Amkor Report Second Quarter 2001 Results
CHANDLER, Ariz.--(BUSINESS WIRE)--July 24, 2001--Amkor Technology, Inc. announced results for the second quarter ended June 30, 2001. Total revenue was $350 million, compared with $547 million in the second quarter of 2000. Assembly & test revenue was $311 million, down 33% from $463 million in Q2 of 2000, and down 29% sequentially. Second quarter wafer fab revenue was $39 million compared with $84 million in Q2 of 2000 and $41 million in the first quarter of 2001.
Excluding amortization of goodwill, acquired intangibles, and debt issuance costs, Amkor reported a second quarter net loss of $85 million, or ($0.55) per share, compared to a profit of $51 million, or $0.33 per share, in Q2 of 2000. Including amortization of goodwill and acquired intangibles, the second quarter 2001 net loss was $116 million, or ($0.76) per share, compared with a profit of $31 million, or $0.20 per share, for Q2 of 2000.
There were 154 million weighted average shares outstanding on a fully diluted basis for the second quarter of 2001 compared with 157 million in the year-ago period.
"During the current downturn, we have undertaken a three-pronged strategy of moving forward prudently with geographic diversification, investing carefully in next-generation technology, and enhancing our financial flexibility," said James Kim, Amkor's Chairman and Chief Executive Officer. "Accordingly, we expect to emerge from this down-cycle in a stronger competitive position."
"Due to the protracted economic slowdown, we no longer expect a strong seasonal build in Q3," said John Boruch, Amkor's President. "Our customers are still experiencing weak demand, and have limited visibility into Q3. Conditions within the supply chain remain volatile."
Second quarter gross margin was 2.3%, compared with 25.5% in Q2 2000 and 17% in the first quarter of 2001, primarily due to sharply lower revenue and the high degree of operating leverage inherent in Amkor's business.
Overall assembly capacity utilization was approximately 45% in the second quarter, compared with 73% in the second quarter of 2000 and 57% in the first quarter of 2001. Assembly unit shipments declined 36% from Q2 2000 and 26% sequentially. Average selling prices declined approximately 5% sequentially during the second quarter.
Depreciation and amortization expenses were $110 million compared with $79 million in the second quarter of 2000.
During the second quarter of 2001 the company's tax benefits increased due to a higher corporate income tax rate resulting from operating losses incurred in high tax jurisdictions.
Second quarter EBITDA was $36 million compared to $150 million in Q2 `00. We have calculated EBITDA as earnings before income taxes; equity in income (loss) of affiliates; foreign currency gain or loss; interest expense, net; depreciation and amortization. EBITDA is a common measure used by investors to evaluate a company's ability to service debt. EBITDA is not defined by generally accepted accounting principles.
"Over the past several months we have taken a variety of measures to reduce operating costs in line with lower-than-expected revenue levels and asset utilization rates," said Ken Joyce, Amkor's Chief Financial Officer. "We achieved some cost savings in the second quarter and expect to realize more meaningful benefits from these measures in the third and fourth quarters. Given the protracted nature of this downturn, we are contemplating additional steps to reduce operating expenses. In any case, we operate with a sizable fixed cost structure, and there are practical limits to the savings that can be realized without compromising our ability to service our customers when business conditions rebound."
"During the past six months, we have improved our liquidity, " noted Joyce. "In February we issued $500 million in senior notes and repaid our $298 million amortizing term loan. In the process, we eliminated nearly $70 million in principal payments during 2001, and we increased our cash balances by $100 million. In May, we issued $250 million in convertible notes. Half the proceeds were used to repay term debt, and half to increase cash balances. On June 1, we successfully converted approximately $50 million in convertible notes into common stock. We have a solid cash position, with $339 million in cash and equivalents as of June 30, in addition to our unused $200 million revolving credit facility."
