SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 July 28, 2003 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) AMKOR TECHNOLOGY, INC. (Exact name of registrant as specified in its charter) Delaware 000-29472 23-1722724 (State of other jurisdiction (Commission (IRS Employer of incorporation) Identification Number) Identification Number) 1345 ENTERPRISE DRIVE WEST CHESTER, PA 19380 (Address of principal executive offices and zip code) (610) 431-9600 (Registrant's telephone number, including area code)
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits. 99.1 Text of Press Release dated July 28, 2003. ITEM 12. DISCLOSURE OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION. On July 28, 2003, Amkor announced its financial results for the three and six months ended June 30, 2003 and certain other information. The press release, which has been attached as Exhibit 99.1, discloses certain financial measures, such as free cash flows, which are considered a non-GAAP financial measure. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles. In order to fully assess our financial operating results, management believes that free cash flows are an appropriate measure of evaluating our liquidity, our ability to service debt and fund capital expenditures. However, this measure should be considered in addition to, and not as a substitute, or superior to, cash flows or other measures of financial performance prepared in accordance with generally accepted accounting principles. The non-GAAP measures included in our press release have been reconciled to the nearest GAAP measure as is required under SEC rules regarding the use of non-GAAP financial measures. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. AMKOR TECHNOLOGY, INC. By: /s/ KENNETH T. JOYCE ------------------------ Kenneth T. Joyce Chief Financial Officer Dated: July 28, 2003
(AMKOR TECHNOLOGY LOGO) News Release AMKOR REPORTS SECOND QUARTER 2003 RESULTS CHANDLER, AZ. - July 28, 2003 -- Amkor Technology, Inc. (Nasdaq: AMKR) reported second quarter sales of $378 million, up 10% sequentially and up 8% over the second quarter of 2002. Amkor's second quarter net loss was $51 million, or ($0.31) per share, compared with a loss of $384 million, or ($2.33) per share, in the second quarter of 2002. Amkor's second quarter loss includes a charge, with no tax effect, for debt retirement costs of $31 million, or ($0.19) per share, principally in connection with the early redemption of $425 million in 9-1/4% Senior Notes due May 2006. Amkor's second quarter 2002 loss included an aggregate charge of $311 million ($298 million, or $1.81 per share, after taxes) for special charges and an impairment associated with Amkor's equity investment in Anam Semiconductor, Inc. Second quarter revenue reflected strong business flow, partially offset by the impact of the May 26 earthquake in northern Japan, which disrupted the flow of fabricated wafers to our Iwate joint venture from Toshiba and other customers whose production facilities were affected. "During the quarter we met our revenue and gross margin guidance despite the business disruption caused by the Japan earthquake and notwithstanding the general impact of SARS on the Asian electronics industry," said James Kim, Amkor's chairman and chief executive officer. "We are encouraged with the near and medium term outlook for the semiconductor industry and the outsourced assembly and test sector. Over the past two years we have undertaken a broad set of initiatives to reduce our cost structure and improve the efficiency of our operations. We currently expect to approach or exceed breakeven net income in the third quarter, and based on long-range customer forecasts, we expect a sequentially stronger Q4. We also agree with the broad analyst community that 2004 should be a year of meaningful recovery in our industry, and therefore expect our business to continue to grow into 2004, subject to normal seasonal patterns." "We continue to see evidence that outsourcing is accelerating as IC suppliers and OEMs focus on companies like Amkor to satisfy their advanced package design, assembly and test requirements," said John Boruch, Amkor's president and chief operating officer. "There is clearly a technology transition occurring at the system level that is fueling demand for our advanced package solutions. Our second quarter business developed as expected, and as our customers' aggregate long-range forecasts strengthened, we accelerated our investment in leading-edge assembly and test equipment."
