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Amkor Technology Reports Financial Results for the Third Quarter 2015
[October 26, 2015]

Amkor Technology Reports Financial Results for the Third Quarter 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:

  • Net sales of $660 million to $710 million, down 3% to 10% from the prior quarter
  • Gross margin of 13% to 17%
  • Net loss of $4 million to net income of $12 million, or ($0.02) to $0.05 per share

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:

  • there can be no assurance that our new factory and research and development center in Korea will be completed, or that the actual scope, costs, timeline or benefits of the project will be consistent with our current expectations;
  • the highly unpredictable nature and cyclicality of the semiconductor industry;
  • timing and volume of orders relative to production capacity and the inability to achieve high capacity utilization rates, control costs and improve profitability;
  • volatility of consumer demand, double booking by customers and deterioration in forecasts from our customers for products incorporating our semiconductor packages, including any slowdown in demand or changes in customer forecasts for smartphones or other mobile devices and generally soft end market demand for electronic devices;
  • delays, lower manufacturing yields and supply constraints relating to wafers, particularly for advanced nodes and related technologies;
  • dependence on key customers and the impact of changes in our market share and prices for our services with those 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 effect of the global economy on credit markets, financial institutions, customers, suppliers and consumers, including the uncertain macroeconomic environment;
  • the highly unpredictable nature and costs of litigation and other legal activities and the risk of adverse results of such matters and the impact of other legal proceedings;
  • the negative impact on economic growth resulting from the action or inaction of the U.S. government relating to federal income tax increases for individuals or corporations, the federal debt ceiling, the federal deficit and government spending restrictions or shutdowns;
  • changes in tax rates and taxes as a result of changes in U.S. or foreign 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 an economic slowdown in China, the U.S. and other major economies worldwide;
  • disruptions in our business or deficiencies in our controls resulting from the integration of newly acquired operations or the implementation and security of, and changes to, our enterprise resource planning, factory shop floor systems and other management information systems;
  • economic effects of terrorist attacks, natural disasters and military conflict;
  • competition, competitive pricing and declines in average selling prices;
  • fluctuations in manufacturing yields;
  • dependence on international operations and sales and exchange rate fluctuations;
  • dependence on raw material and equipment suppliers and changes in raw material and precious metal costs;
  • dependence on key personnel;
  • 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, 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.


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