PRESS RELEASE


Amkor Technology Reports Financial Results for the Third Quarter 2016

Third Quarter Highlights

  • Net sales $1.09 billion, 18.4% sequential growth
  • Gross margin 19.7%
  • Net income $60 million, earnings per diluted share $0.25 and EBITDA $248 million
  • Notable strength in mobile communications across multiple tiers
  • Solid sales growth in Automotive, Greater China and advanced SiP

TEMPE, Ariz.--(BUSINESS WIRE)--Oct. 31, 2016-- Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of semiconductor packaging and test services, today announced financial results for the third quarter ended September 30, 2016.

"Third quarter results were at the high end of our guidance," said Steve Kelley, Amkor's president and chief executive officer. "We saw notable strength in smartphones across multiple tiers. Sales in Automotive, Greater China and advanced SiP were all up sequentially reflecting the continued success of our strategic initiatives in these key areas. Our 18% sequential growth in sales generated substantial cash and profits for the quarter.”

 
Results       Q3 2016     Q2 2016     Q3 2015
      ($ in millions, except per share data)
Net sales $1,086     $917     $734
Gross margin 19.7% 14.3% 17.2%
Net income (loss) $60 $5 $28
Earnings per diluted share $0.25 $0.02 $0.12
EBITDA* $248 $168 $187
 

*EBITDA is a non-GAAP measure. The reconciliation to the comparable GAAP measure is included below under "Selected Operating Data."

Business Outlook

"Demand is solid in nearly all end markets," said Kelley. "We expect Q4 revenue to be around $1.03 billion. For 2016, we expect total revenue of about $3.9 billion, a $1 billion increase over 2015.”

Fourth quarter and full year 2016 outlook:

Fourth quarter

  • Net sales of $990 million to $1.07 billion, down 1% to 9% from the prior quarter
  • Gross margin of 19% to 23%
  • Net income of $46 million to $82 million, or $0.19 to $0.34 per share

Full year

  • Net sales of approximately $3.9 billion, up from $2.9 billion in 2015
  • Gross margin of approximately 17.5%, up from 16.6% in 2015
  • Net income of approximately $130 million, or around $0.55 per share, up from $0.22 in 2015
  • Capital expenditures of approximately $650 million, unchanged from our previous forecast

Our Q4 and full year guidance includes the anticipated receipt of approximately $30 million of insurance payments related to the Japan earthquakes.

Conference Call Information

Amkor will conduct a conference call on Monday, October 31, 2016, 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 1-877-645-6380 or 1-404-991-3911. A replay of the call will be made available at Amkor's website or by dialing 1-855-859-2056 or 1-404-537-3406 (conference ID 94698432). The webcast is also being distributed over NASDAQ OMX's investor distribution network to both institutional and individual investors. Institutional investors can access the call via NASDAQ OMX's password-protected event management site, Street Events (www.streetevents.com).

About Amkor Technology, Inc.

Amkor Technology, Inc. is one of the world’s largest providers of outsourced semiconductor packaging and test services. Founded in 1968, Amkor pioneered the outsourcing of IC packaging and test, and is now a strategic manufacturing partner for more than 250 of the world’s leading semiconductor companies, foundries and electronics OEMs. Amkor’s operating base includes more than 8 million square feet of floor space, with production facilities, product development centers, and sales and support offices located in key electronics manufacturing regions in Asia, Europe and the U.S. For more information, visit www.amkor.com.

 
AMKOR TECHNOLOGY, INC.
Selected Operating Data
 
    Q3 2016     Q2 2016     Q3 2015*
Net Sales Data:
Net sales (in millions):
Advanced products** $ 480 $ 394 $ 365
Mainstream products*** 606   523   369  
Total net sales $ 1,086   $ 917   $ 734  
 
Packaging services 82 % 83 % 85 %
Test services 18 % 17 % 15 %
 
Net sales from top ten customers 68 % 67 % 61 %
 
End Market Distribution Data (an approximation including representative devices and applications based on a sampling of our largest customers):
Communications (smart phones, tablets, handheld devices, wireless LAN) 47 % 44 % 55 %
Automotive and industrial (infotainment, safety, performance, comfort) 24 % 25 % 13 %
Consumer (televisions, set top boxes, gaming, portable media, digital cameras) 14 % 14 % 12 %
Networking (servers, routers, switches) 9 % 11 % 12 %
Computing (PCs, hard disk drives, printers, peripherals, servers) 6 % 6 % 8 %
Total 100 % 100 % 100 %
 
Gross Margin Data:
Net sales 100.0 % 100.0 % 100.0 %
Cost of sales:
Materials 37.2 % 37.7 % 36.8 %
Labor 14.6 % 16.0 % 14.9 %
Other manufacturing 28.5 % 32.0 % 31.1 %
Gross margin 19.7 % 14.3 % 17.2 %
 

*The data for 2015 does not include the results from J-Devices

**Advanced products include flip chip and wafer-level processing and related test services

***Mainstream products include wirebond packaging and related test services

AMKOR TECHNOLOGY, INC.