Amkor reports second quarter 2003 results "Second quarter gross margin of 19.6% reflected the positive operating leverage in our business," said Ken Joyce, Amkor's chief financial officer. "Over the past two years we have made substantial progress increasing the profitability of our business by focusing on improving operating efficiencies while managing costs. During the second quarter of 2003 we enhanced our liquidity and capital structure. We refinanced our secured credit facility on more favorable terms, increasing our term loan from $97 million to $170 million with no significant principal amortization until June 30, 2005 and reducing our revolving line of credit (which remains unused) from $100 million to $30 million. In addition, we took advantage of favorable capital markets by extending the maturity of a significant portion of our long-term debt at a more favorable interest rate by issuing $425 million of 7-3/4% Senior Notes due 2013 and using the proceeds to redeem our $425 million in 9-1/4% Senior Notes due 2006." "Our liquidity remained solid, with cash and equivalents of $346 million at June 30," said Joyce. "Short term debt totaled $49 million, principally relating to working capital lines of credit supporting our operations in Japan and Taiwan." Selected operating data for the second quarter of 2003 is included on a separate page of this release. BUSINESS OUTLOOK Our customers' forecasts have generally been building since the beginning of the year. We expect operating expenses to increase modestly in connection with higher business levels in the second half of the year. On the basis of these factors we have the following expectations for the third quarter: - - Sequential revenue increase in the range of 8% to 10%. - - Gross margin in the range of 21% to 24%. - - Net loss of 2 cents per share to net income of 2 cents per share. Our capital budget for 2003 remains $150 million. We currently anticipate capital expenditures in the third quarter to be approximately $40 million. We will resume the recognition of deferred tax assets when Amkor returns to profitability. We anticipate recognizing approximately $3 million per quarter in foreign tax expense for the remainder of 2003. In connection with the ongoing assessment of probable income taxes and related accruals for prior years, we may recognize a tax benefit during the third quarter of 2003. This potential tax benefit is not included in the above earnings guidance. At June 30, 2003 our company had U.S. net operating losses totaling $425 million expiring between 2021 and 2022. Additionally, at June 30, 2003 we had $50 million of non-U.S. net operating losses available for carryforward, expiring between 2003 and 2012. 2
Amkor will hold a conference call on July 28, 2003 at 5:00 p.m. eastern time to discuss the results of the second quarter in more detail. The call will be webcast and can be accessed through the investor relations page of our web site: www.amkor.com as well as through CCBN's website, www.companyboardroom.com. An archive of the webcast can be accessed through the same links and will be available until the company's next quarterly earnings conference call. An audio replay of the call will be available for 48 hours following the conference call by dialing 303-590-3000 passcode: 540790#. Amkor is the world's largest provider of contract semiconductor assembly and test services. The company offers semiconductor companies and electronics OEMs a complete set of microelectronic design and manufacturing services. 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 and expected results include, but are not limited to: the highly unpredictable nature of the semiconductor industry; volatility of consumer demand for products incorporating our semiconductor packages; worldwide economic effects of terrorist attacks, military conflict in the Middle East and potential military conflict in Asia and Africa; potential effects of business disruption caused by SARS; competitive pricing and declines in average selling prices; 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; and environmental regulations. Further information on risk factors that could affect the outcome of the events set forth in these statements and that could 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, 2002 and the Report on Form 10-Q for the fiscal quarter ended March 31, 2003. Contact: Jeffrey Luth VP Corporate Communications 480-821-2408 ext. 5130 jluth@amkor.com 3
SELECTED OPERATING DATA FOR THE SECOND QUARTER OF 2003 Quarter Year-to-date - - Capital expenditures: $68 million $ 85 million - - Depreciation and amortization: $55 million $113 million ------------ ------------ - - Free cash flow * ($43 million) ($30 million) ============ ============ * Reconciliation of free cash flow to the most directly comparable GAAP measure: Net cash provided by continuing operating activities $25 million $54 million Less purchases of property, plant and equipment ($68 million) ($84 million) Free cash flow from continuing operations ($43 million) ($30 million) * We define free cash flow from continuing operations as net cash provided by continuing operating activities less purchases of property, plant and equipment. Free cash flow is not defined by generally accepted accounting principles, and our definition of free cash flow may not be comparable to similar companies. - - End market distribution (an approximation based on a sampling of programs with our largest customers) - Communications: 38% - Computing 23% - Consumer 28% - Other 11% - - Combined assembly & test capacity utilization (based on front-of-line capacity) was approximately 70%. - - Assembly average selling price (calculated on a per pin basis) declined approximately 3% from Q1 2003. (Excludes results of Amkor Iwate joint venture) - - Assembly unit shipments were 1.31 billion, up 16% from Q1 2003. - - Percentage of assembly revenue: - Advanced packages 76% - Traditional packages 24% - - Test revenue as a proportion of total revenue was approximately 9%. (tables to follow) 4
