AMKOR TECHNOLOGY, INC. - FORM 8-K - EX-99.1 - April 28, 2014

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News Release


Amkor Technology Reports Financial Results for the First Quarter 2014

First Quarter 2014
•
Net sales $696 million
•
Gross margin 18.5%
•
Net income $21 million
•
Earnings per diluted share $0.09

CHANDLER, Ariz. - April 28, 2014 - Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of semiconductor packaging and test services, today announced financial results for the first quarter ended March 31, 2014, with net sales of $696 million, net income of $21 million, and earnings per diluted share of $0.09.

"First quarter results were stronger than we anticipated, driven by incremental demand for advanced packages," said Steve Kelley, Amkor's president and chief executive officer. "We made solid progress in winning key mobile device opportunities, expanding our customer base and driving improved profitability."

Selected financial information for the first quarter 2014 is as follows:
•
Net Sales: $696 million, down 8% from $755 million in the prior quarter, and up 1% from $688 million in the first quarter of 2013
•
Gross Margin: 18.5%, compared to 19.9% in the prior quarter, and 16.7% in the first quarter of 2013
•
Net Income: $21 million, compared to $41 million in the prior quarter, and $13 million in the first quarter of 2013
•
Earnings Per Diluted Share: $0.09, compared to $0.18 in the prior quarter, and $0.07 in the first quarter of 2013

"Our gross margin improved 180 basis points and earnings per share increased 29% over the first quarter 2013 primarily due to improved capacity utilization and lower cost of goods sold," said Joanne Solomon, Amkor's executive vice president and chief financial officer.

Cash and cash equivalents were $629 million, and total debt was $1.7 billion, at March 31, 2014. In April, we reduced our debt by $116 million and improved our leverage with the conversion of the remaining $56 million of our convertible notes into common stock and the prepayment of $60 million of our foreign debt.

Business Outlook

“Driven by stronger customer forecasts for mobile devices and continued momentum from our growth initiatives, our expectations for the second quarter and full year 2014 have improved considerably,” noted Kelley. “Accordingly, we are raising our expectations for full year 2014 capital expenditures to around $575 million to capture these growth opportunities."

Based upon currently available information, we have the following expectations for the second quarter 2014:
•
Net sales of $735 million to $785 million, up 6% to 13% from the prior quarter
•
Gross margin of 18% to 21%
•
Net income of $18 million to $43 million, or $0.08 to $0.18 per diluted share
•
Full year 2014 capital expenditures of around $575 million

Conference Call Information

Amkor will conduct a conference call on Monday, April 28, 2014, 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 1-866-225-8754 or 1-480-629-9819. A replay of the call will be




made available at Amkor's website or by dialing 1-800-406-7325 or 1-303-590-3030 (access pass code #4679945). The webcast is also being distributed over Thomson Reuters' Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through Thomson Reuters' individual investor center at www.companyboardroom.com or by visiting any of the investor sites in Thomson Reuters' Individual Investor Network. Institutional investors can access the call via Thomson Reuters' 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.




Contacts:

Amkor Technology, Inc.
Joanne Solomon
Executive Vice President & Chief Financial Officer
480-786-7878
joanne.solomon@amkor.com

Greg Johnson
Senior Director, Investor Relations and Corporate Communications
480-786-7594
greg.johnson@amkor.com





AMKOR TECHNOLOGY, INC.
Selected Operating Data

Since the fourth quarter 2013, we have reported net sales data by the following categories: advanced products and mainstream products. We have also provided quarterly and annual net sales and packaged units for 2012 and 2013 under these revised net sales reporting categories at the Investor Relations section of our website at www.amkor.com.

