature in 2011."
"Third quarter 2009 capital additions were $78 million. We expect capital additions for the fourth quarter to be approximately $70 million and approximately $200 million for the full year 2009 with full year capital intensity of approximately 9%. Our third quarter 2009 and planned capital additions are primarily related to expanding our capacity in response to increased levels of customer demand," said Solomon.
Selected operating data for the third 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 fourth quarter of 2009:
-- Net sales flat, plus or minus 2%, from the third quarter of 2009
-- Gross margin between 23% and 25%
-- Net income - in the range of $0.17 to $0.23 per diluted share
Conference Call Information
Amkor will conduct a conference call on October 27, 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 888-561-1799. A replay of the call will be made available at Amkor's web site or by dialing 800-406-7325 (access passcode # 4169497). 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 to semiconductor companies and electronics OEMs. 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 fourth quarter of 2009; the expected dollar amount and focus of our capital additions and the expected level of capital intensity; 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;
-- 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: Q3 2009 Q2 2009 Q3 2008
Packaging services:
Wirebond - leadframe 28 % 25 % 29 %
Wirebond - laminate 44 % 43 % 40 %
Flip chip and wafer level processing 17 % 20 % 20 %
Packaging services 89 % 88 % 89 %
Test services 11 % 12 % 11 %
Total sales 100 % 100 % 100 %
Packaged units (in millions):
Wirebond - leadframe 1,802 1,229 1,957
Wirebond - laminate 419 330 390
Flip chip and wafer level processing 126 134 157
Total packaged units 2,347 1,693 2,504
Net sales from top ten customers 54 % 54 % 49 %
Capacity utilization 82 % 66 % 86 %
End Market Distribution Data (an approximation based on a sampling of our
largest customers):
Communications 50 % 49 % 42 %
Consumer 30 % 30 % 33 %
Computing 13 % 14 % 15 %
Other 7 % 7 % 10 %
Total 100 % 100 % 100 %
Earnings per Share Data: Q3 2009 Q2 2009 Q3 2008
(in millions, except per share data)
Net income attributable to Amkor - basic $ 81 $ 9 $ 29
Adjustment for dilutive securities on net
income:
Interest on 2.5% convertible notes due - - 1
2011, net of tax
Interest on 6.25% convertible notes due 2 - 2
2013, net of tax
Interest on 6.0% convertible notes due 4 4 -
2014, net of tax
Net income attributable to Amkor - diluted $ 87 $ 13 $ 32
Weighted average shares outstanding - 183 183 183
basic
Effect of dilutive securities:
Stock options - - 1
2.5% convertible notes due 2011 3 - 13
6.25% convertible notes due 2013 13 - 13
6.0% convertible notes due 2014 83 83 -
Weighted average shares outstanding - 282 266 210
diluted
Net income attributable to Amkor per
common share:
Basic $ 0.44 $ 0.05 $ 0.16
Diluted $ 0.31 $ 0.05 $ 0.15
Q3 2009 Q2 2009 Q3 2008
(in millions)
Capital Investment Data:
Property, plant and equipment additions $ 78 $ 27 $ 92
Net change in related accounts payable and (36 ) - 34
deposits
Purchases of property, plant and equipment $ 42 $ 27 $ 126
Depreciation and amortization $ 74 $ 77 $ 79
Free Cash Flow Data:
Net cash provided by operating activities $ 123 $ 96 $ 173
Less purchases of property, plant and (42 ) (27 ) (126 )
equipment
Free cash flow* $ 81 $ 69 $ 47
*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 Nine Months
Ended September 30, Ended September 30,
2009 2008 2009 2008
(In thousands, except per share data)
Net sales $ 616,205 $ 719,731 $ 1,511,497 $ 2,109,890
Cost of sales 461,589 590,700 1,206,455 1,645,776
Gross profit 154,616 129,031 305,042 464,114
Operating expenses:
Selling, general and 53,619 60,467 156,132 193,357
administrative
Research and 13,364 14,084 33,546 43,035
development
