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Amkor Technology Reports Financial Results for the Third Quarter 2015

Third Quarter Highlights

TEMPE, Ariz. — (BUSINESS WIRE) — October 26, 2015 — Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of semiconductor packaging and test services, today announced financial results for the third quarter ended September 30, 2015.

"Third quarter revenues were at the higher end of our expectations and roughly flat to Q2,” said Steve Kelley, Amkor's president and chief executive officer. “Third quarter profit exceeded expectations, largely due to favorable exchange rates and a richer mix of assembly and test services."

       
      GAAP Results
      Q3 2015   Q2 2015   Q3 2014
     

($ in millions, except per share data)

Net sales     $734   $737   $813
Gross margin     17.2%   15.6%   18.8%
Net income*     $28   $10   $47
Earnings per diluted share*     $0.12   $0.04   $0.20
               

*Second quarter 2015 results include a $9 million ($0.04 per diluted share) charge for the early extinguishment of debt related to the redemption of all $345 million aggregate principal amount of Amkor's outstanding 7.375% Senior Notes due 2018.

Cash and cash equivalents were $430 million, and total debt was $1.4 billion, at September 30, 2015.

Business Outlook

“In response to the generally soft end market demand for electronic devices, we expect customers to cautiously manage inventories through the fourth quarter of 2015,” said Kelley. “We are tightly controlling capital expenditures and working capital in line with the demand environment. Accordingly, we are reducing our estimate of full year 2015 capital expenditures from around $550 million to around $525 million, including around $150 million of spending for our new K5 facility."

Based upon currently available information, we have the following expectations for the fourth quarter 2015:

Conference Call Information

Amkor will conduct a conference call on Monday, October 26, 2015, at 5:00 p.m. Eastern 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 website: www.amkor.com. You may also access the call by dialing 1-877-645-6380 or 1-404-991-3911. A replay of the call will be made available at Amkor's website or by dialing 1-855-859-2056 or 1-404-537-3406 (conference ID 58799565). The webcast is also being distributed over NASDAQ OMX's investor distribution network to both institutional and individual investors. Institutional investors can access the call via NASDAQ OMX's 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 at Amkor's website: www.amkor.com.

 

AMKOR TECHNOLOGY, INC.

Selected Operating Data

 
      Q3 2015     Q2 2015     Q3 2014  
Net Sales Data:                    
Net sales (in millions):                    
Advanced products*     $ 365       $ 362       $ 411    
Mainstream products**     369       375       402    
Total net sales     $ 734       $ 737       $ 813    
                     
Packaging services     85   %   85   %   86   %
Test services     15   %   15   %   14   %
                     
Net sales from top ten customers     61   %   62   %   60   %
                     
Packaged units (in millions):                    
Advanced products*     1,305       1,275       1,012    
Mainstream products**     2,750       2,703       3,545    
Total packaged units     4,055       3,978       4,557    
                     

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)     55   %   56   %   56   %
Automotive, industrial and other (infotainment, safety, performance, comfort)     13   %   12   %   11   %
Consumer (televisions, set top boxes, gaming, portable media, digital cameras)     12   %   12   %   13   %
Networking (servers, routers, switches)     12   %   11   %   11   %
Computing (PCs, hard disk drives, printers, peripherals, servers)     8   %   9   %   9   %
Total     100   %   100   %   100   %
                     
Gross Margin Data:                    
Net sales     100.0   %   100.0   %   100.0   %
Cost of sales:                    
Materials     36.8   %   37.2   %   37.5   %
Labor     14.9   %   15.7   %   14.1   %
Other manufacturing     31.1   %   31.5   %   29.6   %
Gross margin     17.2   %   15.6   %   18.8   %
                     
Earnings per Share Data:                    
                     
Net income attributable to Amkor common stockholders - basic and diluted     $ 28       $ 10       $ 47    
                     
Weighted average shares outstanding - basic     237       237       236    
Effect of dilutive securities:                    
Stock options and restricted share awards                 1    
Weighted average shares outstanding - diluted     237       237       237    
                     
Net income attributable to Amkor per common share:                    
Basic     $ 0.12       $ 0.04       $ 0.20    
Diluted     $ 0.12       $ 0.04       $ 0.20    
 

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

**Mainstream products include wirebond packaging and related test services

 
 

AMKOR TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 
     

For the Three Months Ended
September 30,

 

For the Nine Months Ended
September 30,

      2015   2014   2015   2014
      (In thousands, except per share data)
Net sales     $ 734,362     $ 812,824     $ 2,213,959     $ 2,276,327  
Cost of sales     607,762     659,607     1,837,314     1,843,576  
Gross profit     126,600     153,217     376,645     432,751  
Selling, general and administrative     54,232     61,600     173,609     191,698  
Research and development     21,073     16,437     59,119     59,561  
Total operating expenses     75,305     78,037     232,728     251,259  
Operating income     51,295     75,180     143,917     181,492  
Interest expense     17,695     23,780     64,317     70,039  
Interest expense, related party     1,243     1,243     3,727     3,727  
Other (income) expense, net     (11,576 )   (9,626 )   (4,784 )   (15,289 )
Total other expense, net     7,362     15,397     63,260     58,477  
Income before taxes and equity in earnings of unconsolidated affiliate     43,933     59,783     80,657     123,015  
Income tax expense     16,568     14,985     27,198     32,425  
Income before equity in earnings of unconsolidated affiliate     27,365     44,798     53,459     90,590  
Equity in earnings of J-Devices     1,656     3,372     15,460     29,169  
Net income     29,021     48,170     68,919     119,759  
Net income attributable to noncontrolling interests     (847 )   (1,073 )   (2,386 )   (2,508 )
Net income attributable to Amkor     $ 28,174     $ 47,097     $ 66,533     $ 117,251  
                   
