UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

AMKOR TECHNOLOGY, INC.

(Exact name of registrant as specified in its charter)

DELAWARE		000-29472		23-1722724
(State or Other Jurisdiction of		(Commission File Number)		(IRS Employer
Incorporation)				Identification No.)

1900 SOUTH PRICE ROAD
CHANDLER, AZ 85286
(Address of Principal Executive Offices, including Zip Code)

(480) 821-5000
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02. Results of Operations and Financial Condition.

Attached hereto as Exhibit 99.1 and incorporated by reference herein is financial information for Amkor Technology, Inc. for the three and twelve months ended December 31, 2008 and forward-looking statements relating to the first quarter of 2009 as presented in a press release dated February 12, 2009. The information in this Form 8-K and the exhibit attached hereto is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

Exhibit 99.1 discloses free cash flow for the three and twelve months ended December 31, 2008. Free cash flow (which we define as net cash provided by operating activities less purchases of property, plant and equipment) is 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. We believe free cash flow to be relevant and useful information to our investors in assessing our financial operating results as this measure is used by our management in 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 for, or superior to, cash flows or other measures of financial performance prepared in accordance with generally accepted accounting principles, and may not be comparable to similarly titled measures reported by other companies. The non-GAAP measures included in our press release have been reconciled to the nearest GAAP measure as required under SEC rules regarding the use of non-GAAP financial measures.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

99.1		Text of Press Release dated February 12, 2009, which is furnished (not filed) herewith.

     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.

Date: February 12, 2009

EXHIBIT INDEX:

Exhibit		Description
99.1		Text of Press Release dated February 12, 2009

Amkor Reports Fourth Quarter and Full Year 2008 Results

Chandler, AZ (February 12, 2009) — Amkor Technology, Inc., (NASDAQ: AMKR) today reported financial results for the fourth quarter and full year ended December 31, 2008.

Fourth quarter net sales of $549 million were down 24% sequentially from the third quarter and declined 27% from the fourth quarter of 2007. The fourth quarter net loss, which included a goodwill impairment charge, was $623 million, or $3.40 loss per share, compared to $0.15 income per diluted share in the prior quarter and $0.46 income per diluted share in the fourth quarter of 2007.

For the full year 2008, net sales were $2.7 billion and the company had a net loss of $457 million or $2.50 loss per share. For the full year 2007, net sales were $2.7 billion and net income was $220 million, or $1.11 per diluted share.

The net loss for the fourth quarter and full year 2008 included a $671 million goodwill impairment charge, or $3.67 per share, to write off the entire carrying value of the company’s goodwill. This non-cash charge does not affect the company’s liquidity or cash flows from operating activities. Fourth quarter results also included a $36 million gain on extinguishment of debt and a $17 million net foreign currency gain primarily attributable to the depreciation of the Korean won and the resulting revaluation of the company’s Korean employee benefit plan liability.

Commenting on fourth quarter performance, James Kim, chairman and chief executive officer, said, “Difficult business conditions continue to challenge our industry, our customers and our company. Since early 2008 we have been proactively managing our cost structure while continuing to deliver high quality services, and our fourth quarter operating results reflect labor and other cost savings of approximately $18 million from previously implemented cost reduction programs.”

“In view of the continued downturn in global consumer demand, we implemented further cost reduction measures in the first quarter of 2009 that include lowering executive and other employee compensation, additional reductions in employee and contractor headcount, and shortened work weeks. Our cost reduction initiatives and lower volume are expected to reduce our costs by an additional $22 million in the first quarter,” Mr. Kim said.

“Fourth quarter gross margin of 18% was unchanged from the prior quarter,” said Joanne Solomon, chief financial officer. “Gross margin benefited by an estimated $20 million from the strengthening of the U.S. dollar against foreign currencies and a reduction in labor and other costs of $16 million. These benefits were partially offset by the accrual of an additional $12 million for unpaid royalties relating to the final award in the Tessera arbitration issued by the ICC in January 2009.”

Unit shipments in the fourth quarter declined 30% from the prior quarter while sales declined 24% in the same period, reflecting a shift in our mix from traditional leadframe packages to more advanced packages.