Also, we have reduced planned capital expenditures to approximately $150 million for 2001, from $480 million in 2000, without sacrificing investments in next generation packaging and test technology. This translates into a total capex budget of less than $40 million for the second half of 2001." Business Highlights
-
Our Japan initiatives are progressing well. Activity at our joint venture with Toshiba is down due to sluggish market conditions, however we are very encouraged with the way this factory has been integrated into Amkor's operational structure. Amkor Iwate represents a benchmark for large-scale assembly & test outsourcing in Japan and provides a terrific platform for further penetration in this large market.
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We are making excellent progress with our new factory in Shanghai. China is going to be a high growth market for microelectronics. We are moving forward with qualifications on several package technologies and expect to build revenues slowly through this year and then accelerate through 2002. We intend to build scale at Amkor China as quickly as market conditions will allow.
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In Taiwan, we have closed our acquisition of Sampo Semiconductor and should complete the TSTC transaction later this week. Amkor is now firmly established in this major market for microelectronics. Our plan is to supplement the existing capabilities at Amkor Taiwan with a broad range of advanced packaging technologies currently available at other Amkor locations.
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In the area of Flip Chip we now offer turnkey wafer bump, probe, assembly and test to a blue chip customer set. We recently received important design wins from a major IDM and a leading broadband communications company. Our Flip Chip development efforts should reap substantial dividends in 2002.
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Our System-in-Package business continues to develop as planned. We are in qualification with several new customers for a broad range of applications, including RF / wireless, memory storage, power supply management, ADSL and memory controllers. We are the first outsourced company with fully automated MultiMediaCard production, and we'll have automated Secure Digital card production soon.
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We are moving underutilized assembly and test equipment from Korea and the Philippines to other locations as appropriate.
Business Outlook
At the present time there is uncertainty as to when excess inventory throughout the supply chain will be absorbed, and when end market demand will rebound. These economic conditions are affecting customer forecasts and continue to impair our visibility into the second half of 2001. The following statements are based on current expectations. These statements are forward looking, and actual results may differ materially. These statements do not reflect the impact of any mergers, acquisitions or other business combinations that may take place later this year.
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Our best estimate is that total revenue for the third quarter will be flat to down 10% compared with the second quarter.
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We expect third quarter wafer fab revenue to be flat with the second quarter. We remain committed to restructuring our ownership interest in Anam and continue to explore opportunities.
Amkor will be holding a conference call on July 24 at 5:00 p.m. eastern time to discuss the results of the second quarter in more detail and to provide additional guidance for the third quarter of 2001. Participants can access the call at 312.470.7370. The call will also be webcast through our web site, http://www.amkor.com.
Amkor is the world's largest provider of contract microelectronics assembly and test services. The company offers semiconductor companies and electronics OEMs a complete set of microelectronic design and manufacturing services, including deep sub-micron wafer fabrication; wafer probe, wafer mapping, characterization and reliability testing; IC packaging design and assembly; multi-chip module design and assembly; and final testing. More information on Amkor is available from the company's SEC filings and on Amkor's web site: www.amkor.com.
The statements by James Kim, John Boruch and Ken Joyce, and the above statements contained in our Business Outlook, are forward-looking statements that involve a number of risks and uncertainties. Factors that could affect future operating results and cause actual results to vary materially from historical results include, but are not limited to: dependence on the highly cyclical nature the semiconductor industry; competitive pricing and declines in average selling prices; dependence on our relationship with ASI for all of our wafer fabrication output; reliance on a small group of principal customers; timing and volume of orders relative to the production capacity; availability of manufacturing capacity and fluctuations in manufacturing yields; availability of financing; 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 the results of ASI through the equity method of accounting.
Further information on risk factors that could affect the outcome of the events set forth in these statements and that would affect the company's operating results and financial condition is detailed in the company's filings with the Securities and Exchange Commission, including the Report on Form 10-K for the fiscal year ended December 31, 2000.
AMKOR TECHNOLOGY, INC.