Gain on sale of real (146 ) - (146 ) (9,856 )
estate
Total operating 66,837 74,551 189,532 226,536
expenses
Operating income 87,779 54,480 115,510 237,578
Other (income) expense:
Interest expense, net 24,465 30,119 77,436 83,866
Interest expense, 3,813 1,562 9,187 4,687
related party
Foreign currency loss 8,259 (23,026 ) 2,161 (44,100 )
(gain)
Loss (gain) on debt 1,226 - (15,658 ) -
retirement, net
Other income, net (126 ) (256 ) (77 ) (955 )
Total other expense, 37,637 8,399 73,049 43,498
net
Income before income 50,142 46,081 42,461 194,080
taxes
Income tax (benefit) (30,854 ) 16,313 (25,940 ) 26,551
expense
Net income 80,996 29,768 68,401 167,529
Net income attributable
to noncontrolling 133 613 407 1,146
interests
Net income attributable $ 80,863 $ 29,155 $ 67,994 $ 166,383
to Amkor
Net income attributable
to Amkor per common
share:
Basic $ 0.44 $ 0.16 $ 0.37 $ 0.91
Diluted $ 0.31 $ 0.15 $ 0.32 $ 0.84
Shares used in
computing per common
share amounts:
Basic 183,060 183,001 183,048 182,633
Diluted 282,356 209,989 238,568 209,848
AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
2009 2008
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 446,716 $ 424,316
Restricted cash 2,679 4,880
Accounts receivable:
Trade, net of allowances 341,677 259,630
Other 5,171 14,183
Inventories 142,264 134,045
Other current assets 42,316 23,862
Total current assets 980,823 860,916
Property, plant and equipment, net 1,372,578 1,473,763
Intangibles, net 11,650 11,546
Restricted cash 6,317 1,696
Other assets 58,141 36,072
Total assets $ 2,429,509 $ 2,383,993
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings and current portion of $ 69,834 $ 54,609
long-term debt
Trade accounts payable 324,981 241,684
Accrued expenses 220,349 258,449
Total current liabilities 615,164 554,742
Long-term debt 1,149,300 1,338,751
Long-term debt, related party 250,000 100,000
Pension and severance obligations 94,812 116,789
Other non-current liabilities 9,813 30,548
Total liabilities 2,119,089 2,140,830
Equity:
Amkor stockholders' equity:
Preferred stock - -
Common stock, $0.001 par value, 500,000 shares
authorized, issued and outstanding of 183,102 183 183
in 2009 and 183,035 in 2008
Additional paid-in capital 1,499,299 1,496,976
Accumulated deficit (1,210,227 ) (1,278,221 )
Accumulated other comprehensive income 14,606 18,201
Total Amkor stockholders' equity 303,861 237,139
Noncontrolling interests in subsidiaries 6,559 6,024
Total equity 310,420 243,163
Total liabilities and equity $ 2,429,509 $ 2,383,993
AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended
September 30,
2009 2008
(In thousands)
Cash flows from operating activities:
Net income $ 68,401 $ 167,529
Depreciation and amortization 230,887 229,501
Gain on debt retirement, net (15,658 ) -
Other operating activities and non-cash items (12,080 ) 20,947
Changes in assets and liabilities (114,740 ) 39,414
Net cash provided by operating activities 156,810 457,391
Cash flows from investing activities:
Purchases of property, plant and equipment (111,929 ) (317,109 )
Proceeds from the sale of property, plant and 1,570 15,257
equipment
Proceeds from sale of investment - 2,460
Other investing activities (8,573 ) (702 )
Net cash used in investing activities (118,932 ) (300,094 )
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 of long-term debt (272,214 ) (135,913 )
Payments for debt issuance costs (8,479 ) -
Proceeds from issuance of stock through stock 348 10,201
compensation plans
Net cash used in financing activities (15,345 ) (125,726 )
Effect of exchange rate fluctuations on cash and (133 ) 2,197
cash equivalents
Net increase in cash and cash equivalents 22,400 33,768
Cash and cash equivalents, beginning of period 424,316 410,070
Cash and cash equivalents, end of period $ 446,716 $ 443,838
Source: Amkor Technology, Inc.
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