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 Incorporation)		(Commission File Number)		(IRS Employer 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 six months ended June 30, 2010 and forward-looking statements relating to the third quarter of 2010 as presented in a press release dated August 4, 2010. 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 months ended June 30, 2010. 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 August 4, 2010, which is furnished (not filed) herewith.

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.

Date: August 4, 2010

EXHIBIT INDEX:

Exhibit				Description
	99.1			Text of Press Release dated August 4, 2010

Exhibit 99.1

		News Release

Amkor Technology Reports Second Quarter 2010 Financial Results

	•		Net sales $749 million
	•		Gross margin 24%
	•		Net income $59 million
	•		Earnings per diluted share $0.23 (includes $0.06 loss related to refinancings, partially offset by $0.02 gain from release of tax valuation allowance)

CHANDLER, Ariz. — August 4, 2010 — Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of semiconductor assembly and test services, today announced financial results for the second quarter ended June 30, 2010, with net sales of $749 million, net income of $59 million, and earnings per diluted share of $0.23. Earnings per diluted share includes a $0.06 loss related to refinancings, partially offset by a $0.02 gain from the release of a tax valuation allowance.

     “Our record-level net sales and solid gross margin in the second quarter exceeded our expectations,” said Ken Joyce, Amkor’s president and chief executive officer. “Demand was broad-based across a wide range of applications, with notable growth in ball grid array and chip scale package solutions in support of our consumer and communications end markets. These results demonstrate the strength of our business model in servicing growing global demand for electronic devices that feature ever greater communication and computing capabilities and provide high speed mobile access to data-rich content.”

Select financial information for the second quarter 2010 is as follows:

	•		Net Sales: $749 million, up 16% from $646 million in the prior quarter, and up 48% from $507 million in the second quarter of 2009
	•		Gross Margin: 24%, compared to 21% in the prior quarter and 20% in the second quarter of 2009
	•		Net Income: $59 million, up from $44 million in the prior quarter, and up from $9 million in the second quarter of 2009
	•		Earnings Per Diluted Share: $0.23, up from $0.18 in the prior quarter, and up from $0.05 in the second quarter of 2009

“In order to lower our borrowing costs and mitigate future refinancing and liquidity risks, we extended the maturities of our nearest term notes and refinanced, at a lower interest rate, some of our highest cost debt,” said Joanne Solomon, Amkor’s executive vice president and chief financial officer. “We recognized a loss of approximately $18 million, with no net tax effect, or $0.06 per diluted share, due primarily to premiums paid to retire existing debt. We also recognized a gain of $5 million, or $0.02 per diluted share, from the release of a valuation allowance on certain deferred tax assets due to improved profitability in certain of our foreign operations.”

Unit shipments of 2.7 billion during the second quarter 2010 were up 11% from the first quarter, principally driven by strong demand for leadframe and chip scale packaging services. This unit growth and resulting high utilization drove the higher than expected gross margin.

“Capital additions were $158 million during the second quarter, in support of continued growth in our chip scale package, ball grid array and other advanced technologies,” continued Solomon. “ Free cash flow for the second quarter was $11 million as a result of our higher level of investments for our customers.”

Cash and cash equivalents were $438 million, and total debt was $1.4 billion, at June 30, 2010.

Selected operating data for the second quarter 2010 is included in a section before the financial tables.

Business Outlook

“We continue to see solid demand across the business into 2011,” said Joyce. “To support our customers’ needs, we are expanding our capacity to meet that demand, including a nearly 200,000 square foot expansion of our K4 manufacturing site in Gwangju, South Korea. We are also investing to ramp advanced technologies, such as fine pitch copper pillar flip chip and through mold via. As such, we have increased our estimate of full year capital additions to around $500 million, or a capital intensity of between 16% and 17% of net sales, of which approximately $270 million is expected to be spent in the second half of 2010.”

Based upon the currently available information, we have the following expectations for the third quarter of 2010:

	•		Net sales of $787 million to $817 million, up 5% to 9% from the prior quarter
	•		Gross margin between 25% and 26%
	•		Net income of $96 million to $113 million, or $0.36 to $0.42 per diluted share
	•		Capital additions of approximately $195 million

Conference Call Information

Amkor will conduct a conference call on August 4, 2010, 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 877-941-2928. A replay of the call will be made available at Amkor’s web site or by dialing 800-406-7325 (access pass code #4327244). 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 on 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, the following: statements regarding expected demand, the expected dollar amount and timing of our capital additions, our capacity expansion to meet customer demand, the investment in and ramp of advanced technologies, and the expected level of capital intensity, and the statements made regarding our current business outlook for the third quarter of 2010 including our expected net sales, gross margin, net income, 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;
	•		inability to achieve high capacity utilization rates;
	•		volatility of consumer demand for products incorporating our semiconductor packages;
	•		dependence on key customers;
	•		weakness in the forecasts of our customers;
	•		customer modification of and follow through with respect to forecasts provided to us;
	•		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;
	•		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;
	•		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 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, 2009 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.

