e8vk
 
 
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
Date of Report (Date of earliest event reported)
April 28, 2011
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 months ended March 31, 2011 and forward-looking statements relating to the second quarter of 2011 as presented in a press release dated April 28, 2011. 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 March 31, 2011. Free cash flow 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 define free cash flow as net cash provided by operating activities less purchases of property, plant and equipment. We believe free cash flow to be relevant and useful information to our investors because it provides them with additional information in assessing our liquidity, capital resources and financial operating results. Our management uses free cash flow in evaluating our liquidity, our ability to service debt and our ability to fund capital additions. However, this measure should be considered in addition to, and not as a substitute for, or superior to other measures of financial performance prepared in accordance with GAAP, and may not be comparable to similarly titled measures reported by other companies. The non-GAAP measure included in our press release has 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 April 28, 2011, 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.
         
  AMKOR TECHNOLOGY, INC.
 
 
  By:   /s/ Joanne Solomon    
    Joanne Solomon   
    Executive Vice President and
Chief Financial Officer 
 
 
Date: April 28, 2011

 


 

EXHIBIT INDEX:
     
Exhibit   Description
99.1
  Text of Press Release dated April 28, 2011

 

exv99w1
Exhibit 99.1
     
(LOGO)   News Release
Amkor Technology Reports First Quarter 2011 Financial Results
First Quarter 2011
    Net sales $665 million
    Gross margin 19%
    Net income $25 million
    Earnings per diluted share $0.10
CHANDLER, Ariz. — April 28, 2011 — Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of semiconductor assembly and test services, today announced financial results for the first quarter ended March 31, 2011, with net sales of $665 million, net income of $25 million, and earnings per diluted share of $0.10.
“First quarter results were consistent with our expectations even though sales were reduced by approximately $6 million due to the impact of the Japan earthquake on our Kitakami operations,” said Ken Joyce, Amkor’s president and chief executive officer. “Gross margin of 19% was at the top of our expected range. We saw typical seasonal softness during the quarter, and our strong position in gaming amplified these seasonal patterns. We also saw weakness in networking and certain consumer electronics due to inventory adjustments by some of our customers.”
Selected financial information for the first quarter 2011 is as follows:
    Net Sales: $665 million, down 11% from $751 million in the prior quarter, and up 3% from $646 million in the first quarter 2010
    Gross Margin: 19%, compared to 21% in the prior quarter and 21% in the first quarter 2010
    Net Income: $25 million, down from $51 million in the prior quarter, and down from $44 million in the first quarter 2010
    Earnings Per Diluted Share: $0.10, down from $0.20 in the prior quarter, and down from $0.18 in the first quarter 2010

 


 

“We delivered a solid gross margin of 19% despite the challenging demand environment, continued pressure from unfavorable foreign currency exchange rate movements, higher gold prices and the events in Japan,” said Joanne Solomon, Amkor’s executive vice president and chief financial officer. “We kept a tight focus on labor and other manufacturing costs during this seasonally slower time of the year.”
“Capital additions were $105 million during the first quarter, primarily in support of the communications area. We also delivered positive free cash flow results,” continued Solomon.
Cash and cash equivalents were $393 million, and net debt was $851 million, at March 31, 2011. In January 2011, all $100 million of our 6.25% Convertible Notes due 2013 were converted into 13.4 million shares of Amkor Common Stock.
Selected operating data for the first quarter 2011 are included in a section before the financial statements.
Business Outlook
“We remain optimistic about solid growth in the second half 2011, although there is less visibility due to the situation in Japan,” said Joyce. “Because of the current uncertainties in the electronics industry supply chain, we have reduced our sales expectations for the second quarter 2011 by $50 million,” added Joyce. “Our guidance for the second quarter is also negatively impacted by unexpected weakness in demand for wireless baseband chips by a single OEM.”
Based upon the currently available information, we have the following expectations for the second quarter 2011:
    Net sales of $650 million to $700 million, down 2% to up 5% from the prior quarter
    Gross margin between 16% and 20%
    Net income of $8 million to $37 million, or $0.04 to $0.15 per diluted share
    Capital additions of around $125 million for the second quarter, and capital additions of around $450 million for the full year

 


 

Conference Call Information
Amkor will conduct a conference call on April 28, 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 877-941-1465. A replay of the call will be made available at Amkor’s web site or by dialing 800-406-7325 (access pass code #4435872). 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, statements made regarding: visibility and uncertainties in the electronics industry supply chain and reductions in our sales expectations due to the situation in Japan, weakness in demand for wireless baseband chips, the amount and timing of our capital additions in 2011, growth in the second half of the year, and our current business outlook for the second 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:
    Uncertainties in demand, disruptions in production and the electronic industry supply chain and potential increased costs arising out of the Japan earthquake and tsunami;
    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;

 


 

    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;
    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, 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.
Contact:
Amkor Technology, Inc., Chandler
Joanne Solomon
Executive Vice President & Chief Financial Officer
480-786-7878
joanne.solomon@amkor.com