AMKOR TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) FOR THE THREE MONTHS ENDED JUNE 30, --------------------------- 2003 2002 ---------- ------------ (unaudited) (unaudited) Net revenues $ 377,947 $ 350,471 Cost of revenues 303,686 344,026 ---------- ------------ Gross profit 74,261 6,445 ---------- ------------ Operating expenses: Selling, general and administrative 44,261 46,981 Research and development 6,130 8,769 Loss (gain) on disposal of assets (791) 1,438 Amortization of acquired intangibles 2,038 1,743 Special charges (1) - 268,166 ---------- ------------ Total operating expenses 51,638 327,097 ---------- ------------ Operating income (loss) 22,623 (320,652) ---------- ------------ Other (income) expense: Interest expense, net 36,481 37,434 Foreign currency loss 737 704 Other (income) expense, net 176 (509) Debt retirement costs (2) 30,561 - ---------- ------------ Total other expense 67,955 37,629 ---------- ------------ Loss before income taxes, equity investment gains (losses), minority interest and discontinued operations (45,332) (358,281) Equity investment gains (losses) 73 (53,071) Minority interest expense (475) (908) ---------- ------------ Loss from continuing operations before income taxes (45,734) (412,260) ---------- ------------ Income tax provision (benefit) 5,013 (26,709) ---------- ------------ Loss from continuing operations (50,747) (385,551) Discontinued operations: Income from wafer fabrication services business, net of tax of $-0- and $1,269 - 2,023 ---------- ------------ Net loss $ (50,747) $ (383,528) ========== ============ Per Share Data: Basic and diluted loss per common share from continuing operations $ (0.31) $ (2.34) Basic and diluted income per common share from discontinued operations - 0.01 ---------- ------------ Basic and diluted net loss per common share $ (0.31) $ (2.33) ========== ============ Shares used in computing basic and diluted net (loss) income per common share 165,852 164,281 ========== ============ (1) Special charges include the following: Loss on FAS 142 impairment $ - $ 73,080 Loss on FAS 144 impairment - 190,266 Loss on facility shutdowns - 4,820 ---------- ------------ - 268,166 ========== ============ (2) Debt retirement costs include the following: Call premium related to redemption of $425 million senior notes due May 2006 $ 19,656 $ - Write-off of unamortized deferred debt acquisition costs 8,364 - Other debt retirement costs 2,541 - ---------- ------------ 30,561 - ========== ============ 5
AMKOR TECHNOLOGY, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) FOR THE SIX MONTHS ENDED JUNE 30, --------------------------- 2003 2002 --------- --------- (unaudited) (unaudited) Net revenues $ 721,078 $ 639,426 Cost of revenues 600,248 652,504 --------- --------- Gross profit (loss) 120,830 (13,078) --------- --------- Operating expenses: Selling, general and administrative 86,805 92,521 Research and development 12,618 16,913 Loss (gain) on disposal of assets (722) 3,112 Amortization of acquired intangibles 4,068 2,995 Special charges (1) - 268,166 --------- --------- Total operating expenses 102,769 383,707 --------- --------- Operating income (loss) 18,061 (396,785) --------- --------- Other (income) expense: Interest expense, net 72,343 73,619 Foreign currency (gain) loss (188) 2,702 Other (income) expense, net 1,405 (1,007) Debt retirement costs (2) 30,561 - --------- --------- Total other expense 104,121 75,314 --------- --------- Loss before income taxes, equity investment losses, minority interest and discontinued operations (86,060) (472,099) Equity investment losses (3,555) (151,741) Minority interest expense (326) (2,661) --------- --------- Loss from continuing operations before income taxes (89,941) (626,501) --------- --------- Income tax provision (benefit) 836 (50,813) --------- --------- Loss from continuing operations (90,777) (575,688) --------- --------- Discontinued operations: Income from wafer fabrication services business, net of tax of $419 and $2,822 3,047 4,352 Gain on sale of wafer fabrication services business, net of tax of $7,081 and $-0- 51,519 - --------- --------- Income from discontinued operations 54,566 4,352 --------- --------- Net loss $ (36,211) $(571,336) ========= ========= Per Share Data: Basic and diluted loss per common share from continuing operations $ (0.55) $ (3.52) Basic and diluted income per common share from discontinued operations 0.33 0.03 --------- --------- Basic and diluted net loss per common share $ (0.22) $ (3.49) ========= ========= Shares used in computing basic and diluted net (loss) income per common share 165,504 163,529 ========= ========= (1) Special charges include the following: Loss on FAS 142 impairment $ - $ 73,080 Loss on FAS 144 impairment - 190,266 Loss on facility shutdowns - 4,820 --------- --------- - 268,166 ========= ========= (2) Debt retirement costs include the following: Call premium related to redemption of $425 million senior notes due May 2006 $ 19,656 $ - Write-off of unamortized deferred debt acquisition costs 8,364 - Other debt retirement costs 2,541 - --------- --------- 30,561 - ========= ========= 6
