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.--(BUSINESS WIRE)--Apr. 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: 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 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 (

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:

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

        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






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  





March 31,



December 31,


        (In thousands)
Current assets:                              
Cash and cash equivalents       $ 628,585                   $ 610,442  
Restricted cash       2,681                   2,681  
Accounts receivable, net of allowances      




Inventories       197,297                   200,423  
Other current assets      




Total current assets      


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  
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  





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.

Source: Amkor Technology, Inc.

Amkor Technology, Inc.
Joanne Solomon
Executive Vice President & Chief Financial Officer
Greg Johnson
Senior Director, Investor Relations and Corporate Communications