Amkor Technology Reports Financial Results for the Second Quarter 2014

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 at Amkor's website: www.amkor.com.

 
AMKOR TECHNOLOGY, INC.
Selected Operating Data
 

Since the fourth quarter 2013, we have reported net sales data by the following categories: advanced products and mainstream products. We have also provided quarterly and annual net sales and packaged units for 2012 and 2013 under these revised net sales reporting categories at the Investor Relations section of our website at www.amkor.com.

           
Q2 2014 Q1 2014 Q2 2013
Net Sales Data:
Net sales (in millions):
Advanced products* $ 364 $ 302 $ 387
Mainstream products** 403   394   359  
Total net sales $ 767   $ 696   $ 746  
 
Packaging services 86 % 85 % 87 %
Test services 14 % 15 % 13 %
 
Net sales from top ten customers 58 % 60 % 63 %
 
Packaged units (in millions):
Advanced products* 910 650 704
Mainstream products** 3,379   3,217   1,976  
Total packaged units 4,289   3,867   2,680  
 
End Market Distribution Data (an approximation including representative devices and applications based on a sampling of our largest customers) :
Communications (smart phones, tablets, handheld devices, wireless LAN) 53 % 53 % 58 %
Consumer (television, set top boxes, gaming, portable media, digital cameras) 15 % 15 % 14 %
Automotive, industrial and other (infotainment, safety, performance, comfort) 12 % 12 % 9 %
Networking (servers, routers, switches) 11 % 10 % 10 %
Computing (PCs, hard disk drive, printers, peripherals, servers) 9   % 10   % 9   %
Total 100   % 100   % 100   %
 
Gross Margin Data:
Net sales 100.0 % 100.0 % 100.0 %
Cost of sales:
Materials 37.2 % 36.8 % 41.7 %
Labor

14.0

% 14.7 % 14.0 %
Other manufacturing

29.2

  % 30.0   % 25.8   %
Gross margin 19.6   % 18.5   % 18.5   %
 
Earnings per Share Data:
Net income attributable to Amkor - basic $ 50 $ 20 $ 30
 
Adjustment for dilutive securities on net income:
Interest on 6.0% convertible notes due 2014, net of tax

  1   3  
Net income attributable to Amkor - diluted $ 50   $ 21   $ 33  
 
Weighted average shares outstanding - basic 233 216 161
Effect of dilutive securities:

Stock Options

1

6.0% convertible notes due 2014

3

  19   74  
Weighted average shares outstanding - diluted 237   235   235  
 
Net income attributable to Amkor per common share:
Basic $ 0.21   $ 0.09   $ 0.18  
Diluted $ 0.21   $ 0.09   $ 0.14  
 

*Advanced products include flip chip and wafer-level processing and related test services

**Mainstream products include wirebond packaging and related test services and since July 1, 2013, include the results of our newly acquired power discrete business in Malaysia which has a high volume of units relative to revenue

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

For the Three Months Ended

For the Six Months Ended

June 30,

June 30,

2014*

   

2013

2014*

   

2013

(In thousands, except per share data)

Net sales $ 767,459 $ 746,059 $ 1,463,503 $ 1,433,588
Cost of sales   616,745   607,680     1,183,969     1,180,256  
Gross profit   150,714   138,379     279,534     253,332  
Selling, general and administrative 67,674 65,618 130,098 125,177
Research and development   22,079   14,308     43,124   28,614  
Total operating expenses   89,753   79,926     173,222   153,791  
Operating income 60,961 58,453 106,312 99,541
Interest expense 22,537 23,739 46,259 45,817
Interest expense, related party 1,242 3,192 2,484 6,684
Other (income) expense, net   (5,699 )   12,876     (5,663 )   10,654  
Total other expense, net   18,080     39,807     43,080     63,155  

Income before taxes and equity in earnings of unconsolidated affiliate

42,881 18,646 63,232 36,386
Income tax expense (benefit)   12,511     (10,238 )   17,440     (6,209 )

Income before equity in earnings of unconsolidated affiliate

30,370 28,884 45,792 42,595
Equity in earnings of J-Devices   20,036     1,445     25,797     1,500  
Net income 50,406 30,329 71,589 44,095
Net income attributable to noncontrolling interests   (885 )   (602 )   (1,435 )   (986 )
Net income attributable to Amkor $ 49,521   $ 29,727   $ 70,154 $     43,109  
 