 


 

AMKOR TECHNOLOGY, INC.
Selected Operating Data
                         
Sales Data:   Q1 2011     Q4 2010     Q1 2010  
Packaging services (in millions):
                       
Chip scale package
  $ 231     $ 272     $ 205  
Leadframe
    170       176       179  
Ball grid array
    148       186       155  
Other packaging
    49       46       42  
 
                 
Packaging services
    598       680       581  
Test services
    67       71       65  
 
                 
Total sales
  $ 665     $ 751     $ 646  
 
                 
 
                       
Packaging services:
                       
Chip scale package
    35 %     36 %     31 %
Leadframe
    26 %     24 %     28 %
Ball grid array
    22 %     25 %     24 %
Other packaging
    7 %     6 %     7 %
 
                 
Packaging services
    90 %     91 %     90 %
Test services
    10 %     9 %     10 %
 
                 
Total sales
    100 %     100 %     100 %
 
                 
 
                       
Packaged units (in millions):
                       
Chip scale package
    475       590       455  
Leadframe
    1,573       1,579       1,954  
Ball grid array
    62       61       50  
Other packaging
    3       4       8  
 
                 
Total packaged units
    2,113       2,234       2,467  
 
                 
 
                       
Net sales from top ten customers
    57 %     57 %     54 %
 
                       
Capacity Utilization (Packaging and test utilization separately presented beginning in Q4 2010. Prior periods were recalculated based on current methodology for comparability):
                       
Packaging
    71 %     78 %     84 %
Test
    71 %     74 %     68 %
 
                       
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)
    43 %     40 %     37 %
Consumer (gaming, set top boxes, TV, portable media)
    23 %     26 %     26 %
Computing (PCs, servers, displays, hard disk drive, printers, other peripherals)
    12 %     12 %     14 %
Networking (infrastructure, routers, network servers)
    12 %     13 %     14 %
Other (auto, industrial)
    10 %     9 %     9 %
 
                 
Total
    100 %     100 %     100 %
 
                 
 
                       
Gross Margin Data:
                       
Net sales
    100 %     100 %     100 %
Cost of sales:
                       
Materials
    43 %     43 %     42 %
Labor
    14 %     13 %     13 %
Other manufacturing
    24 %     23 %     24 %
 
                 
Gross margin
    19 %     21 %     21 %
 
                 

 


 

AMKOR TECHNOLOGY, INC.
Selected Operating Data
                         
    Q1 2011     Q4 2010     Q1 2010  
    (in millions, except per share data)  
Capital Investment Data:
                       
Property, plant and equipment additions
  $ 105     $ 103     $ 73  
Net change in related accounts payable and deposits
    9       66       (6 )
 
                 
Purchases of property, plant and equipment
  $ 114     $ 169     $ 67  
 
                 
Depreciation and amortization
  $ 83     $ 87     $ 76  
 
                       
Free Cash Flow Data:
                       
Net cash provided by operating activities
  $ 120     $ 176     $ 104  
Less purchases of property, plant and equipment
    (114 )     (169 )     (67 )
 
                 
Free cash flow*
  $ 6     $ 7     $ 37  
 
                 
 
                       
Earnings per Share Data:
                       
Net income attributable to Amkor — basic
  $ 25     $ 51     $ 44  
Adjustment for dilutive securities on net income:
                       
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 attributable to Amkor — diluted
  $ 29     $ 57     $ 50  
 
                 
 
                       
Weighted average shares outstanding — basic
    194       183       183  
Effect of dilutive securities:
                       
Stock options and unvested restricted shares
    1       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
    278       283       283  
 
                 
 
                       
Net income attributable to Amkor per common share:
                       
Basic
  $ 0.13     $ 0.28     $ 0.24  
 
                 
Diluted
  $ 0.10     $ 0.20     $ 0.18  
 
                 
 
*   We define free cash flow as net cash provided by operating activities less purchases of property, plant and equipment. Free cash flow is not defined by GAAP. However, we believe free cash flow to be relevant and useful information to our investors because it provides them with additional information in assessing our liquidity, capital resources and financial operating results. Our management uses free cash flow in evaluating our liquidity, our ability to service debt and our ability to fund capital additions.
However, this measure should be considered in addition to, and not as a substitute for, or superior to, other measures of financial performance prepared in accordance with GAAP, and our definition of free cash flow may not be comparable to similarly titled measures reported by other companies.