AMKOR TECHNOLOGY, INC. CONSOLIDATED BALANCE SHEETS (in thousands) June 30, December 31, 2003 2002 ----------- ----------- (unaudited) Assets Current assets: Cash and cash equivalents $ 346,304 $ 311,249 Accounts receivable-- Trade, net of allowance for doubtful accounts of $6,931 and $7,122 240,421 234,056 Due from affiliates 136 298 Other 5,369 8,234 Inventories 77,397 72,121 Other current assets 61,586 48,661 ----------- ----------- Total current assets 731,213 674,619 ----------- ----------- Property, plant and equipment, net 942,087 966,338 ----------- ----------- Investments 72,238 83,235 ----------- ----------- Other assets: Due from affiliates 19,852 20,852 Goodwill 628,322 628,099 Acquired intangibles 41,099 45,033 Other 88,162 114,178 Assets of discontinued operations 307 25,630 ----------- ----------- Total other assets 777,742 833,792 ----------- ----------- Total assets $ 2,523,280 $ 2,557,984 =========== =========== Liabilities and Stockholders' Equity Current liabilities: Bank overdraft $ 6,740 $ 4,633 Short-term borrowings and current portion of long-term debt 49,118 71,023 Trade accounts payable 181,238 180,999 Due to affiliates 3,810 70,243 Accrued expenses 172,425 184,223 ----------- ----------- Total current liabilities 413,331 511,121 Long-term debt 1,814,811 1,737,690 Other noncurrent liabilities 71,389 67,661 ----------- ----------- Total liabilities 2,299,531 2,316,472 ----------- ----------- Minority Interest 10,471 10,145 Stockholders' equity: Common stock 167 166 Additional paid-in capital 1,174,334 1,170,227 Accumulated deficit (969,945) (933,734) Receivable from stockholder (2,887) (2,887) Accumulated other comprehensive losses 11,609 (2,405) ----------- ----------- Total stockholders' equity 213,278 231,367 ----------- ----------- Total liabilities and stockholders' equity $ 2,523,280 $ 2,557,984 =========== =========== 7
AMKOR TECHNOLOGY, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) FOR THE THREE MONTHS ENDED JUNE 30, --------------------------- 2003 2002 ---- ---- (UNAUDITED) (UNAUDITED) Cash flows from continuing operating activities: Loss from continuing operations $ (50,747) $(385,551) Depreciation and amortization 54,907 94,407 Equity investment (gains) losses (73) 53,071 Other adjustments to reconcile loss to net cash provided by operating activities 33,497 246,304 Changes in assets and liabilities excluding effects of acquisitions (12,940) 12,482 --------- --------- Net cash provided by operating activities 24,644 20,713 --------- --------- Cash flows from investing activities: Purchases of property, plant and equipment (68,010) (39,582) Other investing activities 6,734 914 --------- --------- Net cash used in investing activities (61,276) (38,668) --------- --------- Cash flows provided by (used in) financing activities 39,329 (2,061) --------- --------- Effect of exchange rate fluctuations on cash and cash equivalents related to continuing operations 688 676 --------- --------- Cash flows (used in) provided by discontinued operations (8,566) 5,997 --------- --------- Net decrease in cash and cash equivalents (5,181) (13,343) Cash and cash equivalents, beginning of period 351,485 175,281 --------- --------- Cash and cash equivalents, end of period $ 346,304 $ 161,938 ========= ========= Supplemental disclosures of cash flow information: Cash paid (received) during the period for: Interest $ 44,374 $ 40,227 Income taxes $ 495 $ (1,631) 8
AMKOR TECHNOLOGY, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) FOR THE SIX MONTHS ENDED JUNE 30, ------------------------ 2003 2002 ---- ---- (UNAUDITED) (UNAUDITED) Cash flows from continuing operating activities: Loss from continuing operations $ (90,777) $(575,688) Depreciation and amortization 112,700 188,060 Equity investment losses 3,555 151,741 Other adjustments to reconcile loss to net cash provided by operating activities 37,683 233,114 Changes in assets and liabilities excluding effects of acquisitions (9,053) 4,145 --------- --------- Net cash provided by operating activities 54,108 1,372 --------- --------- Cash flows from investing activities: Purchases of property, plant and equipment (84,581) (62,096) Other investing activities 20,012 1,111 --------- --------- Net cash used in investing activities (64,569) (60,985) --------- --------- Cash flows provided by financing activities 31,462 3,179 --------- --------- Effect of exchange rate fluctuations on cash and cash equivalents related to continuing operations 481 2,459 --------- --------- Cash flows provided by discontinued operations 13,573 15,856 --------- --------- Net increase (decrease) in cash and cash equivalents 35,055 (38,119) Cash and cash equivalents, beginning of period 311,249 200,057 --------- --------- Cash and cash equivalents, end of period $ 346,304 $ 161,938 ========= ========= Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 75,764 $ 71,516 Income taxes $ 4,523 $ 2,700 9