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AMKR 8-K Earnings Release FY12 Q1


 

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 26, 2012
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, 2012 and forward-looking statements relating to the second quarter of 2012 as presented in a press release dated April 26, 2012. 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, 2012. 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 U.S. 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, free cash flow has certain limitations, including that it does not represent the residual cash flow available for discretionary expenditures since other, non-discretionary expenditures, such as mandatory debt service, are not deducted from the measure. The amount of mandatory versus discretionary expenditures can vary significantly between periods. This measure should be considered in addition to, and not as a substitute for, or superior to, other measures of liquidity or financial performance prepared in accordance with U.S. GAAP, such as net cash provided by operating activities. Furthermore, our definition of free cash flow 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 U.S. 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 26, 2012, 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 26, 2012





EXHIBIT INDEX:

Exhibit
 
Description
99.1
 
Text of Press Release dated April 26, 2012


AMKR 8-K Earnings Release Ex-99.1 FY12 Q1




News Release


Amkor Technology Reports Financial Results for the First Quarter 2012

First Quarter 2012
•
Net sales $655 million
•
Gross margin 16%
•
Net income $12 million
•
Earnings per diluted share $0.06

CHANDLER, Ariz. - April 26, 2012 - Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of semiconductor packaging and test services, today announced financial results for the first quarter ended March 31, 2012, with net sales of $655 million, net income of $12 million, and earnings per diluted share of $0.06. Net income includes a charge of $7 million (of which $5 million was recorded in cost of sales and $2 million in selling, general and administrative expenses), and earnings per diluted share includes a charge of $0.03, for restructuring costs associated with reductions in our workforce in Japan.

"First quarter results came in at the high end of our expectations," said Ken Joyce, Amkor's president and chief executive officer. "Our strong position in wireless communications continues to drive our business and we saw notable improvement in our test services segment. We also benefited from additional leadframe packaging business from some customers whose supply chains were disrupted by the flooding in Thailand during the fourth quarter of 2011.”

Selected financial information for the first quarter 2012 is as follows:
•
Net Sales: $655 million, down 4% from $684 million in the prior quarter, and down 1% from $665 million in the first quarter of 2011
•
Gross Margin: 16%, compared to 16% in the prior quarter, and 19% in the first quarter of 2011
•
Net Income: $12 million, down from $25 million in the prior quarter, and down from $25 million in the first quarter of 2011
•
Earnings Per Diluted Share: $0.06, down from $0.11 in the prior quarter, and down from $0.10 in the first quarter of 2011

“Capital additions were $124 million during the first quarter, primarily in support of specific business for customers in smartphones and tablets,” said Joanne Solomon, Amkor's executive vice president and chief financial officer.

Amkor's Board of Directors previously authorized $300 million for the repurchase of our common stock; $150 million in August 2011 and $150 million in February 2012. During the first quarter 2012 the company repurchased 1.0 million shares at a purchase price of $4.5 million, for a total of 29.6 million shares at a purchase price of $133.4 million since the program commenced.

Cash and cash equivalents were $381 million, and net debt was $974 million, at March 31, 2012.

Selected operating data for the first quarter 2012 is included in a section below before the financial statements.

Business Outlook

Based upon the currently available information, we have the following expectations for the second quarter 2012:
•
Net sales of $670 million to $700 million, up 2% to 7% from the prior quarter
•
Gross margin of 16% to 18%
•
Net income of $17 million to $36 million, or $0.08 to $0.16 per diluted share
•
Capital additions of around $200 million for the second quarter, and around $550 million for the full year





“We expect solid growth in the second half of 2012,” noted Joyce. “Several of our major customers that sell into smartphones and tablets have substantially increased their demand forecasts with us and we are raising our estimate of 2012 capital additions to around $550 million to meet these specific new opportunities. However, our sales and capital additions may vary depending on a number of factors including the supply of 28 nanometer wafers for some of our customers.”