Interest expense for the period was $28 million or flat sequentially, after excluding $4 million of interest accrued in the prior quarter for the Tessera arbitration, and was down $2 million from the fourth quarter of 2007. In the fourth quarter of 2008, the company recorded a $36 million gain from the repurchase of $118 million aggregate principal amount of debt due in 2011. To date in 2009, the company repurchased an additional $33 million principal amount of debt due in 2011 and expects to record a related $9 million gain in the first quarter. The aggregate repurchase of $151 million of debt is expected to reduce net interest expense by approximately $12 million through maturity. The company may from time to time continue to purchase its outstanding notes for cash.

“Capital additions were $32 million for the fourth quarter and $342 million for the full year 2008. Capital additions in the fourth quarter were lower than planned due in part to the deferment of purchases into the first quarter of 2009. After taking into account the deferrals from the fourth quarter, we expect our capital additions for the first quarter of 2009 to be approximately $40 million. Because of the significantly reduced level of customer demand we are estimating total capital additions for the full year 2009 of approximately $100 million,” said Solomon.

“While the near term outlook for the semiconductor industry has continued to weaken, our financial position and liquidity remain sound,” added Solomon. “We generated $80 million in free cash flow in the fourth quarter and ended the year with a cash balance of $424 million and total debt of just under $1.5 billion. However, we do not expect to be free cash flow positive in the first quarter of 2009 primarily as a result of $64 million in payments to Tessera and certain employee benefit and separation payments. Other than annual amortizing debt of approximately $55 million, we have no significant debt due until 2011 when the remaining $289 million of our 2.5% convertible and 7.125% senior notes become due.”

Selected operating data for the fourth quarter and full year 2008 is included in a section before the financial tables.

Business Outlook:

Increasing volatility in customer forecasts and limited visibility due to uncertainties in the U.S. and global economies have increased the risk that our actual results may differ from our expectations. Based upon the latest available information, we have the following expectations for the first quarter of 2009:

	•		Sales — down 30% to 38% from the fourth quarter of 2008
	•		Gross Margin — between 5% and negative 2%
	•		Net Loss — in the range of $0.34 to $0.49 per share.

The outlook for gross margin and net loss includes the impact of anticipated charges in the first quarter of 2009 related to employee workforce reductions. The charges to cost of sales for these reductions are expected to be approximately $6 million. Our guidance for first quarter net loss also includes an estimated $9 million gain from debt repurchases to date and the related interest savings.

Conference Call Information

Amkor will conduct a conference call on February 12, 2009 at 5:00 p.m. eastern time. This call is being webcast by Thomson Financial and can be accessed at Amkor’s web site at www.amkor.com. You may also access the call by dialing 303-228-2960. A replay of the call will be made available at Amkor’s web site or by dialing 303-590-3000 (access passcode #11124867).

The webcast is also being distributed over Thomson Financial’s Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through Thomson Financial individual investor center at www.companyboardroom.com or by visiting any of the investor sites in Thomson Financial’s Individual Investor Network. Institutional investors can access the call via Thomson Financial’s password-protected event management site, StreetEvents (www.streetevents.com).

Amkor is a leading provider of semiconductor assembly and test services. The company offers semiconductor companies and electronics OEMs a complete set of microelectronics design and manufacturing services. More information on Amkor is available from the company’s SEC filings and on Amkor’s website: www.amkor.com.

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 following: expectations regarding further weakening in demand; expectations regarding reduced costs in the first quarter of 2009; expected gains and reduced interest expense associated with debt repurchases; our anticipated level of debt repayment; the expected dollar amount of our capital additions; our statements regarding the outlook for the semiconductor industry and our financial position and liquidity; and the statements made under Business Outlook including those regarding sales, gross margin and net loss per share. 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; deteriorating market conditions; the effect of the financial crisis on credit markets, financial institutions, customers, suppliers and consumers; inability to achieve high capacity utilization rates; volatility of consumer demand for products incorporating our semiconductor packages; weakness in the forecasts of Amkor’s customers; customer modification of and follow through with respect to forecasts provided to Amkor; 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 in the U.S. and other economies worldwide; the highly unpredictable nature and costs of litigation and other legal activities and the risk of adverse results of such matters; the outcome of the pending SEC investigation; worldwide economic effects of terrorist attacks, natural disasters and military conflict; our ability to reduce costs; competitive pricing and declines in average selling prices; timing and volume of orders relative to production capacity; fluctuations in manufacturing yields; competition; dependence on international operations and sales; dependence on raw material and equipment suppliers and changes in raw material 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, 2007 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.