Contact:

Amkor Technology, Inc., Chandler
Joanne Solomon
Executive Vice President & Chief Financial Officer
480-821-5000, ext. 5416
joanne.solomon@amkor.com

AMKOR TECHNOLOGY, INC.
Selected Operating Data

		Q2 2010				Q1 2010				Q2 2009
Sales Data:
Packaging services (in millions):
Chip scale package		$	234			$	205			$	164
Ball grid array			194				155				121
Leadframe			202				179				127
Other packaging			48				42				36
Packaging services			678				581				448
Test services			71				65				59
Total sales		$	749			$	646			$	507
Packaging services:
Chip scale package			31	%			31	%			32	%
Ball grid array			26	%			24	%			24	%
Leadframe			27	%			28	%			25	%
Other packaging			6	%			7	%			7	%
Packaging services			90	%			90	%			88	%
Test services			10	%			10	%			12	%
Total sales			100	%			100	%			100	%
Packaged units (in millions):
Chip scale package			580				455				412
Ball grid array			61				50				46
Leadframe			2,093				1,954				1,229
Other packaging			7				8				6
Total packaged units			2,741				2,467				1,693
Net sales from top ten customers			55	%			54	%			54	%
Capacity utilization			87	%			84	%			66	%

End Market Distribution Data (an approximation including representative devices and applications based on a sampling of our largest customers. Prior periods were revised for an expanded sampling methodology and refinement of our classifications):

Communications (cell phones, Ethernet, WiMAX, wireless LAN, Bluetooth)			34	%			37	%			39	%
Consumer (gaming, set top boxes, TV, portable media)			30	%			26	%			31	%
Computing (PCs, servers, displays, hard disk drive, printers, other peripherals)			14	%			14	%			12	%
Networking (infrastructure, routers, network servers)			13	%			14	%			12	%
Other (auto, industrial)			9	%			9	%			6	%
Total			100	%			100	%			100	%

AMKOR TECHNOLOGY, INC.
Selected Operating Data (continued)

		Q2 2010				Q1 2010				Q2 2009
Gross Margin Data:
Net sales			100	%			100	%			100	%
Cost of sales:
Materials			42	%			42	%			41	%
Labor			13	%			13	%			13	%
Other manufacturing			21	%			24	%			26	%
Gross margin			24	%			21	%			20	%
Packaging services gross margin			24	%			21	%			21	%
Test services gross margin			27	%			23	%			23	%
Earnings per Share Data:		(in millions, except per share data)
Net income (loss) attributable to Amkor — basic		$	59			$	44			$	9
Adjustment for dilutive securities on net income (loss):
Interest on 2.5% convertible notes due 2011, net of tax			—				—				—
Interest on 6.25% convertible notes due 2013, net of tax			2				2				—
Interest on 6.0% convertible notes due 2014, net of tax			4				4				4
Net income (loss) attributable to Amkor — diluted		$	65			$	50			$	13
Weighted average shares outstanding — basic			183				183				183
Effect of dilutive securities:
Stock options and unvested restricted shares			1				1				—
2.5% convertible notes due 2011			3				3				—
6.25% convertible notes due 2013			13				13				—
6.0% convertible notes due 2014			83				83				83
Weighted average shares outstanding — diluted			283				283				266
Net income (loss) attributable to Amkor per common share:
Basic		$	0.32			$	0.24			$	0.05
Diluted		$	0.23			$	0.18			$	0.05
Capital Investment Data:
Property, plant and equipment additions		$	158			$	73			$	27
Net change in related accounts payable and deposits			(82	)			(6	)			—
Purchases of property, plant and equipment		$	76			$	67			$	27
Depreciation and amortization		$	78			$	76			$	77
Free Cash Flow Data:
Net cash provided by operating activities		$	87			$	104			$	96
Less purchases of property, plant and equipment			(76	)			(67	)			(27	)
Free cash flow*		$	11			$	37			$	69

AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)

