Amkor Reports Second Quarter 2005 Results

CHANDLER, Ariz., July 27 /PRNewswire-FirstCall/ -- Amkor Technology, Inc. (NASDAQ: AMKR) reported second quarter 2005 sales of $489 million, up 17% sequentially and down 1% from the second quarter of 2004. Amkor's second quarter net loss was $52 million, or ($0.30) per share. For the second quarter of 2004, Amkor's net income was $10 million, or $0.06 per share, and included after-tax gains of $16.5 million, or $0.09 per share, from the sale of an equity investment and the settlement of litigation with a software provider.

"I am pleased with our revenue growth this quarter, which reflects implementation of the strategic business initiatives we put in place last year, together with a modest recovery in overall industry conditions," said James Kim, Amkor's chairman and chief executive officer. "We expect to achieve continued business momentum from these initiatives, and we are deploying what we believe are the appropriate resources to support this planned growth. We are building a critical mass of revenue in our newer factories, which have thus far hampered our performance. For the second half of this year we are focused on improving our profitability by increasing revenue, enriching our product mix and driving greater operational efficiencies throughout the organization."

"During the second quarter we executed on key programs, continued to ramp IBM-related business and leveraged our strong technology and operational capabilities in several areas, including 3D and chip-scale packaging, system-in-package, flip chip and test," said John Boruch, Amkor's president and chief operating officer.

"We expect to see continued growth in the second half as we support a seasonal build in consumer electronics and ramp newer turnkey programs involving a range of flip chip applications," said Boruch. "We expect that supply will continue to tighten over the next several quarters, which should lead to firmer pricing and an opportunity to improve product and customer mix."

"We shipped over 1.8 billion packages in Q2, an increase of 19% over Q1," said Ken Joyce, Amkor's chief financial officer. "Gross margin increased to 13.6%. Our second quarter profitability improvement was constrained by product mix and higher manufacturing costs, as well as lower pricing in our Japan factory."

"Second quarter SG&A expenses rose approximately $6 million over Q1, and included higher-than-anticipated legal billings in connection with the ongoing mold compound litigation, exit costs in connection with vacating our West Chester, PA administrative offices, and a loss accrual for potential foreign business taxes," said Joyce. "We expect legal expenses to moderate in the second half of the year."

During the second quarter we recorded in "Other expense" a non-cash impairment of $2.3 million on our equity investment in DongbuAnam Semiconductor.

Second quarter capital additions totaled $115 million. "Our capital investments are focused on customer opportunities driven by our strength in advanced assembly and test technologies, our Unitive acquisition and IBM collaboration," said Joyce. "We are currently budgeting third quarter capital additions of $90 million."

During the second quarter we paid a total of $45 million in connection with previously announced settlement agreements pertaining to the mold compound litigation.

Selected operating data for the second quarter of 2005 is included in a separate section of this release before the financial tables.

Business Outlook

The third quarter is typically characterized by a seasonal build in consumer electronics. Our aggregate customer forecasts have increased, particularly for turnkey flip chip programs driven by our Unitive acquisition and IBM collaboration. On the basis of current forecasts, we have the following expectations for the third quarter of 2005:

     --  Sequential revenue increase in the range of 8% to 10%.
     --  Gross margin in the range of 15% to 16%.
     --  Net loss in the range of 18 cents to 22 cents per diluted share.

We anticipate recognizing approximately $2 million per quarter in foreign tax expense during 2005. At June 30, 2005 our company had U.S. net operating loss carryforwards totaling $411 million expiring through 2025. Additionally, at June 30, 2005 we had $90 million of non-U.S. net operating loss carryforwards expiring through 2010.

Amkor will conduct a conference call on July 27, 2005 at 5:00 p.m. eastern time to discuss the results of the second quarter in more detail. The call can be accessed by dialing 303-262-2050 or by visiting the investor relations page of our website: www.amkor.com or Thompson CCBN's website, www.companyboardroom.com. An archive of the webcast can be accessed through the same links and will be available until our next quarterly earnings conference call. An audio replay of the call will be available for 48 hours following the conference call by dialing 303-590-3000 passcode: 11033022.