Conference Call Information

Amkor will conduct a conference call on April 26, 2012, at 5:00 p.m. Eastern Daylight Time. This call may include material information not included in this press release. 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 1-888-561-1799. A replay of the call will be made available at Amkor's web site or by dialing 800-406-7325 (access pass code #4532650). 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 packaging and test services to semiconductor companies and electronics OEMs. More information about Amkor is available from the company's filings with the Securities and Exchange Commission 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, all of the statements made under "Business Outlook" above. 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;
•
the performance of our business, economic and market conditions, the cash needs and investment opportunities for the business, the need for additional capacity and facilities to service customer demand and the availability of cash flow from operations or financing;
•
the supply of 28 nanometer wafers;
•
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 or access to other sources of liquidity 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 and compliance with 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, 2011 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

 
Q1 2012
 
 
Q4 2011
 
 
Q1 2011
 
Sales Data (prior periods were revised for a refinement of our classifications):
 
 
 
 
 
 
 
 
Packaging services (in millions):
 
 
 
 
 
 
 
 
Chip scale package
$
250

 
 
$
276

 
 
$
231

 
Leadframe
168

 
 
158

 
 
169

 
Ball grid array
117

 
 
128

 
 
145

 
Other packaging
47

 
 
53

 
 
53

 
Packaging services
582

 
 
615

 
 
598

 
Test services
73

 
 
69

 
 
67

 
Total sales
$
655

 
 
$
684

 
 
$
665

 
 
 
 
 
 
 
 
 
 
Packaging services:
 
 
 
 
 
 
 
 
Chip scale package
38

%
 
40

%
 
35

%
Leadframe
26

%
 
23

%
 
25

%
Ball grid array
18

%
 
19

%
 
22

%
Other packaging
7

%
 
8

%
 
8

%
Packaging services
89

%
 
90

%
 
90

%
Test services
11

%
 
10

%
 
10

%
Total sales
100

%
 
100

%
 
100

%
 
 
 
 
 
 
 
 
 
Packaged units (in millions):
 
 
 
 
 
 
 
 
Chip scale package
409

 
 
445

 
 
478

 
Leadframe
1,457

 
 
1,287

 
 
1,572

 
Ball grid array
40

 
 
40

 
 
48

 
Other packaging
14

 
 
9

 
 
15

 
Total packaged units
1,920

 
 
1,781

 
 
2,113

 
 
 
 
 
 
 
 
 
 
Net sales from top ten customers
65

%
 
66

%
 
57

%
 
 
 
 
 
 
 
 
 
Capacity Utilization
 
 
 
 
 
 
 
 
Packaging
73

%
 
73

%
 
71

%
Test
78

%
 
74

%
 
71

%
 
 
 
 
 
 
 
 
 
End Market Distribution Data (an approximation including representative devices and applications based on a sampling of our largest customers):
 
 
 
 
 
 
 
 
Communications (cell phones, tablets, wireless LAN, handheld devices)
47

%
 
49

%
 
43

%
Consumer (gaming, television, set top boxes, portable media, digital cameras)
20

%
 
21

%
 
23

%
Computing (PCs, laptops, hard disk drives, servers, displays, printers, peripherals)
13

%
 
11

%
 
12

%
Networking (network servers, routers, switches)
11

%
 
11

%
 
12

%
Other (auto, industrial)
9

%
 
8

%
 
10

%
Total
100

%
 
100

%
 
100

%
 
 
 
 
 
 
 
 
 
Gross Margin Data:
 
 
 
 
 
 
 
 
Net sales
100

%
 
100

%
 
100

%
Cost of sales:
 
 
 
 
 
 
 
 
Materials
45

%
 
45

%
 
43

%
Labor
14

%
 
14

%
 
14

%
Other manufacturing
25

%
 
25

%
 
24

%
Gross margin
16

%
 
16

%
 
19

%



AMKOR TECHNOLOGY, INC.
Selected Operating Data

 
Q1 2012
 
 
Q4 2011
 
 
Q1 2011
 
 
(In millions, except per share data)
 
