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Amkor Technology Reports Financial Results for the Fourth Quarter and Full Year 2011
(ENP Newswire Via Acquire Media NewsEdge) ENP Newswire - 10 February 2012
Release date- 09022012 - CHANDLER, Ariz. - Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of semiconductor packaging and test services, today announced financial results for the fourth quarter ended December 31, 2011, with net sales of $684 million, net income of $25 million, and earnings per diluted share of $0.11.
For the full year 2011, Amkor reported net sales of $2.78 billion, net income of $92 million, and earnings per diluted share of $0.39.
'During the fourth quarter we saw record quarterly sales in our wireless communications end market driven by strong demand for smartphones and tablets,' said Ken Joyce, Amkor's president and chief executive officer. 'We also experienced a seasonal decline in gaming and consumer electronics and some softness in demand in the networking, automotive and industrial areas.'
'We achieved some notable successes in 2011,' added Joyce. 'We continued to build upon our industry-leading position in flip chip and other advanced packaging, and commercialized our innovative fine pitch copper pillar flip chip technology. We also delivered a sixth consecutive year of positive free cash flow, and overcame the extraordinary supply chain challenges that resulted from the tragic earthquake and tsunami in Japan.'
Selected financial information for the fourth quarter 2011 is as follows:
Net Sales: $684 million, down 8% from $740 million in the prior quarter, and down 9% from $751 million in the fourth quarter of 2010
Gross Margin: 16%, compared to 17% in the prior quarter, and 21% in the fourth quarter of 2010
Net Income: $25 million, down from $27 million in the prior quarter, and down from $51 million in the fourth quarter of 2010
Earnings Per Diluted Share: $0.11, equal to the prior quarter, and down from $0.20 in the fourth quarter of 2010
Selected financial information for the full year 2011 is as follows:
Net Sales: $2.78 billion, down 6% from $2.94 billion in 2010
Gross Margin: 18%, compared to 23% in 2010
Net Income: $92 million, down 60% from $232 million in 2010
Earnings Per Diluted Share: $0.39, down 57% from $0.91 in 2010
'We continued to focus on cost reduction initiatives in the fourth quarter,' said Joanne Solomon, Amkor's executive vice president and chief financial officer. 'We recorded a charge of $4 million (or $0.01 per diluted share) in the quarter for restructuring costs associated with reductions in our workforce.'
'Capital additions were $128 million during the fourth quarter, primarily in support of specific business for key customers in smartphones and tablets, for expansion of our facilities in China in support of NAND memory business, and for cost reduction initiatives in our factories,' said Solomon.
In August 2011, Amkor's Board of Directors authorized the repurchase of up to $150 million of our common stock. During the fourth quarter the company repurchased 17.7 million shares at a purchase price of $80 million, for a total of 28.6 million shares at a purchase price of $129 million for the full year 2011.
At its recent meeting in February 2012, the Board of Directors authorized an additional $150 million for the repurchase of our common stock. 'Our stock repurchase program has been very successful to date, and we believe that the continuation of the program will serve to enhance stockholder value,' said Joyce. The purchase of stock under this program may be made in the open market or through privately negotiated transactions. The timing, manner, price and amount of any repurchases will be determined by the Company at its discretion and will depend upon a variety of factors including economic and market conditions, price, applicable legal requirements and other factors. The stock repurchase program will be funded with available cash and may be suspended or discontinued at any time.
Cash and cash equivalents were $435 million, and net debt was $912 million, at December 31, 2011.
Selected operating data for the fourth quarter and full year 2011 is included in a section before the financial statements.
Business Outlook
'Looking ahead to the first quarter 2012, we are seeing seasonal demand patterns with revenues expected to be down 3% to 10% from the fourth quarter 2011,' said Joyce. 'We continue to focus on improving utilization and rationalizing our cost structure. These efforts are gaining traction and we expect that our gross margin in the first quarter will be the bottom for the year.'