Company Contact:
Joanne Solomon
Corporate Vice President & CFO
480-821-5000 ext. 5416
jsolo@amkor.com

		Q4 2008				Q3 2008				Q4 2007				2008				2007
Sales Data:
Packaging services:
Wirebond — leadframe			27	%			29	%			31	%			28	%			33	%
Wirebond — laminate			41	%			40	%			40	%			40	%			39	%
Flip chip and wafer level processing			20	%			20	%			18	%			20	%			17	%
Packaging services			88	%			89	%			89	%			88	%			89	%
Test services			12	%			11	%			11	%			12	%			11	%
Total sales			100	%			100	%			100	%			100	%			100	%
Packaged units (in millions):
Wirebond — leadframe			1,308				1,957				1,785				6,593				6,805
Wirebond — laminate			310				390				395				1,376				1,350
Flip chip and wafer level processing			131				157				154				597				415
Total packaged units			1,749				2,504				2,334				8,566				8,570
Net sales from top ten customers			52	%			49	%			49	%			50	%			47	%
Capacity utilization			61	%			86	%			86	%
End Market Distribution Data (an approximation based on a sampling of our largest customers):
Communications			43	%			42	%			40	%
Consumer			33	%			33	%			34	%
Computing			16	%			15	%			17	%
Other			8	%			10	%			9	%
Total			100	%			100	%			100	%

		Q4 2008				Q3 2008				Q4 2007				2008				2007
		(in millions, except per share data)
Earnings per Share Data:
Net (loss) income — basic		$	(623	)		$	29			$	94			$	(457	)		$	220
Adjustment for dilutive securities on net income:
Interest on 2.5% convertible notes due 2011, net of tax			—				1				1				—				5
Interest on 6.25% convertible notes due 2013, net of tax			—				2				2				—				6
Net (loss) income — diluted		$	(623	)		$	32			$	97			$	(457	)		$	231
Weighted average shares outstanding — basic			183				183				182				183				181
Effect of dilutive securities:
Stock options			—				1				1				—				2
2.5% convertible notes due 2011			—				13				13				—				13
6.25% convertible notes due 2013			—				13				13				—				13
Weighted average shares outstanding — diluted			183				210				209				183				209
Net (loss) income per common share:
Basic		$	(3.40	)		$	0.16			$	0.52			$	(2.50	)		$	1.22
Diluted		$	(3.40	)		$	0.15			$	0.46			$	(2.50	)		$	1.11

AMKOR TECHNOLOGY, INC.
Selected Operating Data (continued)

		Q4 2008				Q3 2008				Q4 2007				2008				2007
		(in millions)
Capital Investment Data:
Property, plant and equipment additions		$	32			$	92			$	101			$	342			$	294
Net change in related accounts payable and deposits			37				34				(25	)			44				(58	)
Purchases of property, plant and equipment		$	69			$	126			$	76			$	386			$	236
Depreciation and amortization		$	80			$	79			$	72			$	310			$	283
Free Cash Flow Data:
Net cash provided by operating activities		$	149			$	173			$	189			$	606			$	603
Less purchases of property, plant and equipment			(69	)			(126	)			(76	)			(386	)			(236	)
Free cash flow*		$	80			$	47			$	113			$	220			$	367

AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(Unaudited)