Net income attributable to Amkor per common share:                  
Basic     $ 0.12     $ 0.20     $ 0.28     $ 0.51  
Diluted     $ 0.12     $ 0.20     $ 0.28     $ 0.50  
                   
Shares used in computing per common share amounts:                  
Basic     236,888     236,337     236,813     228,733  
Diluted     236,974     237,509     237,168     236,672  
 

Net income for the nine months ended September 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 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 equity interest in the gain realized by J-Devices on the transaction (reflected in Equity in earnings of J-Devices).

Net income for the nine months ended September 30, 2015 includes a $9 million ($0.04 per diluted share) charge for the early extinguishment of debt related to the redemption of all $345 million aggregate principal amount of Amkor's outstanding 7.375% Senior Notes due 2018.

 

AMKOR TECHNOLOGY, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 
     

September 30,
2015

 

December 31,
2014

      (In thousands)
ASSETS
Current assets:          
Cash and cash equivalents     $ 430,444     $ 449,946  
Restricted cash     2,000     2,681  
Accounts receivable, net of allowances     410,256     469,683  
Inventories     208,213     223,379  
Other current assets     53,858     52,259  
Total current assets     1,104,771     1,197,948  
Property, plant and equipment, net     2,284,901     2,206,476  
Investments     146,639     117,733  
Restricted cash     2,163     2,123  
Other assets     109,014     111,125  
Total assets     $ 3,647,488     $ 3,635,405  
           
LIABILITIES AND EQUITY
Current liabilities:          
Short-term borrowings and current portion of long-term debt     $     $ 5,000  
Trade accounts payable     279,260     309,025  
Capital expenditures payable     221,281     127,568  
Accrued expenses     251,650     258,997  
Total current liabilities     752,191     700,590  
Long-term debt     1,365,376     1,450,824  
Long-term debt, related party     75,000     75,000  
Pension and severance obligations     149,952     152,673  
Other non-current liabilities     101,564     125,382  
Total liabilities     2,444,083     2,504,469  
           
Amkor stockholders’ equity:          
Preferred stock          
Common stock     283     282  
Additional paid-in capital     1,882,529     1,878,810  
Accumulated deficit     (450,429 )   (516,962 )
Accumulated other comprehensive loss     (32,366 )   (32,867 )
Treasury stock     (213,576 )   (213,028 )
Total Amkor stockholders’ equity     1,186,441     1,116,235  
Noncontrolling interests in subsidiaries     16,964     14,701  
Total equity     1,203,405     1,130,936  
Total liabilities and equity     $ 3,647,488     $ 3,635,405  
 
 

AMKOR TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 
 

For the Nine Months Ended
September 30,

  2015   2014
  (In thousands)
Cash flows from operating activities:      
Net income $ 68,919     $ 119,759  
Depreciation and amortization 371,968     340,089  
Loss on debt retirement 2,530      
Gain on sale of subsidiary to J-Devices     (9,155 )
Other operating activities and non-cash items (14,752 )   (27,811 )
Changes in assets and liabilities (5,299 )   (17,214 )
Net cash provided by operating activities 423,366     405,668  
       
Cash flows from investing activities:      
Payments for property, plant and equipment (352,644 )   (442,308 )
Proceeds from sale of property, plant and equipment 5,212     2,170  
Cash received (transferred) on sale of subsidiary to J-Devices, net 8,355     (15,774 )
Investment in J-Devices (12,908 )    
Other investing activities (869 )   (389 )
Net cash used in investing activities (352,854 )   (456,301 )
       
Cash flows from financing activities:      
Borrowings under revolving credit facilities 180,000      
Payments under revolving credit facilities (100,000 )    
Proceeds from issuance of long-term debt 360,000     80,000  
Payments of long-term debt (530,000 )   (140,000 )
Payment of deferred consideration for an acquisition     (18,763 )
Proceeds from the issuance of stock through share-based compensation plans 657     5,826  
Payments of tax withholding for restricted shares (548 )   (1,348 )
Payments of subsidiary dividends to noncontrolling interests (123 )    
Net cash used in financing activities (90,014 )   (74,285 )
       
Effect of exchange rate fluctuations on cash and cash equivalents     68  
       
Net decrease in cash and cash equivalents (19,502 )   (124,850 )
Cash and cash equivalents, beginning of period 449,946     610,442  
Cash and cash equivalents, end of period $ 430,444     $ 485,592  
 

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:

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, 2014 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.
Joanne Solomon
Executive Vice President & Chief Financial Officer
480-786-7878
Email Contact
Greg Johnson
Senior Director, Finance and Investor Relations
480-786-7594
Email Contact