Amkor is a leading provider of contract semiconductor assembly and test services. The company offers semiconductor companies and electronics OEMs a complete set of microelectronic design and manufacturing services. More information on 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 certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, without limitation, statements regarding the following: planned growth and continued business momentum; building a critical mass of revenue; achieving greater operating efficiencies; expectations of a seasonal build in consumer electronics; the ramp of turnkey programs involving flip chip applications; expectations of supply tightening, firmer pricing, improving product and customer mix, expanding margins and moderating legal expenses; Amkor's financial performance, including expected revenue, gross margin, and net loss; budgeted capital expenditures; customer forecasts; anticipated foreign tax expense; and the forward-looking statements contained under Business Outlook. These forward-looking statements are subject to a number of risks and uncertainties that could affect future results and cause actual results and events to differ materially from historical and expected results, including, but not limited to, the following: the highly unpredictable nature of the semiconductor industry; volatility of consumer demand for products incorporating our semiconductor packages; fluctuations in operating results; weakness in the forecasts of Amkor's customers; customer modification of and follow through with respect to forecasts provided to Amkor; deterioration of the U.S. or other economies; the highly unpredictable nature of litigation; our relationship with IBM; the satisfaction of conditions in the agreements entered into in connection with the IBM transaction; the incurrence of significant additional cost and expense necessary for an increase in Amkor's capacity, and Amkor's ability to finance capital expenditures and increase its capacity; worldwide economic effects of terrorist attacks and military conflict; competitive pricing and declines in average selling prices; timing and volume of orders relative to the production capacity; fluctuations in manufacturing yields; competition; the risk of adverse results of litigation against us; dependence on international operations and sales; dependence on raw material and equipment suppliers; exchange rate fluctuations; dependence on key personnel; difficulties in managing growth; enforcement of intellectual property rights; environmental regulations and technological challenges.

Further information on risk factors that could affect the outcome of the events set forth in these statements and that could affect the company's operating results and financial condition is detailed in the company's filings with the Securities and Exchange Commission, including the reports on Form 10-K/A for the year ended December 31, 2004 and Form 10-Q/A for the quarter ended March 31, 2005. Amkor undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this document.

     Contact:
     Jeffrey Luth
     VP Corporate Communications
     480-821-5000 ext. 5130
     
Email Contact



     Selected operating data for the second quarter and six months of 2005
                                                               2nd  Quarter            Six  Months
          --    Capital  additions                                            $115  million        $161  million

                  Net  change  in  related  accounts
                    payable                                                              ($57  million)      ($37  million)

                  Payments  for  property,  plant  &
                    equipment                                                            $58  million        $124  million

          --    Depreciation  and  amortization                      $61  million        $122  million

          --    Free  cash  flow  *                                              ($69  million)    ($142  million)

          *      Reconciliation  of  free  cash  flow  to  the  most  directly  comparable  GAAP
                  measure:

                  Net  cash  used  in  operating  activities    ($11  million)      ($18  million)

                  Payments  for  property,  plant  &
                    equipment                                                          ($58  million)    ($124  million)

                  Free  cash  flow                                                  ($69  million)    ($142  million)

                  We  define  free  cash  flow  as  net  cash  (used  in)  provided  by  operating
                  activities  less  payments  for  property,  plant  and  equipment.    Free
                  cash  flow  is  not  defined  by  generally  accepted  accounting  principles.
                  However,  we  believe  free  cash  flow  to  be  relevant  and  useful
                  information  to  our  investors  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  expenditures.    However,  this  measure
                  should  be  considered  in  addition  to,  and  not  as  a  substitute,  or
                  superior  to,  cash  flows  or  other  measures  of  financial  performance
                  prepared  in  accordance  with  generally  accepted  accounting  principles,
                  and  our  definition  of  free  cash  flow  may  not  be  comparable  to
                  similarly  titled  measures  reported  by  other  companies.

          --    Capacity  utilization,  calculated  as  quarterly  revenue  divided  by
                  revenue  generating  capacity  (RGC)  at  quarter-end,  was  approximately
                  85%.    We  define  RGC  as  90%  utilization  of  installed  capacity  (based
                  on  the  limiting  equipment  set  on  each  production  line),  using
                  quarterly  average  selling  price.

          --    Assembly  unit  shipments  were  1.8  billion,  up  19%  from  Q1  2005.