Selected Operating Data

In the press release above we provide EBITDA, which is not defined by U.S. GAAP. We define EBITDA as net income before interest expense, income tax expense and depreciation and amortization. We believe EBITDA to be relevant and useful information to our investors because it provides additional information in assessing our financial operating results. Our management uses EBITDA in evaluating our operating performance, our ability to service debt and our ability to fund capital expenditures. However, EBITDA has certain limitations in that it does not reflect the impact of certain expenses on our consolidated statements of income, including interest expense, which is a necessary element of our costs because we have borrowed money in order to finance our operations, income tax expense, which is a necessary element of our costs because taxes are imposed by law, and depreciation and amortization, which is a necessary element of our costs because we use capital assets to generate income. EBITDA should be considered in addition to, and not as a substitute for, or superior to, operating income, net income or other measures of financial performance prepared in accordance with U.S. GAAP. Furthermore our definition of EBITDA may not be comparable to similarly titled measures reported by other companies. Below is our reconciliation of EBITDA to U.S. GAAP net income.

 
Non-GAAP Financial Measure Reconciliation:              
Q3 2016     Q2 2016     Q3 2015
(in millions)
EBITDA Data:
Net income attributable to Amkor $ 60 $ 5 $ 28
Plus: Interest expense 23 22 19
Plus: Income tax expense 24 3 17
Plus: Depreciation & amortization 141   138   123
EBITDA $ 248   $ 168   $ 187
 
 
AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
     

For the Three Months Ended
September 30,

   

For the Nine Months Ended
September 30,

2016     2015 2016     2015
(In thousands, except per share data)
Net sales $ 1,086,014 $ 734,362 $ 2,872,022 $ 2,213,959
Cost of sales 872,214   607,762   2,403,732   1,837,314  
Gross profit 213,800   126,600   468,290   376,645  
Selling, general and administrative 72,363 54,232 216,894 173,609
Research and development 26,822   21,073   84,145   59,119  
Total operating expenses 99,185   75,305   301,039   232,728  
Operating income 114,615 51,295 167,251 143,917
Interest expense 21,488 17,695 58,496 64,317
Interest expense, related party 1,243 1,243 3,727 3,727
Other (income) expense, net 6,657   (11,576 ) 9,607   (4,784 )
Total other expense, net 29,388   7,362   71,830   63,260  
Income before taxes and equity in earnings of unconsolidated affiliate 85,227 43,933 95,421 80,657
Income tax expense 24,086   16,568   29,319   27,198  
Income before equity in earnings of unconsolidated affiliate 61,141 27,365 66,102 53,459
Equity in earnings of J-Devices   1,217     10,587  
Net income 61,141 28,582 66,102 64,046
Net income attributable to non-controlling interests (1,052 ) (847 ) (2,175 ) (2,386 )
Net income attributable to Amkor $ 60,089   $ 27,735   $ 63,927   $ 61,660  
 
Net income attributable to Amkor per common share:
Basic $ 0.25   $ 0.12   $ 0.27   $ 0.26  
Diluted $ 0.25   $ 0.12   $ 0.27   $ 0.26  
 
Shares used in computing per common share amounts:
Basic 237,353 236,888 237,157 236,813
Diluted 238,192 236,974 237,586 237,168
 
 
AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
     

September 30,
2016

   

December 31,
2015

(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 549,836 $ 523,172
Restricted cash 2,000 2,000
Accounts receivable, net of allowances 630,984 526,143
Inventories 272,589 238,205
Other current assets 31,637   27,960  

Total current assets

1,487,046 1,317,480
Property, plant and equipment, net 2,619,469 2,579,017
Goodwill 27,908 23,409
Restricted cash 4,209 2,176
Other assets 102,482   104,346  
Total assets $ 4,241,114   $ 4,026,428  
 
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt $ 30,834 $ 76,770
Trade accounts payable 517,745 434,222
Capital expenditures payable 179,768 242,980
Accrued expenses 346,613   264,212  
Total current liabilities 1,074,960 1,018,184
Long-term debt 1,473,214 1,435,269
Long-term debt, related party 75,000 75,000
Pension and severance obligations 191,615 167,197
Other non-current liabilities 86,265   113,242  
Total liabilities 2,901,054   2,808,892  
 