Capital Investment Data:
 
 
 
 
 
 
 
 
Property, plant and equipment additions
$
124

 
 
$
128

 
 
$
105

 
Net change in related accounts payable and deposits
(3
)
 
 
14

 
 
9

 
Purchases of property, plant and equipment
$
121

 
 
$
142

 
 
$
114

 
Depreciation and amortization
$
88

 
 
$
87

 
 
$
83

 
 
 
 
 
 
 
 
 
 
Free Cash Flow Data:
 
 
 
 
 
 
 
 
Net cash provided by operating activities
$
56

 
 
$
141

 
 
$
120

 
Less purchases of property, plant and equipment
(121
)
 
 
(142
)
 
 
(114
)
 
Free cash flow*
$
(65
)
 
 
$
(1
)
 
 
$
6

 
 
 
 
 
 
 
 
 
 
Earnings per Share Data:
 
 
 
 
 
 
 
 
Net income attributable to Amkor - basic
$
12

 
 
$
25

 
 
$
25

 
 
 
 
 
 
 
 
 
 
Adjustment for dilutive securities on net income:
 
 
 
 
 
 
 
 
Interest on 6.0% convertible notes due 2014, net of tax
4

 
 
4

 
 
4

 
Net income attributable to Amkor - diluted
$
16

 
 
$
29

 
 
$
29

 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding - basic**
168

 
 
177

 
 
194

 
Effect of dilutive securities:
 
 
 
 
 
 
 
 
Stock options and unvested restricted shares
—

 
 
—

 
 
1

 
6.0% convertible notes due 2014
83

 
 
83

 
 
83

 
Weighted average shares outstanding - diluted
251

 
 
260

 
 
278

 
 
 
 
 
 
 
 
 
 
Net income attributable to Amkor per common share:
 
 
 
 
 
 
 
 
Basic
$
0.07

 
 
$
0.14

 
 
$
0.13

 
Diluted
$
0.06

 
 
$
0.11

 
 
$
0.10

 

*
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 U.S. GAAP. 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, free cash flow has certain limitations, including that it does not represent the residual cash flow available for discretionary expenditures since other, non-discretionary expenditures, such as mandatory debt service, are not deducted from the measure. The amount of mandatory versus discretionary expenditures can vary significantly between periods.
 
 
 
This measure should be considered in addition to, and not as a substitute for, or superior to, other measures of liquidity or financial performance prepared in accordance with U.S. GAAP, such as net cash provided by operating activities. Furthermore, our definition of free cash flow may not be comparable to similarly titled measures reported by other companies.
 
 
**
Amkor's Board of Directors previously authorized $300 million for the repurchase of our common stock; $150 million in August 2011 and $150 million in February 2012. During the first quarter, we repurchased 1.0 million shares of common stock for a purchase price of $4.5 million. As of March 31, 2012, we had repurchased a total of 29.6 million shares under the stock repurchase program for a purchase price of $133.4 million.




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

 
For the Three Months Ended
March 31,
 
 
2012
 
2011
 
(In thousands, except per share data)
Net sales
$
655,010

 
$
664,950

Cost of sales
550,029

 
538,264

Gross profit
104,981

 
126,686

Operating expenses:
 
 
 
Selling, general and administrative
57,255

 
64,558

Research and development
13,425

 
12,129

Total operating expenses
70,680

 
76,687

Operating income
34,301

 
49,999

Other expense (income):
 
 
 
Interest expense
18,586

 
18,789

Interest expense, related party
3,492

 
2,580

Interest income
(889
)
 
(587
)
Foreign currency loss
790

 
1,731

Equity in earnings of unconsolidated affiliate
(1,988
)
 
(1,518
)
Other income, net
(634
)
 
(144
)
Total other expense, net
19,357

 
20,851

Income before income taxes
14,944

 
29,148

Income tax expense
3,362

 
3,382

Net income
11,582

 
25,766

Net loss (income) attributable to noncontrolling interests
192

 
(663
)
Net income attributable to Amkor
$
11,774

 
$
25,103

 
 
