Amkor Technology Reports Financial Results for the First Quarter 2015

The gross margin, net income and earnings per diluted share information presented above under Non-GAAP Results excludes charges relating to the settlement of litigation and are non-GAAP measures. The charges are $87 million ($77 million, net of tax) in the fourth quarter 2014. The reconciliation to the comparable GAAP measures is included below under "Selected Operating Data."

Cash and cash equivalents were $494 million, and total debt was $1.5 billion, at March 31, 2015.

Business Outlook

"We anticipate that second quarter 2015 revenues will be flat sequentially, primarily due to inventory adjustments and other issues at a major customer," said Kelley. "We expect demand will strengthen in the second half of 2015 driven by the launch of flagship mobile devices with high Amkor content. Our full year 2015 capital expenditure estimate of around $600 million, including around $150 million of spending for our new K5 facility, remains unchanged."

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

  • Net sales of $725 million to $775 million, down 2% to up 4% from the prior quarter
  • Gross margin of 16% to 19%
  • Net income of $12 million to $35 million, or $0.05 to $0.15 per diluted share

Conference Call Information

Amkor will conduct a conference call on Monday, April 27, 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 23579914). 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
 
Q1 2015 Q4 2014 Q1 2014
Net Sales Data:
Net sales (in millions):
Advanced products* $ 373 $ 462 $ 302
Mainstream products** 370   391   394  
Total net sales $ 743   $ 853   $ 696  
 
Packaging services 85 % 85 % 85 %
Test services 15 % 15 % 15 %
 
Net sales from top ten customers 60 % 64 % 60 %
 
Packaged units (in millions):
Advanced products* 1,188 1,174 650
Mainstream products** 2,671   3,001   3,217  
Total packaged units 3,859   4,175   3,867  
 
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) 57 % 60 % 53 %
Consumer (television, set top boxes, gaming, portable media, digital cameras) 12 % 11 % 15 %
Automotive, industrial and other (infotainment, safety, performance, comfort) 11 % 10 % 12 %
Networking (servers, routers, switches) 11 % 10 % 10 %
Computing (PCs, hard disk drive, printers, peripherals, servers) 9   % 9   % 10   %
Total 100   % 100   % 100   %
 
Gross Margin Data:
Net sales 100.0 % 100.0 % 100.0 %
Cost of sales:
Materials 36.7 % 36.0 % 36.8 %
Labor 14.2 % 13.2 % 14.7 %
Other manufacturing 30.9 % 27.9 % 30.0 %
Litigation settlement   % 8.8   %   %
Gross margin 18.2   % 14.1   % 18.5   %
 
Earnings per Share Data:
Net income available to Amkor common stockholders - basic $ 29 $ 13 $ 20
Adjustment for dilutive securities on net income:
Interest on 6.0% convertible notes due 2014, net of tax     1  
Net income attributable to Amkor - diluted $ 29   $ 13   $ 21  
 
Weighted average shares outstanding - basic 237 237 216
Effect of dilutive securities:
6.0% convertible notes due 2014     19  
Weighted average shares outstanding - diluted 237   237   235  
 
Net income attributable to Amkor per common share:
Basic $ 0.12   $ 0.06   $ 0.09  
Diluted $ 0.12   $ 0.06   $ 0.09  
 
*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.

Selected Operating Data

 
In the press release above we provide non-GAAP gross margin, non-GAAP net income and non-GAAP earnings per diluted share for the fourth quarter 2014. We present these non-GAAP amounts to demonstrate the impact of the charges we recognized related to the settlement of our litigation with Tessera. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). These measures have limitations, including that they exclude the charges for the settlement payments, which are amounts that the company will ultimately have to pay in cash, and should be considered in addition to, and not as a substitute for, or superior to, gross margin, net income and earnings per diluted share prepared in accordance with U.S. GAAP. Below is the reconciliation of non-GAAP gross margin, non-GAAP net income and non-GAAP earnings per diluted share to U.S. GAAP gross margin, net income and earnings per diluted share.
   