          --    Percentage  of  revenue  (rounded  to  nearest  whole  percent):

                      Leadframe  packages    40%

                      Laminate  packages      46%

                      Other                                4%

                      Test                                  9%



                                                        AMKOR  TECHNOLOGY,  INC.
                              CONDENSED  CONSOLIDATED  STATEMENTS  OF  OPERATIONS
                                        (in  thousands,  except  per  share  data)
                                                                  (unaudited)

                                                                                                    For  the  Three  Months  Ended
                                                                                                                        June  30,
                                                                                                            2005                      2004

          Net  sales                                                                            $489,335              $492,536
          Cost  of  sales                                                                      422,837                397,761
          Gross  profit                                                                          66,498                  94,775
          Operating  expenses:
              Selling,  general  and  administrative                        66,865                  55,916
              Research  and  development                                                9,924                    9,900
                  Total  operating  expenses                                          76,789                  65,816
          Operating  income  (loss)                                                  (10,291)                28,959
          Other  expense  (income):
              Interest  expense,  net                                                    41,395                  36,360
              Foreign  currency  loss  (gain)                                      (1,773)                  2,635
              Other  expense  (income),  net                                          2,063                (25,541)
                  Total  other  expense                                                    41,685                  13,454
          Income  (loss)  before  income  taxes  and
            minority  interest                                                            (51,976)                15,505
          Minority  interest                                                                      926                            3
          Income  (loss)  before  income  taxes                              (51,050)                15,508
          Provision  for  income  taxes                                                1,353                    5,528
          Net  income  (loss)                                                            $(52,403)                $9,980

          Per  Share  Data:
              Basic  and  diluted  net  income  (loss)
                per  common  share                                                            $(0.30)                  $0.06

              Shares  used  in  computing  basic  net  income
                (loss)  per  common  share                                            176,371                175,304

              Shares  used  in  computing  diluted  net
                income  (loss)  per  common  share                              176,371                175,872



                                                        AMKOR  TECHNOLOGY,  INC.
                              CONDENSED  CONSOLIDATED  STATEMENTS  OF  OPERATIONS
                                        (in  thousands,  except  per  share  data)
                                                                  (unaudited)

                                                                                                      For  the  Six  Months  Ended
                                                                                                                        June  30,
                                                                                                            2005                      2004

          Net  sales                                                                            $906,816              $957,182
          Cost  of  sales                                                                      796,923                750,559
          Gross  profit                                                                        109,893                206,623
          Operating  expenses:
              Selling,  general  and  administrative                      127,331                109,422
              Research  and  development                                              18,824                  18,877
              Provision  for  legal  settlement  and
                contingencies                                                                  50,000                    1,500
                  Total  operating  expenses                                        196,155                129,799
          Operating  income  (loss)                                                  (86,262)                76,824
          Other  expense  (income):
              Interest  expense,  net                                                    81,908                  69,650
              Foreign  currency  loss                                                          459                    2,710
              Other  expense  (income),  net                                          2,241                (23,744)
                  Total  other  expense                                                    84,608                  48,616
          Income  (loss)  before  income  taxes  and
            minority  interest                                                          (170,870)                28,208
          Minority  interest                                                                  1,937                      (355)
          Income  (loss)  before  income  taxes                            (168,933)                27,853
          Provision  for  income  taxes                                                2,540                    6,963
          Net  income  (loss)                                                          $(171,473)              $20,890

          Per  Share  Data:
              Basic  and  diluted  net  income  (loss)
                per  common  share                                                            $(0.97)                  $0.12

              Shares  used  in  computing  basic  net  income
                (loss)  per  common  share                                            176,045                174,961

              Shares  used  in  computing  diluted  net  income
                (loss)  per  common  share                                            176,045                178,028



                                                        AMKOR  TECHNOLOGY,  INC.
                                        CONDENSED  CONSOLIDATED  BALANCE  SHEETS
                                                                (in  thousands)
                                                                  (unaudited)

                                                                                                        June  30,          December  31,
                                                                                                            2005                      2004
                                              Assets
          Current  assets:
              Cash  and  cash  equivalents                                        $228,204              $372,284
              Accounts  receivable:
                  Trade,  net  of  allowance  of  $5,164  in
                    2005  and  $5,074  in  2004                                        294,918                265,547
                  Other                                                                                  5,304                    3,948
              Inventories,  net                                                            116,719                111,616
              Other  current  assets                                                      30,276                  32,591
                      Total  current  assets                                            675,421                785,986

          Property,  plant  and  equipment,  net                        1,427,915            1,380,396
          Goodwill                                                                                655,940                656,052
          Intangibles,  net                                                                  42,863                  47,302
          Investments                                                                            11,101                  13,762
          Other  assets                                                                          75,441                  81,870
                      Total  assets                                                      $2,888,681          $2,965,368