 
 
Net income attributable to Amkor per common share:
 
 
 
Basic
$
0.07

 
$
0.13

Diluted
$
0.06

 
$
0.10

 
 
 
 
Shares used in computing per common share amounts:
 
 
 
Basic
167,866

 
194,067

Diluted
250,688

 
277,585





AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)


 
March 31,
2012
 
December 31, 2011
 
 
 
(In thousands)
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
381,132

 
$
434,631

Restricted cash
2,680

 
2,680

Accounts receivable:
 
 
 
Trade, net of allowances
345,764

 
298,543

Other
19,746

 
27,197

Inventories
205,400

 
198,427

Other current assets
37,683

 
35,352

Total current assets
992,405

 
996,830

Property, plant and equipment, net
1,691,540

 
1,656,214

Intangibles, net
7,260

 
8,382

Investments
36,567

 
36,707

Restricted cash
2,279

 
4,001

Other assets
74,161

 
70,913

Total assets
$
2,804,212

 
$
2,773,047

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Short-term borrowings and current portion of long-term debt
$
53,027

 
$
59,395

Trade accounts payable
424,163

 
424,504

Accrued expenses
173,572

 
158,287

Total current liabilities
650,762

 
642,186

Long-term debt
1,076,640

 
1,062,256

Long-term debt, related party
225,000

 
225,000

Pension and severance obligations
125,413

 
129,096

Other non-current liabilities
19,003

 
13,288

Total liabilities
2,096,818

 
2,071,826

Equity:
 
 
 
Amkor stockholders' equity:
 
 
 
Preferred stock
—

 
—

Common stock
198

 
197

Additional paid-in capital
1,612,112

 
1,611,242

Accumulated deficit
(786,688
)
 
(798,462
)
Accumulated other comprehensive income
9,427

 
10,849

Treasury stock
(135,418
)
 
(130,560
)
Total Amkor stockholders' equity
699,631

 
693,266

Noncontrolling interests in subsidiaries
7,763

 
7,955

Total equity
707,394

 
701,221

Total liabilities and equity
$
2,804,212

 
$
2,773,047




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

 
For the Three Months Ended
March 31,
 
 
2012
 
2011
 
(In thousands)
Cash flows from operating activities:
 
 
 
Net income
$
11,582

 
$
25,766

Depreciation and amortization
88,446

 
83,442

Other operating activities and non-cash items
(1,772
)
 
4,896

Changes in assets and liabilities
(42,150
)
 
6,123

Net cash provided by operating activities
56,106

 
120,227

 
 
 
 
Cash flows from investing activities:
 
 
 
Purchases of property, plant and equipment
(121,087
)
 
(113,881
)
Proceeds from the sale of property, plant and equipment
621

 
278

Financing lease payment from unconsolidated affiliate
7,914

 
3,020

Other investing activities
1,683

 
(1,057
)
Net cash used in investing activities
(110,869
)
 
(111,640
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Borrowings under short-term credit facilities
20,000

 
15,000

Payments under short-term credit facilities
(15,000
)
 
(15,000
)
Proceeds from issuance of long-term debt
158,742

 
—

Payments of long-term debt
(156,357
)
 
(20,413
)
Payments for repurchase of common stock
(4,505
)
 
—

Proceeds from the issuance of stock through share-based compensation plans
69

 
627

Payments of tax withholding for restricted shares
(353
)
 
(696
)
Net cash provided by (used in) financing activities
2,596

 
(20,482
)
 
 
 
 
Effect of exchange rate fluctuations on cash and cash equivalents
(1,332
)
 
(152
)
 
 
 
 
Net decrease in cash and cash equivalents
(53,499
)
 
(12,047
)
Cash and cash equivalents, beginning of period
434,631

 
404,998

Cash and cash equivalents, end of period
$
381,132

 
$
392,951