Non-GAAP Financial Measures Reconciliation:
  Q4 2014
Gross margin 14.1 %
Plus: Litigation settlement charges divided by net sales 8.8 %
Non-GAAP gross margin 22.9 %
 
Net income (in millions) $ 13
Plus: Litigation settlement charges, net of tax (in millions) 77  
Non-GAAP net income (in millions) $ 90  
 
Earnings per diluted share $ 0.06
Plus: Litigation settlement charges per diluted share 0.32  
Non-GAAP earnings per diluted share $ 0.38  
 
 
AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
For the Three Months Ended
March 31,
2015   2014
(In thousands, except per share data)
Net sales $ 742,875 $ 696,044
Cost of sales 607,928   567,224  
Gross profit 134,947   128,820  
Selling, general and administrative 62,942 62,424
Research and development 18,026   21,045  
Total operating expenses 80,968   83,469  
Operating income 53,979 45,351
Interest expense 23,777 23,722
Interest expense, related party 1,242 1,242
Other (income) expense, net (498 ) 36  
Total other expense, net 24,521   25,000  
Income before taxes and equity in earnings of unconsolidated affiliate 29,458 20,351
Income tax expense 5,999   4,929  
Income before equity in earnings of unconsolidated affiliate 23,459 15,422
Equity in earnings of J-Devices 6,238   5,761  
Net income 29,697 21,183
Net income attributable to noncontrolling interests (916 ) (550 )
Net income attributable to Amkor $ 28,781   $ 20,633  
 
Net income attributable to Amkor per common share:
Basic $ 0.12   $ 0.09  
Diluted $ 0.12   $ 0.09  
 
Shares used in computing per common share amounts:
Basic 236,708 216,757
Diluted 237,424 235,497
 
     
AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
March 31, December 31,
2015 2014
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 494,189 $ 449,946
Restricted cash 2,681 2,681
Accounts receivable, net of allowances 433,092 469,683
Inventories 227,605 223,379
Other current assets 48,383   52,259  
Total current assets 1,205,950 1,197,948
Property, plant and equipment, net 2,167,790 2,206,476
Investments 138,218 117,733
Restricted cash 2,151 2,123
Other assets 119,767   111,125  
Total assets $ 3,633,876   $ 3,635,405  
 
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt $ 30,000 $ 5,000
Trade accounts payable 287,129 309,025
Capital expenditures payable 111,646 127,568
Accrued expenses 272,620   258,997  
Total current liabilities 701,395 700,590
Long-term debt 1,420,677 1,450,824
Long-term debt, related party 75,000 75,000
Pension and severance obligations 153,027 152,673
Other non-current liabilities 120,193   125,382  
Total liabilities 2,470,292   2,504,469  
 
Amkor stockholders’ equity:
Preferred stock
Common stock 282 282
Additional paid-in capital 1,880,753 1,878,810
Accumulated deficit (488,181 ) (516,962 )
Accumulated other comprehensive loss (31,629 ) (32,867 )
Treasury stock (213,258 ) (213,028 )
Total Amkor stockholders’ equity 1,147,967 1,116,235
Noncontrolling interests in subsidiaries 15,617   14,701  
Total equity 1,163,584   1,130,936  
Total liabilities and equity $ 3,633,876   $ 3,635,405  
 
 
AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
For the Three Months Ended
March 31,
2015     2014
(In thousands)
Cash flows from operating activities:
Net income $ 29,697 $ 21,183
Depreciation and amortization 124,387 108,338
Other operating activities and non-cash items (9,525 ) (4,274 )
Changes in assets and liabilities 20,465   6,699  
Net cash provided by operating activities 165,024   131,946  
 
Cash flows from investing activities:
Payments for property, plant and equipment (106,149 ) (95,999 )
Proceeds from sale of property, plant and equipment 3,254 726
Investment in J-Devices (12,908 )
Other investing activities (322 ) (266 )
Net cash used in investing activities (116,125 ) (95,539 )
 
Cash flows from financing activities:
Borrowings under revolving credit facilities 30,000
Proceeds from issuance of long-term debt 80,000
Payments of long-term debt (35,000 ) (80,000 )
Payment of deferred consideration for an acquisition (18,763 )
Proceeds from the issuance of stock through share-based compensation plans 574 438
Payments of tax withholding for restricted shares (230 ) (122 )
Net cash used in financing activities (4,656 ) (18,447 )
 
Effect of exchange rate fluctuations on cash and cash equivalents 183
 
Net increase in cash and cash equivalents 44,243 18,143
Cash and cash equivalents, beginning of period 449,946   610,442  
Cash and cash equivalents, end of period $ 494,189   $ 628,585  
 

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