Second Quarter Highlights
- Net sales $737 million
- Gross margin 15.6%
- Net income $10 million; $19 million
before charge for early extinguishment of debt
- Earnings per diluted share $0.04; $0.08
before charge for early extinguishment of debt
- Redemption completed for all $345
million of our 7.375% Senior Notes due 2018
Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of
semiconductor packaging and test services, today announced
financial results for the second quarter ended June 30, 2015.
“We generated $737M in Q2 revenues, roughly flat to Q1,” said
Steve Kelley, Amkor's president and chief executive officer.
“Profitability was constrained due to lower revenues and a weaker
product mix.”
GAAP Results Q2 2015
Q1 2015 Q2 2014 ($ in millions, except per
share amounts) Net sales $737 $743 $767 Gross margin 15.6% 18.2%
19.6% Net income* $10 $29 $50 Earnings per diluted share* $0.04
$0.12 $0.21
*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. Second quarter
2014 results include 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.
During the second quarter we completed the redemption of our
7.375% Senior Notes due 2018 using cash on hand and borrowings
under our credit facilities which bear interest at floating rates
tied to LIBOR. Based on current interest rates, we expect to save
approximately $17 million in annual interest expense from the
redemption.
Cash and cash equivalents were $442 million, and total debt was
$1.5 billion, at June 30, 2015.
Business Outlook
“We expect sluggish mobile device market conditions to persist
through most of Q3, with revenues slightly down compared with Q2,”
said Kelley. “We are cautiously optimistic that demand will
strengthen in the fourth quarter with the anticipated launch of
flagship mobile devices. Due to the changed demand outlook, we are
reducing our estimate of full year 2015 capital expenditures to
around $550 million, including around $150 million of spending for
our new K5 facility."
Based upon currently available information, we have the
following expectations for the third quarter 2015:
- Net sales of $700 million to
$750 million, down 5% to up 2% from the prior quarter
- Gross margin of 13% to 16%
- Net loss of $7 million to net income of
$14 million, or ($0.03) to $0.06 per share
Conference Call Information
Amkor will conduct a conference call on Monday, July 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 84109040). 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
Q2 2015 Q1 2015 Q2 2014
Net Sales Data: Net sales (in millions): Advanced products*
$ 362 $ 373 $ 364 Mainstream products** 375 370 403
Total net sales $ 737 $ 743 $ 767
Packaging services
85
% 85 % 86 % Test services
15
% 15 % 14 % Net sales from top ten customers 62 % 60 % 58 %
Packaged units (in millions): Advanced products*
1,275
1,188 910 Mainstream products** 2,703 2,671 3,379
Total packaged units
3,978
3,859 4,289
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) 56 % 57 % 53 % Consumer (television, set top boxes, gaming,
portable media, digital cameras) 12 % 12 % 15 % Automotive,
industrial and other (infotainment, safety, performance, comfort)
12 % 11 % 12 % Networking (servers, routers, switches) 11 % 11 % 11
% Computing (PCs, hard disk drive, printers, peripherals, servers)
9 % 9 % 9 % Total 100 % 100 %
100 %
Gross Margin Data: Net sales 100.0 %
100.0 % 100.0 % Cost of sales: Materials 37.2 % 36.7 % 37.2 % Labor
15.7 % 14.2 % 14.0 % Other manufacturing 31.5 % 30.9
% 29.2 % Gross margin 15.6 % 18.2 % 19.6
%
Earnings per Share Data: Net income
attributable to Amkor common stockholders - basic and diluted $ 10
$ 29 $ 50 Weighted average shares
outstanding - basic 237 237 233 Effect of dilutive securities:
Stock options — — 1 6.0% convertible notes due 2014 — —
3 Weighted average shares outstanding - diluted 237
237 237 Net income attributable to
Amkor per common share: Basic $ 0.04 $ 0.12 $ 0.21
Diluted $ 0.04 $ 0.12 $ 0.21
*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 EndedJune
30, For the Six Months EndedJune 30,
2015 2014 2015 2014
(In thousands, except per share data) Net sales $ 736,722 $
767,459 $ 1,479,597 $ 1,463,503 Cost of sales 621,624
616,745 1,229,552 1,183,969 Gross profit
115,098 150,714 250,045 279,534
Selling, general and administrative 56,435 67,674 119,377 130,098
Research and development 20,020 22,079 38,046
43,124 Total operating expenses 76,455 89,753
157,423 173,222 Operating income 38,643 60,961 92,622
106,312 Interest expense 22,845 22,537 46,622 46,259 Interest
expense, related party 1,242 1,242 2,484 2,484 Other expense
(income), net 7,290 (5,699 ) 6,792 (5,663 ) Total
other expense, net 31,377 18,080 55,898 43,080
Income before taxes and equity in earnings of unconsolidated
affiliate 7,266 42,881 36,724 63,232 Income tax expense 4,631
12,511 10,630 17,440 Income before
equity in earnings of unconsolidated affiliate 2,635 30,370 26,094
45,792 Equity in earnings of J-Devices 7,566 20,036
13,804 25,797 Net income 10,201 50,406 39,898 71,589
Net income attributable to noncontrolling interests (623 ) (885 )
(1,539 ) (1,435 ) Net income attributable to Amkor $ 9,578 $
49,521 $ 38,359 $ 70,154 Net income
attributable to Amkor per common share: Basic $ 0.04 $ 0.21
$ 0.16 $ 0.31 Diluted $ 0.04 $ 0.21
$ 0.16 $ 0.30 Shares used in computing
per common share amounts: Basic 236,840 232,891 236,774 224,868
Diluted 237,321 236,872 237,366 236,182
Net income for the three and six months ended June 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
expense (income), 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).
AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, 2015
December 31, 2014
(In thousands) ASSETS Current assets: Cash and cash
equivalents $ 442,297 $ 449,946 Restricted cash 2,682 2,681
Accounts receivable, net of allowances 438,494 469,683 Inventories
219,993 223,379 Other current assets 48,912 52,259
Total current assets 1,152,378 1,197,948 Property, plant and
equipment, net 2,229,022 2,206,476 Investments 140,396 117,733
Restricted cash 2,306 2,123 Other assets 120,126 111,125
Total assets $ 3,644,228 $ 3,635,405
LIABILITIES AND EQUITY Current liabilities: Short-term
borrowings and current portion of long-term debt $ — $ 5,000 Trade
accounts payable 280,677 309,025 Capital expenditures payable
210,319 127,568 Accrued expenses 226,402 258,997
Total current liabilities 717,398 700,590 Long-term debt 1,415,528
1,450,824 Long-term debt, related party 75,000 75,000 Pension and
severance obligations 158,041 152,673 Other non-current liabilities
109,068 125,382 Total liabilities 2,475,035
2,504,469 Amkor stockholders’ equity: Preferred stock
— — Common stock 283 282 Additional paid-in capital 1,881,713
1,878,810 Accumulated deficit (478,603 ) (516,962 ) Accumulated
other comprehensive loss (36,985 ) (32,867 ) Treasury stock
(213,455 ) (213,028 ) Total Amkor stockholders’ equity 1,152,953
1,116,235 Noncontrolling interests in subsidiaries 16,240
14,701 Total equity 1,169,193 1,130,936 Total
liabilities and equity $ 3,644,228 $ 3,635,405
AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
For the Six Months EndedJune
30,
2015 2014 (In thousands) Cash flows
from operating activities: Net income $ 39,898 $ 71,589
Depreciation and amortization 248,716 220,389 Loss on debt
retirement 2,530 — Gain on sale of subsidiary to J-Devices — (9,155
) Other operating activities and non-cash items (14,179 ) (24,000 )
Changes in assets and liabilities (48,684 ) (23,570 ) Net cash
provided by operating activities 228,281 235,253
Cash flows from investing activities: Payments for property,
plant and equipment (194,360 ) (230,392 ) Proceeds from sale of
property, plant and equipment 4,069 1,634 Cash received
(transferred) on sale of subsidiary to J-Devices, net 8,355 (15,774
) Investment in J-Devices (12,908 ) — Other investing activities
(1,315 ) (353 ) Net cash used in investing activities (196,159 )
(244,885 ) Cash flows from financing activities: Borrowings
under revolving credit facilities 180,000 — Payments under
revolving credit facilities (30,000 ) — Proceeds from issuance of
long-term debt 340,000 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 656 4,826 Payments of tax withholding for
restricted shares (427 ) (1,006 ) Net cash used in financing
activities (39,771 ) (74,943 ) Effect of exchange rate
fluctuations on cash and cash equivalents —
68
Net decrease in cash and cash equivalents (7,649 ) (84,507 )
Cash and cash equivalents, beginning of period 449,946
610,442 Cash and cash equivalents, end of period $ 442,297
$ 525,935
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 regarding
expected annual interest savings and 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;
- 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150727006268/en/
Amkor Technology, Inc.Joanne SolomonExecutive Vice President
& Chief Financial
Officer480-786-7878joanne.solomon@amkor.comGreg JohnsonSenior
Director, Finance and Investor
Relations480-786-7594greg.johnson@amkor.com
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