		For the Three Months								For the Six Months
		Ended June 30,								Ended June 30,
		2010				2009				2010				2009
						(In thousands, except per share data)
Net sales		$	749,165			$	506,516			$	1,394,903			$	895,292
Cost of sales			569,966				404,129				1,078,748				744,866
Gross profit			179,199				102,387				316,155				150,426
Operating expenses:
Selling, general and administrative			66,356				52,445				122,652				102,513
Research and development			12,095				10,035				23,768				20,182
Total operating expenses			78,451				62,480				146,420				122,695
Operating income			100,748				39,907				169,735				27,731
Other (income) expense:
Interest expense			24,410				27,438				46,779				54,015
Interest expense, related party			3,813				3,812				7,625				5,374
Interest income			(847	)			(612	)			(1,580	)			(1,044	)
Foreign currency (gain) loss			(421	)			5,970				554				(6,098	)
Loss (gain) on debt retirement, net			17,807				(7,888	)			17,807				(16,884	)
Equity in earnings of unconsolidated affiliate			(1,608	)			—				(2,709	)			—
Other (income) expense, net			(149	)			(10	)			(390	)			49
Total other expense, net			43,005				28,710				68,086				35,412
Income (loss) before income taxes			57,743				11,197				101,649				(7,681	)
Income tax (benefit) expense			(1,200	)			1,833				(1,367	)			4,914
Net income (loss)			58,943				9,364				103,016				(12,595	)
Net loss (income) attributable to noncontrolling interests			107				(141	)			331				(274	)
Net income (loss) attributable to Amkor		$	59,050			$	9,223			$	103,347			$	(12,869	)
Net income (loss) attributable to Amkor per common share:
Basic		$	0.32			$	0.05			$	0.56			$	(0.07	)
Diluted		$	0.23			$	0.05			$	0.41			$	(0.07	)
Shares used in computing per common share amounts:
Basic			183,274				183,036				183,250				183,036
Diluted			282,644				265,846				282,551				183,036

AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)

		June 30,				December 31,
		2010				2009
		(In thousands)
ASSETS
Current assets:
Cash and cash equivalents		$	437,803			$	395,406
Restricted cash			2,679				2,679
Accounts receivable:
Trade, net of allowances			411,273				328,252
Other			15,310				18,666
Inventories			182,288				155,185
Other current assets			47,572				32,737
Total current assets			1,096,925				932,925
Property, plant and equipment, net			1,442,508				1,364,630
Intangibles, net			17,084				9,975
Investments			22,522				19,108
Restricted cash			12,923				6,795
Other assets			101,096				99,476
Total assets		$	2,693,058			$	2,432,909
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt		$	144,500			$	88,944
Trade accounts payable			489,850				361,263
Accrued expenses			169,766				155,630
Total current liabilities			804,116				605,837
Long-term debt			1,049,335				1,095,241
Long-term debt, related party			250,000				250,000
Pension and severance obligations			86,445				83,067
Other non-current liabilities			6,015				9,063
Total liabilities			2,195,911				2,043,208
Equity:
Amkor stockholders’ equity:
Preferred stock			—				—
Common stock, $0.001 par value, 500,000 shares authorized, issued and outstanding of 183,367 in 2010 and 183,171 in 2009			183				183
Additional paid-in capital			1,502,894				1,500,246
Accumulated deficit			(1,018,894	)			(1,122,241	)
Accumulated other comprehensive income			7,037				5,021
Treasury stock, at cost, 37 shares in 2010			(234	)			—
Total Amkor stockholders’ equity			490,986				383,209
Noncontrolling interests in subsidiaries			6,161				6,492
Total equity			497,147				389,701
Total liabilities and equity		$	2,693,058			$	2,432,909

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

		For the Six Months Ended
		June 30,
		2010				2009
		(In thousands)
Cash flows from operating activities:
Net income (loss)		$	103,016			$	(12,595	)
Depreciation and amortization			154,406				156,507
Loss (gain) on debt retirement, net			10,562				(16,884	)
Other operating activities and non-cash items			(4,697	)			5,407
Changes in assets and liabilities			(72,779	)			(99,077	)
Net cash provided by operating activities			190,508				33,358
Cash flows from investing activities:
Purchases of property, plant and equipment			(142,928	)			(69,955	)
Proceeds from the sale of property, plant and equipment			1,062				687
Financing lease payment from unconsolidated affiliate			7,767				—
Other investing activities			(9,782	)			(3,086	)
Net cash used in investing activities			(143,881	)			(72,354	)
Cash flows from financing activities:
Borrowings under revolving credit facilities			3,261				—
Payments under revolving credit facilities			(34,253	)			—
Proceeds from issuance of short-term working capital facility			15,000				15,000
Payments of short-term working capital facility			(15,000	)			—
Proceeds from issuance of long-term debt			611,007				100,000
Proceeds from issuance of long-term debt, related party			—				150,000
Payments of long-term debt, net of redemption premiums and discounts			(577,259	)			(186,156	)
Payments for debt issuance costs			(7,579	)			(8,539	)
Proceeds from issuance of stock through share-based compensation plans			587				15
Net cash (used in) provided by financing activities			(4,236	)			70,320
Effect of exchange rate fluctuations on cash and cash equivalents			6				(346	)
Net increase in cash and cash equivalents			42,397				30,978
Cash and cash equivalents, beginning of period			395,406				424,316
Cash and cash equivalents, end of period		$	437,803			$	455,294