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF INCOME EXCLUDING
AMORTIZATION OF GOODWILL AND OTHER ACQUISITION-RELATED INTANGIBLES
AND THE WRITE-OFF OF DEFERRED DEBT ISSUANCE COSTS
(in thousands, except per share data)
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
(unaudited) (unaudited)
---------------------- ----------------------
2001 2000 2001 2000
---- ---- ---- ----
Net revenues
Assembly and Test $ 311,423 $ 462,677 $ 750,836 $ 931,612
Wafer Fab 38,746 84,359 79,956 170,235
---------- ---------- ---------- ----------
Total 350,169 547,036 830,792 1,101,847
Cost of
revenues-including
purchases from ASI 342,158 407,441 740,996 847,221
---------- ---------- ---------- ----------
Gross profit 8,011 139,595 89,796 254,626
---------- ---------- ---------- ----------
Operating expenses:
Selling, general
and administrative 51,365 46,884 105,359 88,781
Research and
development 8,135 4,872 18,637 8,243
---------- ---------- ---------- ----------
Total operating
expenses 59,500 51,756 123,996 97,024
---------- ---------- ---------- ----------
Operating income
(loss) (51,489) 87,839 (34,200) 157,602
---------- ---------- ---------- ----------
Other (income)
expense:
Interest expense,
net 38,094 29,428 75,763 44,857
Foreign currency
loss 2,375 1,756 1,065 2,592
Other expense
(income), net (57) (322) 111 2,038
---------- ---------- ---------- ----------
Total other
expense 40,412 30,862 76,939 49,487
---------- ---------- ---------- ----------
Income (loss)
before
income taxes
and equity
in income of
investees (91,901) 56,977 (111,139) 108,115
Provision (benefit)
for
income taxes (25,673) 6,230 (30,983) 15,186
Equity in income
(loss)
of investees (17,450) 559 (34,835) 5,495
Minority Interest (828) - (828) -
---------- ---------- ---------- ----------
Net income (loss) $ (84,506) $ 51,306 $ (115,819) $ 98,424
========== ========== ========== ==========
Per Share Data:
Basic net income
(loss) per
common share ($0.55) $0.35 ($0.76) $0.70
========== ========== ========== ==========
Diluted net income
(loss) per common
share ($0.55) $0.33 ($0.76) $0.67
========== ========== ========== ==========
Shares used in
computing
basic net
income (loss)
per common share 153,950 148,530 153,068 139,701
========== ========== ========== ==========
Shares used in
computing
diluted net
income (loss)
per common share 153,950 157,617 153,068 148,078
========== ========== ========== ==========
The above supplemental consolidated statements of income exclude
the effects of the following:
During the three months and six months ended June 30, 2001, the
Company wrote off $2.3 million and $9.4 million, respectively,
of deferred debt issuance costs related to loan repayments.
During the three months and six months ended June 30, 2001, the
amortization of goodwill and other acquired intangibles excluded
from SGA was $20.6 million and 42.5 million, respectively.
During the three months and six months ended June 30, 2000, the
amortization of goodwill and other acquired intangibles excluded
from SGA was $15.4 million and 21.8 million, respectively.
During the three months and six months ended June 30, 2001, the
amortization of the difference between the cost of our equity
investments and our share of the underlying net assets of ASI
excluded from equity in income (loss) of investees was $8.9
million and 17.8 million, respectively.
During the three months and six months ended June 30, 2000, the
amortization of the difference between the cost of our equity
investments and our share of the underlying net assets of ASI
excluded from equity in income (loss) of investees was $4.9
million and 8.5 million, respectively.
AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
2001 2000
(unaudited) (unaudited)
Assets
Current assets:
Cash and cash equivalents $ 339,135 $ 93,517
Accounts receivable--
Trade, net of allowance for doubtful
accounts of $1,838 and $2,426 229,192 301,915
Due from affiliates 2,504 1,634
Other 7,898 6,465
Inventories 83,801 108,613
Other current assets 46,437 36,873
----------- -----------
Total current assets 708,967 549,017
----------- -----------
Property, plant and equipment, net 1,453,275 1,478,510
----------- -----------
Investments 448,822 501,254
----------- -----------
Other assets:
Due from affiliates 22,143 25,013
Goodwill and acquired intangibles 717,475 737,593
Other 106,080 101,897
----------- -----------
Total other assets 845,698 864,503
----------- -----------
Total assets $ 3,456,762 $ 3,393,284
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Bank overdraft $ 13,784 $ 25,731
Short-term borrowings and current
portion of long-term debt 30,272 73,586
Trade accounts payable 142,375 133,047
Due to affiliates 8,829 32,534
Accrued expenses 123,606 129,301
Accrued income taxes 16,621 52,232
----------- -----------
Total current liabilities 335,487 446,431
Long-term debt 1,876,219 1,585,536
Other noncurrent liabilities 58,246 46,483
Minority Interest 2,406 -
----------- -----------
Total liabilities 2,272,358 2,078,450
----------- -----------
Stockholders' equity:
Common stock 156 152
Additional paid-in capital 1,030,857 975,026
Retained earnings 158,381 343,886
Receivable from stockholder (3,276) (3,276)
Accumulated other comprehensive
income (1,714) (954)
----------- -----------
Total stockholders' equity 1,184,404 1,314,834
----------- -----------
Total liabilities and stockholders'
equity $ 3,456,762 $ 3,393,284
=========== ===========
AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
(unaudited) (unaudited)
----------------------- -------------------------
2001 2000 2001 2000
Net revenues
Assembly and
Test $311,423 $462,677 $750,836 $931,612
Wafer Fab 38,746 84,359 79,956 170,235
--------- --------- --------- ----------
Total 350,169 547,036 830,792 1,101,847
Cost of revenues—
including
purchases from
ASI 342,158 407,441 740,996 847,221
--------- --------- --------- ----------
Gross profit 8,011 139,595 89,796 254,626
--------- --------- --------- ----------
Operating
expenses:
Selling, general
and
administrative 51,365 46,884 105,359 88,781
Amortization of
goodwill & other
acquired
intangibles 20,573 15,440 42,485 21,802
Research and
development 8,135 4,872 18,637 8,243
--------- --------- --------- ----------
Total operating
expenses 80,073 67,196 166,481 118,826
--------- --------- --------- ----------
Operating income
(loss) (72,062) 72,399 (76,685) 135,800
--------- --------- --------- ----------
Other (income)
expense:
Interest expense,
net 40,411 29,428 85,206 44,857
Foreign currency
loss 2,375 1,756 1,065 2,592
Other expense
(income), net (57) (322) 111 2,038
--------- --------- --------- ----------
Total other
expense 42,729 30,862 86,382 49,487
--------- --------- --------- ----------
Income (loss)
before income
taxes and equity
in income of
investees (114,791) 41,537 (163,067) 86,313
Provision
(benefit) for
income taxes (25,673) 6,230 (30,983) 15,186
Equity in (loss)
of investees (26,345) (4,371) (52,593) (3,035)
Minority
Interest (828) (828)
--------- --------- --------- ----------
Net income (loss) $(116,291) $30,936 $(185,505) $68,092
========= ========= ========== ==========
Per Share Data:
Basic net income
(loss) per
common share ($0.76) $0.21 ($1.21) $0.49
========= ========= ========== ==========
Diluted net
income (loss)
per common share ($0.76) $0.20 ($1.21) $0.47
========= ========= ========== ==========
Shares used in
computing basic
net income
(loss) per
common share 153,950 148,530 153,068 139,701
========= ========= ========== ==========
Shares used in
computing
diluted net
income (loss)
per common share 153,950 157,617 153,068 148,078
========= ========= ========== ==========
--30--NR/ph* CRB/ph RV/ph
| CONTACT: | Amkor Technology, Inc. |
|---|---|
| Investors: | |
| Jeffrey Luth, 610/431-9600 ext. 5613 | |
| jluth@amkor.com | |
| or | |
| Media: | |
| Ken Jensen, 480/821-2408 Ext. 5130 | |
| kjens@amkor.com | |