Net income attributable to Amkor per common share:
Basic $ 0.21   $ 0.18   $ 0.31 $     0.27  
Diluted $ 0.21   $ 0.14   $ 0.30 $     0.21  
 
Shares used in computing per common share amounts:
Basic 232,891 160,886 224,868 156,672
Diluted 236,872 235,111 236,182 235,099
 

*Net income for the three and six months ended June 30, 2014 includes a net gain of $18 million ($0.08 per diluted share) related to the sale of Amkor's Japanese subsidiary to J-Devices, its 60% owned joint venture in Japan. In connection with the sale, Amkor recognized $9 million principally from the realization of accumulated foreign currency translation gains (reflected in Other (income) expense, net) and an additional $9 million from its 60% equity interest in the gain realized by J-Devices on the transaction (reflected in Equity in earnings of J-Devices).

 
AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
       
June 30, December 31,
2014 2013
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 525,935 $ 610,442
Restricted cash 2,681 2,681
Accounts receivable, net of allowances 455,838 385,542
Inventories 205,668 200,423
Other current assets 57,803   33,328  
Total current assets 1,247,925 1,232,416
Property, plant and equipment, net 2,153,818 2,006,553
Investments 134,717 105,214
Restricted cash 2,247 2,234
Other assets 70,666   80,881  
Total assets $ 3,609,373   $ 3,427,298  
 
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt $ 10,000 $ 61,350
Trade accounts payable 555,805 365,334
Accrued expenses 252,048   264,252  
Total current liabilities 817,853 690,936
Long-term debt 1,451,111 1,516,390
Long-term debt, related party 75,000 75,000
Pension and severance obligations 159,936 165,073
Other non-current liabilities 14,423   14,959  
Total liabilities 2,518,323   2,462,358  
 
Amkor stockholders’ equity:
Preferred stock
Common stock 282 262
Additional paid-in capital 1,875,533 1,812,530
Accumulated deficit (577,194 ) (647,348 )
Accumulated other comprehensive loss (7,751 ) (255 )
Treasury stock (212,455 ) (211,449 )
Total Amkor stockholders’ equity 1,078,415 953,740
Noncontrolling interests in subsidiaries 12,635   11,200  
Total equity 1,091,050   964,940  
Total liabilities and equity $ 3,609,373   $ 3,427,298  
 
AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
   
For the Six Months Ended
June 30,
2014     2013
(In thousands)
Cash flows from operating activities:
Net income $ 71,589 $ 44,095
Depreciation and amortization 220,389 195,785

Loss on debt retirement

11,619
Gain on sale of subsidiary to J-Devices (9,155 )
Other operating activities and non-cash items (24,000 ) (13,947 )
Changes in assets and liabilities (23,570 ) (36,702 )
Net cash provided by operating activities 235,253   200,850  
 
Cash flows from investing activities:
Payments for property, plant and equipment (230,392 ) (222,674 )
Proceeds from sale of property, plant and equipment 1,634 25,093
Cash transferred on sale of subsidiary to J-Devices, net of proceeds (15,774 )
Payments from J-Devices 8,843
Investment in J-Devices (67,372 )
Purchase of short-term investment (20,000 )
Proceeds from short-term investment 20,000
Other investing activities (353 ) (2,032 )
Net cash used in investing activities (244,885 ) (258,142 )
 
Cash flows from financing activities:
Borrowings under revolving credit facilities 5,000
Payments under revolving credit facilities (5,000 )
Proceeds from issuance of long-term debt 80,000 293,000
Payments of long-term debt (140,000 )
Payments for debt issuance costs (3,357 )
Payments for the retirement of debt (11,619 )
Payment of deferred consideration for an acquisition (18,763 )
Proceeds from the issuance of stock through share-based compensation plans 4,826
Payments of tax withholding for restricted shares (1,006 ) (172 )
Net cash (used in) provided by financing activities (74,943 ) 277,852  
 
Effect of exchange rate fluctuations on cash and cash equivalents 68 2,399
 
Net (decrease) increase in cash and cash equivalents (84,507 ) 222,959
Cash and cash equivalents, beginning of period 610,442   413,048  
Cash and cash equivalents, end of period $ 525,935   $ 636,007  
 

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