Stockholders’ equity:
Preferred stock
Common stock 283 283
Additional paid-in capital 1,888,641 1,883,592
Accumulated deficit (403,820 ) (467,747 )
Accumulated other comprehensive income (loss) 50,148 (2,084 )
Treasury stock (214,204 ) (213,758 )
Total Amkor stockholders’ equity 1,321,048 1,200,286
Non-controlling interests in subsidiaries 19,012   17,250  
Total equity 1,340,060   1,217,536  
Total liabilities and equity $ 4,241,114   $ 4,026,428  
 
 
AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
     

For the Nine Months Ended September 30,

2016     2015
(In thousands)
Cash flows from operating activities:
Net income $ 66,102 $ 64,046
Depreciation and amortization 416,517 371,968
Loss on debt retirement 9,560
Other operating activities and non-cash items (4,382 ) (9,879 )
Changes in assets and liabilities 13,379   (5,299 )
Net cash provided by operating activities 491,616   430,396  
 
Cash flows from investing activities:
Payments for property, plant and equipment (481,670 ) (352,644 )
Proceeds from sale of property, plant and equipment 13,687 5,212
Cash received on sale of subsidiary to J-Devices, net 8,355
Investment in J-Devices (12,908 )
Other investing activities (2,176 ) (869 )
Net cash used in investing activities (470,159 ) (352,854 )
 
Cash flows from financing activities:
Borrowings under revolving credit facilities 115,000 180,000
Payments under revolving credit facilities (155,000 ) (100,000 )
Borrowings under short-term debt 27,594
Payments of short-term debt (36,211 )
Proceeds from issuance of long-term debt 45,000 360,000
Payments of long-term debt (12,955 ) (530,000 )
Payments for debt issuance costs (156 )
Payments for the retirement of debt (7,030 )
Payments for capital lease obligations (1,691 )
Proceeds from the issuance of stock through share-based compensation plans 2,600 657
Payments of tax withholding for restricted shares (446 ) (548 )
Payments of subsidiary dividends to non-controlling interests (413 ) (123 )
Net cash used in financing activities (16,678 ) (97,044 )
 
Effect of exchange rate fluctuations on cash and cash equivalents 21,885
 
Net increase (decrease) in cash and cash equivalents 26,664 (19,502 )
Cash and cash equivalents, beginning of period 523,172   449,946  
Cash and cash equivalents, end of period $ 549,836   $ 430,444  
 

Revision to Previously Reported Financial Information

In the second quarter of 2016, we identified an error in the provision for income taxes in the financial statements for J-Devices for the periods beginning in 2012 through the fourth quarter of 2015. We believe that the error is not material to Amkor for the periods impacted and have elected to revise our previously issued consolidated financial statements. Periods presented herein are based on the revised financial results. Please refer to the supplementary slides posted on our Investor Relations website for revised historical financial information.

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 success of our initiatives in key areas, demand in end markets and the possible receipt of insurance payments related to the earthquakes in Japan, and all of the other 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:

  • there can be no assurance that the actual costs and financial impact from the earthquakes in Japan will be consistent with our current expectations, for example due to delays or shortfalls in insurance payments;
  • there can be no assurance that we will achieve our major growth objectives, including transitioning second wave customers to advanced packages, expanding our sales to customers in Greater China and increasing our share of the automotive market;
  • there can be no assurance regarding when our new K5 facility in Korea will be fully utilized, or that the actual scope, costs, timeline or benefits of the project will be consistent with our current expectations;
  • 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 and generally soft end market demand for electronic devices;
  • delays, lower manufacturing yields and supply constraints relating to wafers, particularly for advanced nodes 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 and the impact of other legal proceedings;
  • changes in tax rates and taxes as a result of changes in U.S. or foreign tax law or the interpretation thereof, changes in our organizational structure, changes in the jurisdictions in which our income is determined to be earned and taxed, the outcome of tax reviews, audits and 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 expenditures;
  • the effects of an economic slowdown in major economies worldwide, particularly the recent slowdown in China;
  • disruptions in our business or deficiencies in our controls resulting from the integration of newly acquired operations, particularly J-Devices, 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, political instability, military conflict and natural disasters such as the earthquakes in Japan;
  • 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, including any disruptions in the supply chain resulting from the earthquakes in Japan;
  • 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, 2015 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.

Source: Amkor Technology, Inc.

Amkor Technology, Inc.
Megan Faust
Corporate Vice President & Chief Financial Officer
480-786-7707
megan.faust@amkor.com
or
Greg Johnson
Vice President, Finance and Investor Relations
480-786-7594
greg.johnson@amkor.com