		For the Three Months Ended								For the Twelve Months Ended
		December 31,								December 31,
		2008				2007				2008				2007
		(In thousands, except per share data)
Net sales		$	548,712			$	746,888			$	2,658,602			$	2,739,445
Cost of sales			451,088				543,976				2,096,864				2,057,572
Gross profit			97,624				202,912				561,738				681,873
Operating expenses:
Selling, general and administrative			58,399				62,142				251,756				254,365
Research and development			13,192				10,720				56,227				41,650
Goodwill impairment			671,117				—				671,117				—
Gain on sale of real estate and specialty test operations			—				—				(9,856	)			(4,833	)
Total operating expenses			742,708				72,862				969,244				291,182
Operating (loss) income			(645,084	)			130,050				(407,506	)			390,691
Other (income) expense:
Interest expense, net			26,114				28,489				109,980				124,099
Interest expense, related party			1,563				1,562				6,250				6,250
Foreign currency (gain) loss			(16,957	)			1,015				(61,057	)			8,961
(Gain) loss on debt retirement, net			(35,987	)			1				(35,987	)			15,876
Other (income) expense, net			(49	)			1,632				(1,004	)			668
Total other (income) expense			(25,316	)			32,699				18,182				155,854
(Loss) income before income taxes and minority interests			(619,768	)			97,351				(425,688	)			234,837
Income tax expense			5,237				3,024				31,788				12,597
(Loss) income before minority interests			(625,005	)			94,327				(457,476	)			222,240
Minority interests, net of tax			1,927				(663	)			781				(2,376	)
Net (loss) income		$	(623,078	)		$	93,664			$	(456,695	)		$	219,864
Net (loss) income per common share:
Basic		$	(3.40	)		$	0.52			$	(2.50	)		$	1.22
Diluted		$	(3.40	)		$	0.46			$	(2.50	)		$	1.11
Shares used in computing net (loss) income per common share:
Basic			183,035				181,775				182,734				180,597
Diluted			183,035				209,083				182,734				208,767

AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)

		December 31,				December 31,
		2008				2007
		(In thousands)
ASSETS
Current assets:
Cash and cash equivalents		$	424,316			$	410,070
Restricted cash			4,880				2,609
Accounts receivable:
Trade, net of allowances			259,630				393,493
Other			14,183				4,938
Inventories			134,045				149,014
Other current assets			23,862				27,290
Total current assets			860,916				987,414
Property, plant and equipment, net			1,473,763				1,455,111
Goodwill			—				673,385
Intangibles, net			11,546				20,321
Investments			—				3,019
Restricted cash			1,696				1,725
Other assets			36,072				51,631
Total assets		$	2,383,993			$	3,192,606
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt		$	54,609			$	152,489
Trade accounts payable			241,684				359,313
Accrued expenses			258,449				165,271
Total current liabilities			554,742				677,073
Long-term debt			1,338,751				1,511,570
Long-term debt, related party			100,000				100,000
Pension and severance obligations			116,789				208,387
Other non-current liabilities			30,548				33,935
Total liabilities			2,140,830				2,530,965
Minority interests			6,024				7,022
Stockholders’ equity:
Preferred stock			—				—
Common stock, $0.001 par value, 500,000 shares authorized, issued and outstanding of 183,035 in 2008 and 181,799 in 2007			183				182
Additional paid-in capital			1,496,976				1,482,186
Accumulated deficit			(1,278,221	)			(821,526	)
Accumulated other comprehensive income (loss)			18,201				(6,223	)
Total stockholders’ equity			237,139				654,619
Total liabilities and stockholders’ equity		$	2,383,993			$	3,192,606

AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

		For the Twelve Months Ended
		December 31,
		2008				2007
		(In thousands)
Cash flows from operating activities:
Net (loss) income		$	(456,695	)		$	219,864
Goodwill impairment			671,117				—
Depreciation and amortization			309,920				283,267
(Gain) loss on debt retirement, net			(35,987	)			6,876
Other operating activities and non-cash items			21,730				9,055
Changes in assets and liabilities			95,733				84,368
Net cash provided by operating activities			605,818				603,430
Cash flows from investing activities:
Purchases of property, plant and equipment			(386,239	)			(236,240	)
Proceeds from the sale of property, plant and equipment			15,480				5,192
Proceeds from sale of investment			2,460				—
Proceeds from specialty test operations			—				1,717
Other investing activities			(3,081	)			(1,968	)
Net cash used in investing activities			(371,380	)			(231,299	)
Cash flows from financing activities:
Borrowings under revolving credit facilities			619				86,150
Payments under revolving credit facilities			(633	)			(109,296	)
Proceeds from issuance of long-term debt			—				300,000
Payments for debt issuance costs			—				(3,441	)
Payments of long-term debt, including redemption premium payment			(233,814	)			(518,913	)
Proceeds from issuance of stock through stock compensation plans			10,203				37,050
Net cash used in financing activities			(223,625	)			(208,450	)
Effect of exchange rate fluctuations on cash and cash equivalents			3,433				1,695
Net increase in cash and cash equivalents			14,246				165,376
Cash and cash equivalents, beginning of period			410,070				244,694
Cash and cash equivalents, end of period		$	424,316			$	410,070