Press Releases

CHANDLER, Ariz., Oct 27, 2011 (BUSINESS WIRE) --

Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of semiconductor assembly and test services, today announced financial results for the third quarter ended September 30, 2011, with net sales of $740 million, net income of $27 million, and earnings per diluted share of $0.11.

"Sequential sales were up 8%, driven by solid demand in communications, particularly for smartphones and tablets, and the seasonal increase in the consumer area led by our strong position in gaming," said Ken Joyce, Amkor's president and chief executive officer. "Although gross margin and earnings per share were within our guidance range, the profitability challenges we have been experiencing in 2011 continue to be an issue. We are committed to addressing these challenges and are currently focused on rationalizing our cost structure and improving utilization."

Selected financial information for the third quarter 2011 is as follows:

• Net Sales: $740 million, up 8% from $688 million in the prior quarter, and down 7% from $794 million in the third quarter 2010
• Gross Margin: 17%, compared to 19% in the prior quarter, and 24% in the third quarter 2010
• Net Income: $27 million, up from $14 million in the prior quarter, and down from $78 million in the third quarter 2010
• Earnings Per Diluted Share: $0.11, up from $0.07 in the prior quarter, and down from $0.30 in the third quarter 2010

"Our third quarter gross margin of 17% declined from the second quarter due primarily to higher gold prices and restructuring costs associated with downsizing our work force as part of our ongoing cost reduction initiatives," said Joanne Solomon, Amkor's executive vice president and chief financial officer. "We recorded a charge of $5 million in the quarter for the restructuring (or $0.02 per diluted share), with most of the cost being included in our cost of goods sold."

"Capital additions were $123 million during the third quarter, primarily in support of our newest and most advanced interconnect technologies for wireless communications packages, including flip chip CSP, flip chip stacked CSP and fine pitch copper pillar flip chip," said Solomon.

"On August 30, 2011, the Board of Directors authorized the repurchase of up to $150 million of our common stock," continued Solomon. "During the third quarter we repurchased a total of 10.9 million shares for a purchase price of $49 million. We believe this investment in our company enhances stockholder value and reflects our confidence in Amkor's future."

Cash and cash equivalents were $483 million, and net debt was $843 million, at September 30, 2011.

Selected operating data for the third quarter 2011 is included in a section before the financial statements.

Business Outlook

"Based on the current level of demand for smartphones and tablets, our wireless communications business is expected to remain strong in the fourth quarter," said Joyce. "However, we see a general softening in demand in other areas during the fourth quarter driven by the uncertain macroeconomic environment coupled with the normal seasonal decline in gaming."

"Capital additions for the fourth quarter are expected to be in the range of $100 million to $125 million. These investments are targeted to support specific opportunities for key customers in smartphones and tablets, for research and development of the next generation interconnect technologies such as wafer-level fan out and Through Silicon Via, and for cost-down initiatives in our factories," added Joyce.

Based upon the currently available information, we have the following expectations for the fourth quarter 2011:

• Net sales of $650 million to $700 million, down 5% to 12% from the prior quarter
• Gross margin of 15% to 18%
• Net income of $3 million to $25 million, or $0.03 to $0.11 per diluted share
• Capital additions of $100 million to $125 million for the fourth quarter, and capital additions of $425 million to $450 million for the full year

Conference Call Information

Amkor will conduct a conference call on October 27, 2011, at 5:00 p.m. Eastern Daylight Time. This call is being webcast and can be accessed at Amkor's web site: www.amkor.com. You may also access the call by dialing 877-941-0843. A replay of the call will be made available at Amkor's web site or by dialing 800-406-7325 (access pass code #4478852). 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 assembly and test services to semiconductor companies and electronics OEMs. More information about 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 made regarding: our continuing challenges to profitability and our focus on rationalizing our cost structure and improving utilization, our ongoing cost reduction initiatives, the level of demand for smartphones and tablets and the strength of our wireless communications business in the fourth quarter, the demand in other business areas in the fourth quarter, the uncertain macroeconomic environment and demand for gaming in the fourth quarter, the amount and timing of our capital additions, the targeting of our capital additions to support specific opportunities for key customers in smartphones and tablets, for research and development of the next generation interconnect technologies, and for cost-down initiatives in our factories, and our current business outlook for the fourth quarter 2011, including our expected net sales, gross margin, net income, earnings per diluted share and capital additions. 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;
• timing and volume of orders relative to production capacity and inability to achieve high capacity utilization rates;
• volatility of consumer demand and weakness in forecasts from our customers for products incorporating our semiconductor packages;
• dependence on key customers;
• customer modification of and follow through with respect to forecasts provided to us;
• changes in tax rates and taxes as a result of changes in 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 to fund capital additions;
• the effects of a recession or other downturn in the U.S. and other economies worldwide;
• disruptions or deficiencies in our controls resulting from the implementation of our new enterprise resource planning system;
• 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 control costs;
• competition, competitive pricing and declines in average selling prices;
• fluctuations in manufacturing yields;
• dependence on international operations and sales;
• dependence on raw material and equipment suppliers and changes in raw material and precious metal 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, 2010 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., Chandler
Joanne Solomon
Executive Vice President & Chief Financial Officer
480-786-7878
joanne.solomon@amkor.com