'As part of our continuing efforts to rationalize our cost structure, we have initiated a voluntary retirement program in Japan. While the ultimate amount of the charge for this restructuring initiative will depend on the level of employee participation, we currently anticipate incurring a charge of around $6 million in the first quarter 2012,' said Solomon.
Based upon the currently available information, we have the following expectations for the first quarter 2012. These expectations do not include an estimate for the Japan restructuring charge discussed above:
Net sales of $615 million to $665 million, down 3% to 10% from the prior quarter
Gross margin of 14% to 17%
Net loss of $5 million to net income of $18 million, or ($0.03) to $0.09 per diluted share
Capital additions of around $125 million for the first quarter, and around $300 million for the full year
Conference Call Information
Amkor will conduct a conference call on February 9, 2012, at 5:00 p.m. Eastern Standard 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 877-941-0843. A replay of the call will be made available at Amkor's web site or by dialing 800-406-7325 (access pass code #4510386). 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 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: our stock repurchase program, the demand patterns in the first quarter 2012, our efforts on improving utilization and rationalizing our cost structure, our expectations regarding gross margin in the first quarter and the year, our voluntary retirement program in Japan and the related charge anticipated in the first quarter 2012, our current business outlook for the first quarter 2012, including our expected net sales, gross margin, net income, earnings per diluted share and capital additions, and our capital additions for the full year 2012. 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;
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;
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 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.
Q4 2011
Q3 2011
Q4 2010
2011
2010
Sales Data (prior periods were revised for a refinement of our classifications):
Packaging services (in millions):
Chip scale package
$
276
$
247
$
272
$
965
$
954
Leadframe
158
179
176
692
761
Ball grid array
128
190
186
625
747
Other packaging
53
52
46
211
188
Packaging services
615
668
680
2,493
2,650
Test services
69
72
71
283
289
Total sales
$
684
$
740
$
751
$
2,776
$
2,939
Packaging services:
Chip scale package
40
%
33
%
36
%
35
%
33
%
Leadframe
23
%
24
%
24
%
25
%
26
%
Ball grid array
19
%
26
%
25
%
22
%
25
%
Other packaging
8
%
7
%
6
%
8
%
6
%
Packaging services
90
%
90
%
91
%
90
%
90
%
Test services
10
%
10
%
9
%
10
%
10
%
Total sales
100
%
100
%
100
%
100
%
100
%
Packaged units (in millions):
Chip scale package
445
461
590
1,826
2,130
Leadframe
1,287
1,511
1,579
6,041
7,466
Ball grid array
40
56
61
195
228
Other packaging
9
29
4
74
24
Total packaged units
1,781
2,057
2,234
8,136
9,848
Net sales from top ten customers
66
%
63
%
57
%
61
%
54
%
Capacity Utilization:
Packaging
73
%
79
%
78
%
74
%
82
%
Test
74
%
76
%
74
%
75
%
78
%
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)
49
%
40
%
40
%
43
%
36
%
Consumer (gaming, television, set top boxes, portable media, digital cameras)
21
%
27
%
26
%
24
%
28
%
Computing (PCs, laptops, hard disk drive, servers, displays, printers, peripherals)
11
%
12
%
12
%
12
%
14
%
Networking (network servers, routers, switches)
11
%
12
%
13
%
12
%
13
%
Other (auto, industrial)
8
%
9
%
9
%
9
%
9
%
Total
100
%
100
%
100
%
100
%
100
%
Gross Margin Data:
Net sales
100
%
100
%
100
%
100
%
100
%
Cost of sales:
Materials
45
%
45
%
43
%
44
%
43
%
Labor
14
%
15
%
13
%
15
%
12
%
Other manufacturing
25
%
23
%
23
%
23
%
22
%
Gross margin
16
%
17
%
21
%
18
%
23
%
2011
2010
(In millions)
Return on Invested Capital:
Operating income
$
194
$