 


 

AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
                 
    For the Three Months  
    Ended March 31,  
    2011     2010  
    (In thousands, except per share data)  
Net sales
  $ 664,950     $ 645,738  
Cost of sales
    538,264       508,782  
 
           
Gross profit
    126,686       136,956  
 
           
 
               
Operating expenses:
               
Selling, general and administrative
    64,558       56,296  
Research and development
    12,129       11,673  
 
           
Total operating expenses
    76,687       67,969  
 
           
Operating income
    49,999       68,987  
 
           
Other (income) expense
               
Interest expense
    18,789       22,369  
Interest expense, related party
    2,580       3,812  
Interest income
    (587 )     (733 )
Foreign currency loss
    1,731       975  
Equity in earnings of unconsolidated affiliate
    (1,518 )     (1,101 )
Other income, net
    (144 )     (241 )
 
           
Total other expense, net
    20,851       25,081  
 
           
Income before income taxes
    29,148       43,906  
Income tax expense (benefit)
    3,382       (167 )
 
           
Net income
    25,766       44,073  
Net (income) loss attributable to noncontrolling interests
    (663 )     224  
 
           
Net income attributable to Amkor
  $ 25,103     $ 44,297  
 
           
 
               
Net income attributable to Amkor per common share:
               
Basic
  $ 0.13     $ 0.24  
 
           
Diluted
  $ 0.10     $ 0.18  
 
           
 
               
Shares used in computing per common share amounts:
               
Basic
    194,067       183,226  
Diluted
    277,585       282,509  

 


 

AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
                 
    March 31,     December 31,  
    2011     2010  
    (In thousands, except per share data)  
ASSETS
               
Current assets:
               
Cash and cash equivalents
  $ 392,951     $ 404,998  
Restricted cash
    19,712       17,782  
Accounts receivable:
               
Trade, net of allowances
    349,398       392,327  
Other
    19,152       17,970  
Inventories
    185,642       191,072  
Other current assets
    43,928       37,918  
 
           
Total current assets
    1,010,783       1,062,067  
 
               
Property, plant and equipment, net
    1,558,835       1,537,226  
Intangibles, net
    12,236       13,524  
Investments
    29,473       28,215  
Restricted cash
    1,940       1,945  
Other assets
    88,306       93,845  
 
           
Total assets
  $ 2,701,573     $ 2,736,822  
 
           
 
               
LIABILITIES AND EQUITY
               
Current liabilities:
               
Short-term borrowings and current portion of long-term debt
  $ 132,620     $ 150,081  
Trade accounts payable
    406,110       443,333  
Accrued expenses
    165,388       178,794  
 
           
Total current liabilities
    704,118       772,208  
 
               
Long-term debt
    960,908       964,219  
Long-term debt, related party
    150,000       250,000  
Pension and severance obligations
    109,779       103,543  
Other non-current liabilities
    12,336       10,171  
 
           
Total liabilities
    1,937,141       2,100,141  
 
           
 
               
Equity:
               
Amkor stockholders’ equity:
               
Preferred stock
           
Common stock, $0.001 par value, 500,000 shares authorized, 197,178 and 183,467 shares issued, and 197,061 and 183,420 shares outstanding, in 2011 and 2010, respectively
    197       183  
Additional paid-in capital
    1,607,942       1,504,927  
Accumulated deficit
    (865,167 )     (890,270 )
Accumulated other comprehensive income
    14,991       15,457  
Treasury stock, at cost, 117 and 47 shares in 2011 and 2010, respectively
    (862 )     (284 )
 
           
Total Amkor stockholders’ equity
    757,101       630,013  
Noncontrolling interests in subsidiaries
    7,331       6,668  
 
           
Total equity
    764,432       636,681  
 
           
Total liabilities and equity
  $ 2,701,573     $ 2,736,822  
 
           

 


 

AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
                 
    For the Three Months  
    Ended March 31,  
    2011     2010  
    (In thousands)  
Cash flows from operating activities:
               
Net income
  $ 25,766     $ 44,073  
Depreciation and amortization
    83,442       75,805  
Other operating activities and non-cash items
    4,896       (1,419 )
Changes in assets and liabilities
    6,123       (14,730 )
 
           
Net cash provided by operating activities
    120,227       103,729  
 
           
 
               
Cash flows from investing activities:
               
Purchases of property, plant and equipment
    (113,881 )     (67,092 )
Proceeds from the sale of property, plant and equipment
    278       364  
Financing lease payment from unconsolidated affiliate
    3,020       4,896  
Other investing activities
    (1,057 )     (6,168 )
 
           
Net cash used in investing activities
    (111,640 )     (68,000 )
 
           
 
               
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 )     (15,000 )
Proceeds from issuance of long-term debt
          38,824  
Payments of long-term debt
    (20,413 )     (13,661 )
Payments for debt issuance costs
          (166 )
Proceeds from issuance of stock through stock compensation plans
    627       399  
Payments of minimum tax withholding for restricted shares
    (696 )      
 
           
Net cash used in financing activities
    (20,482 )     (5,596 )
 
           
 
               
Effect of exchange rate fluctuations on cash and cash equivalents
    (152 )     (66 )
 
           
 
               
Net (decrease) increase in cash and cash equivalents
    (12,047 )     30,067  
Cash and cash equivalents, beginning of period
    404,998       395,406  
 
           
Cash and cash equivalents, end of period
  $ 392,951     $ 425,473