 
Q1 2014
 
 
Q4 2013
 
 
Q1 2013
 
Net Sales Data:
 
 
 
 
 
 
 
 
Net sales (in millions):
 
 
 
 
 
 
 
 
Advanced products*
$
302

 
 
$
346

 
 
$
370

 
Mainstream products**
394

 
 
409

 
 
318

 
Total net sales
$
696

 
 
$
755

 
 
$
688

 
 
 
 
 
 
 
 
 
 
Packaging services
85

%
 
85

%
 
86

%
Test services
15

%
 
15

%
 
14

%
 
 
 
 
 
 
 
 
 
Net sales from top ten customers
60

%
 
63

%
 
63

%
 
 
 
 
 
 
 
 
 
Packaged units (in millions):
 
 
 
 
 
 
 
 
Advanced products*
650

 
 
816

 
 
579

 
Mainstream products**
3,217

 
 
3,261

 
 
1,722

 
Total packaged units
3,867

 
 
4,077

 
 
2,301

 
 
 
 
 
 
 
 
 
 
End Market Distribution Data (an approximation including representative devices and applications based on a sampling of our largest customers):
 
 
 
 
 
 
 
 
Communications (handsets, tablets, handheld devices, wireless LAN)
53

%
 
55

%
 
59

%
Consumer (television, set top boxes, gaming, portable media, digital cameras)
15

%
 
14

%
 
14

%
Automotive, industrial and other (infotainment, safety, performance, comfort)
12

%
 
11

%
 
8

%
Networking (servers, routers, switches)
10

%
 
11

%
 
10

%
Computing (desk tops, PCs, hard disk drive, printers, peripherals, servers)
10

%
 
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

%
 
42.5

%
Labor
14.7

%
 
14.6

%
 
14.8

%
Other manufacturing
30.0

%
 
28.3

%
 
26.0

%
Gross margin
18.5

%
 
19.9

%
 
16.7

%
 
 
 
 
 
 
 
 
 
Earnings per Share Data:
 
 
 
 
 
 
 
 
Net income attributable to Amkor - basic
$
20

 
 
$
41

 
 
$
13

 
 
 
 
 
 
 
 
 
 
Adjustment for dilutive securities on net income:
 
 
 
 
 
 
 
 
Interest on 6.0% convertible notes due 2014, net of tax
1

 
 
1

 
 
4

 
Net income attributable to Amkor - diluted
$
21

 
 
$
42

 
 
$
17

 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding - basic
216

 
 
216

 
 
152

 
Effect of dilutive securities:
 
 
 
 
 
 
 
 
6.0% convertible notes due 2014
19

 
 
19

 
 
83

 
Weighted average shares outstanding - diluted
235

 
 
235

 
 
235

 
 
 
 
 
 
 
 
 
 
Net income attributable to Amkor per common share:
 
 
 
 
 
 
 
 
Basic
$
0.09

 
 
$
0.19

 
 
$
0.09

 
Diluted
$
0.09

 
 
$
0.18

 
 
$
0.07

 

*Advanced products include flip chip and wafer-level processing and related test services
**Mainstream products include wirebond packaging and related test services and since July 1, 2013 include the results of our newly acquired power discrete business in Malaysia which has a high volume of units relative to revenue



AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

 
For the Three Months Ended
March 31,
 
2014
 
2013
 
(In thousands, except per share data)
Net sales
$
696,044

 
$
687,529

Cost of sales
567,224

 
572,576

Gross profit
128,820

 
114,953

Selling, general and administrative
62,424

 
59,559

Research and development
21,045

 
14,306

Total operating expenses
83,469

 
73,865

Operating income
45,351

 
41,088

Interest expense
23,722

 
22,078

Interest expense, related party
1,242

 
3,492

Other expense (income), net
36

 
(2,222
)
Total other expense, net
25,000

 
23,348

Income before taxes and equity in earnings of unconsolidated affiliate
20,351

 
17,740

Income tax expense
4,929

 
4,029

Income before equity in earnings of unconsolidated affiliate
15,422

 
13,711

Equity in earnings of J-Devices
5,761

 
55

Net income
21,183

 
13,766

Net income attributable to noncontrolling interests
(550
)
 