                  Liabilities  and  Stockholders'  Equity
          Current  liabilities:
              Bank  overdraft                                                                        $--                      $102
              Short-term  borrowings  and  current
                portion  of  long-term  debt                                        281,639                  52,147
              Trade  accounts  payable                                                307,344                211,706
              Accrued  expenses                                                            159,857                175,075
                      Total  current  liabilities                                  748,840                439,030

          Long-term  debt                                                                1,810,377            2,040,813
          Other  non-current  liabilities                                      125,462                109,317
                      Total  liabilities                                              2,684,679            2,589,160

          Minority  interest                                                                  4,937                    6,679

          Stockholders'  equity:
              Common  stock                                                                            178                        176
              Additional  paid-in  capital                                    1,326,310            1,323,579
              Accumulated  deficit                                                (1,140,545)            (969,072)
              Accumulated  other  comprehensive  income                  13,122                  14,846
                      Total  stockholders'  equity                                199,065                369,529
                      Total  liabilities  and  stockholders'
                        equity                                                                $2,888,681          $2,965,368



                                                        AMKOR  TECHNOLOGY,  INC.
                              CONDENSED  CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS
                                                                (in  thousands)
                                                                  (unaudited)

                                                                                                    For  the  Three  Months  Ended
                                                                                                                        June  30,
                                                                                                            2005                      2004

          Cash  flows  from  operating  activities:
              Net  income  (loss)                                                        $(52,403)                $9,980
              Depreciation  and  amortization                                    61,186                  58,264
              Other  non-cash  items                                                        5,016                (20,364)
              Changes  in  assets  and  liabilities
                excluding  effects  of  acquisition                          (25,070)                  4,575
                  Net  cash  provided  by  (used  in)
                    operating  activities                                              (11,271)                52,455

          Cash  flows  from  investing  activities:
              Payments  for  property,  plant  and  equipment        (57,685)            (140,331)
              Other  investing  activities                                                287                  32,614
                  Net  cash  used  in  investing  activities              (57,398)            (107,717)

          Cash  flows  provided  by  financing  activities              9,822                    5,393

          Effect  of  exchange  rate  fluctuations  on
            cash  and  cash  equivalents                                                    291                  (1,032)

          Net  decrease  in  cash  and  cash  equivalents              (58,556)              (50,901)
          Cash  and  cash  equivalents,  beginning  of
            period                                                                                  286,760                345,496
          Cash  and  cash  equivalents,  end  of  period              $228,204              $294,595

          Supplemental  disclosures  of
            cash  flow  information:
              Cash  paid  (refunded)  during  the  period  for:
                  Interest                                                                        $42,787                $34,083
                  Income  taxes                                                                    $(817)                $2,670



                                                        AMKOR  TECHNOLOGY,  INC.
                              CONDENSED  CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS
                                                                (in  thousands)
                                                                  (unaudited)

                                                                                                      For  the  Six  Months  Ended
                                                                                                                        June  30,
                                                                                                            2005                      2004

          Cash  flows  from  operating  activities:
              Net  income  (loss)                                                      $(171,473)              $20,890
              Depreciation  and  amortization                                  122,044                110,661
              Other  non-cash  items                                                        6,398                (15,102)
              Changes  in  assets  and  liabilities
                excluding  effects  of  acquisitions                          25,318                  33,344
                  Net  cash  provided  by  (used  in)
                    operating  activities                                              (17,713)              149,793

          Cash  flows  from  investing  activities:
              Payments  for  property,  plant  and  equipment      (124,397)            (284,182)
              Other  investing  activities                                                443                  39,068
                  Net  cash  used  in  investing  activities            (123,954)            (245,114)

          Cash  flows  provided  by  (used  in)
            financing  activities                                                        (1,994)                77,145

          Effect  of  exchange  rate  fluctuations  on
            cash  and  cash  equivalents                                                  (419)                    (488)

          Net  decrease  in  cash  and  cash  equivalents            (144,080)              (18,664)
          Cash  and  cash  equivalents,  beginning  of
            period                                                                                  372,284                313,259
          Cash  and  cash  equivalents,  end  of  period              $228,204              $294,595

          Supplemental  disclosures  of
            cash  flow  information:
              Cash  paid  during  the  period  for:
                  Interest                                                                        $82,957                $61,602
                  Income  taxes                                                                  $1,916                $14,451
 


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