374
Income tax expense
(7
)
(19
)
Net operating profit after tax (NOPAT)
$
187
$
355
Invested capital:
Average debt
$
1,355
$
1,399
Plus average equity
662
507
Less average cash
(420
)
(400
)
Average invested capital
$
1,597
$
1,506
Return on invested capital (NOPAT / average invested capital)*
12
%
24
%
Q4 2011
Q3 2011
Q4 2010
2011
2010
(In millions, except per share data)
Capital Investment Data:
Property, plant and equipment additions
$
128
$
123
$
103
$
453
$
505
Net change in related accounts payable and deposits
14
(23
)
66
14
(59
)
Purchases of property, plant and equipment
$
142
$
100
$
169
$
467
$
446
Depreciation and amortization
$
87
$
83
$
87
$
336
$
324
Free Cash Flow Data:
Net cash provided by operating activities
$
141
$
142
$
176
$
517
$
543
Less purchases of property, plant and equipment
(142
)
(100
)
(169
)
(467
)
(446
)
Free cash flow*
$
(1
)
$
42
$
7
$
50
$
97
Earnings per Share Data:
Net income attributable to Amkor - basic
$
25
$
27
$
51
$
92
$
232
Adjustment for dilutive securities on net income:
Interest on 2.5% convertible notes due 2011, net of tax
-
-
-
-
1
Interest on 6.25% convertible notes due 2013, net of tax
-
-
2
-
7
Interest on 6.0% convertible notes due 2014, net of tax
4
4
4
16
16
Net income attributable to Amkor - diluted
$
29
$
31
$
57
$
108
$
256
Weighted average shares outstanding - basic**
177
195
183
191
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
83
83
Weighted average shares outstanding - diluted
260
278
283
274
283
Net income attributable to Amkor per common share:
Basic
$
0.14
$
0.14
$
0.28
$
0.48
$
1.26
Diluted
$
0.11
$
0.11
$
0.20
$
0.39
$
0.91
*
We define return on invested capital ('ROIC') as net operating profit after tax divided by average invested capital (the sum of average debt plus average equity less average cash). ROIC is not defined by U.S. GAAP. However, we believe ROIC is relevant and useful information for our investors and management in evaluating whether our capital investments are generating stockholder value.
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. 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, these measures should be considered in addition to, and not as a substitute for, or superior to other measures of financial performance prepared in accordance with U.S. GAAP and may not be comparable to similarly titled measures reported by other companies.
**
In August 2011, our Board of Directors authorized the repurchase of up to $150.0 million of our common stock. During the fourth quarter we repurchased 17.7 million shares for a purchase price of $80.2 million. From January 1, 2012, through February 9, 2012, we repurchased an additional 1.0 million shares for a purchase price of $4.5 million, for a cumulative total of 29.5 million shares for a purchase price of $133.4 million.
For the Three Months
Ended December 31,
For the Year
Ended December 31,
2011
2010
2011
2010
(In thousands, except per share data)
Net sales
$
683,769
$
750,609
$
2,776,359
$
2,939,483
Cost of sales
571,942
591,266
2,285,790
2,275,727
Gross profit
111,827
159,343
490,569
663,756
Operating expenses:
Selling, general and administrative
55,660
62,037
246,513
242,424
Research and development
12,465
11,097
50,386
47,534
Total operating expenses
68,125
73,134
296,899
289,958
Operating income
43,702
86,209
193,670
373,798
Other expense (income):
Interest expense
18,220
19,202
74,212
85,595
Interest expense, related party
3,492
3,813
12,394
15,250
Interest income
(961
)
(675
)
(2,749
)
(2,950
)
Foreign currency loss
520
4,746
2,178
13,756
Loss on debt retirement, net
-
-
15,531
18,042
Equity in earnings of unconsolidated affiliate
(444
)
(1,552
)
(7,085
)
(6,435
)
Other income, net
(335
)
(144
)
(1,030
)
(619
)
Total other expense, net
20,492
25,390
93,451
122,639
Income before income taxes
23,210
60,819
100,219
251,159
Income tax (benefit) expense
(2,351
)
10,058