(384
)
Net income attributable to Amkor
$
20,633

 
$
13,382

 
 
 
 
Net income attributable to Amkor per common share:
 
 
 
Basic
$
0.09

 
$
0.09

Diluted
$
0.09

 
$
0.07

 
 
 
 
Shares used in computing per common share amounts:
 
 
 
Basic
216,757

 
152,411

Diluted
235,497

 
235,087





AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)


 
March 31,
2014
 
December 31,
2013
 
(In thousands)
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
628,585

 
$
610,442

Restricted cash
2,681

 
2,681

Accounts receivable, net of allowances
406,797

 
385,542

Inventories
197,297

 
200,423

Other current assets
45,399

 
33,328

Total current assets
1,280,759

 
1,232,416

Property, plant and equipment, net
2,033,396

 
2,006,553

Investments
114,119

 
105,214

Restricted cash
2,193

 
2,234

Other assets
72,872

 
80,881

Total assets
$
3,503,339

 
$
3,427,298

 
 
 
 
LIABILITIES AND EQUITY
Current liabilities:
 
 
 
Short-term borrowings and current portion of long-term debt
$
66,350

 
$
61,350

Trade accounts payable
416,789

 
365,334

Accrued expenses
258,558

 
264,252

Total current liabilities
741,697

 
690,936

Long-term debt
1,511,252

 
1,516,390

Long-term debt, related party
75,000

 
75,000

Pension and severance obligations
168,020

 
165,073

Other non-current liabilities
16,010

 
14,959

Total liabilities
2,511,979

 
2,462,358

 
 
 
 
Amkor stockholders’ equity:
 
 
 
Preferred stock
—

 
—

Common stock
262

 
262

Additional paid-in capital
1,813,940

 
1,812,530

Accumulated deficit
(626,715
)
 
(647,348
)
Accumulated other comprehensive income (loss)
3,694

 
(255
)
Treasury stock
(211,571
)
 
(211,449
)
Total Amkor stockholders’ equity
979,610

 
953,740

Noncontrolling interests in subsidiaries
11,750

 
11,200

Total equity
991,360

 
964,940

Total liabilities and equity
$
3,503,339

 
$
3,427,298




AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 
For the Three Months Ended
March 31,
 
2014
 
2013
 
(In thousands)
Cash flows from operating activities:
 
 
 
Net income
$
21,183

 
$
13,766

Depreciation and amortization
108,338

 
97,148

Other operating activities and non-cash items
(4,274
)
 
(840
)
Changes in assets and liabilities
6,699

 
(11,400
)
Net cash provided by operating activities
131,946

 
98,674

 
 
 
 
Cash flows from investing activities:
 
 
 
Purchases of property, plant and equipment
(95,999
)
 
(112,543
)
Proceeds from the sale of property, plant and equipment
726

 
24,614

Payments from J-Devices
—

 
8,843

Other investing activities
(266
)
 
(249
)
Net cash used in investing activities
(95,539
)
 
(79,335
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Proceeds from issuance of long-term debt
80,000

 
33,000

Payments of long-term debt
(80,000
)
 
—

Payment of deferred consideration for an acquisition
(18,763
)
 
—

Proceeds from the issuance of stock through share-based compensation plans
438

 
—

Payments of tax withholding for restricted shares
(122
)
 
(90
)
Net cash (used in) provided by financing activities
(18,447
)
 
32,910

 
 
 
 
Effect of exchange rate fluctuations on cash and cash equivalents
183

 
1,405

 
 
 
 
Net increase in cash and cash equivalents
18,143

 
53,654

Cash and cash equivalents, beginning of period
610,442

 
413,048

Cash and cash equivalents, end of period
$
628,585

 
$
466,702

 




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:
•
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;
•
delays, lower manufacturing yields and supply constraints relating to the ramp to high volume manufacturing of 20 nanometer wafers 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, including the final outcome in the pending patent license litigation 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, 2013 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. Reports