Amkor Technology Reports Financial Results for the Third Quarter 2013

Third Quarter 2013

  • Net sales $768 million
  • Gross margin 18.4%
  • Net income $25 million
  • Earnings per diluted share $0.11

CHANDLER, Ariz. — (BUSINESS WIRE) — October 28, 2013 — 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, 2013, with net sales of $768 million, net income of $25 million, and earnings per diluted share of $0.11.

“Third quarter sales were up 10% year-over-year and 3% sequentially,” said Steve Kelley, Amkor's president and chief executive officer. “Excluding the power discrete business, which was not included in our guidance, third quarter sales were consistent with the midpoint of our expectations. We are seeing particular strength in the NAND Flash market, where revenues grew over 25% sequentially. In addition, the gross margin performance of our mainstream wirebond business improved in the third quarter due to increased utilization, efficiency improvements and lower gold wire cost.”

Selected financial information for the third quarter 2013 is as follows:

  • Net Sales: $768 million, up 2.9% from $746 million in the prior quarter, and up 10.4% from $695 million in the third quarter of 2012
  • Gross Margin: 18.4%, compared to 18.5% in the prior quarter, and 16.8% in the third quarter of 2012
  • Net Income: $25 million, compared to $30 million in the prior quarter, and $22 million in the third quarter of 2012
  • Earnings Per Diluted Share: $0.11, compared to $0.14 in the prior quarter, and $0.11 in the third quarter of 2012

Amkor closed its acquisition of Toshiba’s power discrete semiconductor packaging and test operation in Malaysia on July 31, 2013, and from that date began consolidating the results of the acquired operations. Third quarter results include net sales of $31 million and net income of $1 million from these operations.

In October 2013, we received a new interim order from the arbitration panel in our pending patent license arbitration, and we now estimate the possible range of damages to be from $60 million to $115 million (excluding interest). Third quarter results include a charge of $11 million ($10 million, net of tax), or $0.04 per diluted share (net of tax), relating to an increase in our accrual for damages to the low end of the range. Of the total charge, $10 million was recorded as cost of goods sold and $1 million was recorded as interest expense.

Selected financial information for the third quarter 2013 excluding the $11 million loss contingency charge is as follows:

  • Adjusted gross margin 19.7%
  • Adjusted net income $35 million
  • Adjusted earnings per diluted share $0.15

The adjusted items presented above are non-GAAP measures. Selected operating data for the third quarter 2013, and a reconciliation of the non-GAAP measures presented above to the comparable GAAP measures, is included in a section below before the financial statements.

“Capital additions were $97 million during the third quarter, primarily in support of customers in mobile communications,” said Joanne Solomon, Amkor's executive vice president and chief financial officer. “We also made a $39 million payment toward the purchase of the land for our new factory and R&D center in South Korea.”

Cash and cash equivalents were $591 million, and total debt was $1.7 billion, at September 30, 2013.

Business Outlook

“Looking ahead to the fourth quarter, our sales are expected to be slightly down sequentially,” noted Kelley. “We will benefit from a full quarter of results from the recently acquired power discrete business in Malaysia, offset by seasonal declines in the consumer and computing end markets.”

Based upon currently available information, we have the following expectations for the fourth quarter 2013:

  • Net sales of $730 million to $780 million, down 5% to up 2% from the prior quarter
  • Gross margin of 17% to 20%
  • Net income of $17 million to $44 million, or $0.08 to $0.19 per diluted share
  • Capital additions of around $70 million for the fourth quarter, and around $450 million for the full year 2013. In addition, we plan to spend around $50 million in the fourth quarter for the acquisition of land relating to our previously announced new factory and R&D center in South Korea, and around $100 million in the full year 2013.

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