7,124
19,012
Net income
25,561
50,761
93,095
232,147
Net income attributable to noncontrolling interests
(711
)
(157
)
(1,287
)
(176
)
Net income attributable to Amkor
$
24,850
$
50,604
$
91,808
$
231,971
Net income attributable to Amkor per common share:
Basic
$
0.14
$
0.28
$
0.48
$
1.26
Diluted
$
0.11
$
0.20
$
0.39
$
0.91
Shares used in computing per common share amounts:
Basic
176,941
183,404
190,829
183,312
Diluted
259,633
282,830
273,686
282,602
December 31,
2011
2010
(In thousands, except per share data)
ASSETS
Current assets:
Cash and cash equivalents
$
434,631
$
404,998
Restricted cash
2,680
17,782
Accounts receivable:
Trade, net of allowances
298,543
392,327
Other
27,197
17,970
Inventories
198,427
191,072
Other current assets
35,352
37,918
Total current assets
996,830
1,062,067
Property, plant and equipment, net
1,656,214
1,537,226
Intangibles, net
8,382
13,524
Investments
36,707
28,215
Restricted cash
4,001
1,945
Other assets
70,913
93,845
Total assets
$
2,773,047
$
2,736,822
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt
$
59,395
$
150,081
Trade accounts payable
424,504
443,333
Accrued expenses
158,287
178,794
Total current liabilities
642,186
772,208
Long-term debt
1,062,256
964,219
Long-term debt, related party
225,000
250,000
Pension and severance obligations
129,096
103,543
Other non-current liabilities
13,288
10,171
Total liabilities
2,071,826
2,100,141
Equity:
Amkor stockholders' equity:
Preferred stock
-
-
Common stock
197
183
Additional paid-in capital
1,611,242
1,504,927
Accumulated deficit
(798,462
)
(890,270
)
Accumulated other comprehensive income
10,849
15,457
Treasury stock
(130,560
)
(284
)
Total Amkor stockholders' equity
693,266
630,013
Noncontrolling interests in subsidiaries
7,955
6,668
Total equity
701,221
636,681
Total liabilities and equity
$
2,773,047
$
2,736,822
For the Year Ended
December 31,
2011
2010
(In thousands)
Cash flows from operating activities:
Net income
$
93,095
$
232,147
Depreciation and amortization
335,644
323,608
Loss on debt retirement, net
10,557
10,562
Other operating activities and non-cash items
1,176
11,522
Changes in assets and liabilities
76,360
(35,244
)
Net cash provided by operating activities
516,832
542,595
Cash flows from investing activities:
Purchases of property, plant and equipment
(466,694
)
(445,669
)
Proceeds from the sale of property, plant and equipment
15,823
3,125
Financing lease payment from unconsolidated affiliate
10,794
13,384
Other investing activities
9,543
(15,761
)
Net cash used in investing activities
(430,534
)
(444,921
)
Cash flows from financing activities:
Borrowings under revolving credit facilities
6,567
3,261
Payments under revolving credit facilities
(6,567
)
(34,253
)
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
387,512
611,007
Proceeds from issuance of long-term debt, related party
75,000
-
Payments of long-term debt, net of redemption premiums and discounts
(392,191
)
(663,433
)
Payments for debt issuance costs
(5,875
)
(7,487
)
Payments for repurchase of common stock
(128,368
)
-
Proceeds from the issuance of stock through share-based compensation plans
821
1,048
Payments of tax withholding for restricted shares
(776
)
-
Net cash used in financing activities
(58,877
)
(89,857
)
Effect of exchange rate fluctuations on cash and cash equivalents
2,212
1,775
Net increase in cash and cash equivalents
29,633
9,592
Cash and cash equivalents, beginning of period
404,998
395,406
Cash and cash equivalents, end of period
$
434,631
$
404,998
Contact:
Amkor Technology, Inc., Chandler
Joanne Solomon
Executive Vice President & Chief Financial Officer
480-786-7878
joanne.solomon@amkor.com
[Editorial queries for this story should be sent to newswire@enpublishing.co.uk]
((Comments on this story may be sent to info@enpublishing.co.uk))
(c) 2012 Electronic News Publishing -
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