Highlights:
- 2015 Sales $2.88 Billion
- 2015 GAAP EPS $0.24, Non-GAAP EPS
$0.34
- Completed Acquisition of J-Devices
- Advanced System-in-Package (SiP) 2015
Sales Top $725 Million
Amkor Technology, Inc. (NASDAQ:AMKR), a leading provider of
semiconductor packaging and test services, today announced
financial results for the fourth quarter and full year ended
December 31, 2015. The GAAP financial results for the fourth
quarter of 2015 include certain one-time, non-cash accounting
charges related to the increase in Amkor’s ownership interest in
J-Devices Corporation to 100% on December 30, 2015. These charges
were excluded from Amkor’s fourth quarter guidance and we believe
the table “Non-GAAP Results” below provides a basis for comparing
our 2015 operating results with our fourth quarter guidance and
prior periods.
“Fourth quarter results were generally in line with
expectations,” said Steve Kelley, Amkor’s president and chief
executive officer. “Although 2015 was challenging, early in the
year we reduced our capital and operational budgets, which allowed
us to generate positive free cash flow for the year.”
“During 2015 we made strong progress in many of our key
initiatives,” added Kelley. “Amkor’s advanced System-in-Package
(SiP) business is gaining significant traction and achieved sales
of $725 million. These multi-component, multi-function products
demand a variety of high precision assembly technologies, which
leverage Amkor’s strengths. Automotive was also a bright spot for
Amkor as sales were up 10%. Finally, our Greater China Revenues
grew 20% and we have significantly expanded the number of accounts
we engage with in the region.”
GAAP Results Q4 2015
Q3 2015 Q4 2014
2015 2014 ($ in millions, except per
share amounts) Net sales $671 $734 $853 $2,885 $3,129 Gross margin
15.3% 17.2% 14.1% 16.6% 17.7% Net income ($9) $28 $13 $58 $130
Earnings per diluted share ($0.04) $0.12 $0.06 $0.24 $0.55
Non-GAAP Results* Q4 2015
Q3 2015 Q4 2014
2015 2014 ($ in millions, except per
share amounts) Net sales $671 $734 $853 $2,885 $3,129 Gross margin
15.3% 17.2% 22.9% 16.6% 20.1% Net income $5 $28 $90 $81 $190
Earnings per diluted share $0.02 $0.12 $0.38 $0.34 $0.81 EBITDA
$132 $187 $175 $666 $739 Adjusted EBITDA $146 $187 $250 $689 $796
* Fourth quarter and full year 2015 net income and earnings per
diluted share exclude a gain of $16 million related to our previous
investments in J-Devices and a non-cash loss of $30 million
relating to the release of a foreign currency translation
adjustment account, for a net loss of $14 million. Full year 2015
net income and earnings per diluted share exclude a charge of $9
million for the early extinguishment of debt related to the
redemption of our 7.375% Senior Notes due 2018. Fourth quarter and
full year 2014 gross margin exclude charges of $75 million and net
income and earnings per diluted share exclude charges of $77
million and $78 million, net of tax, respectively, relating to the
settlement of our litigation with Tessera. Full year 2014 net
income and earnings per diluted share also exclude the gain on the
sale of our subsidiary to J-Devices of $18 million, net of tax. The
reconciliation to the comparable GAAP measures is included below
under “Selected Operating Data.”
In December, Amkor increased its ownership in J-Devices
Corporation from 66% to 100% through the exercise of existing
options. J-Devices was formed in 2009 as a joint venture to acquire
the assembly and test operations of Toshiba. Since that time, it
has experienced considerable growth through a number of
acquisitions involving other large semiconductor companies in
Japan. J-Devices is now the largest outsourced semiconductor
assembly and test (OSAT) provider in Japan and the sixth largest in
the world. Using the latest wire bond assembly and test
technologies, J-Devices specializes in producing high quality and
reliable semiconductor packages for the exacting standards of the
automotive end market.
“The purchase of the remaining interest in J-Devices has been
part of our long term strategic plan to strengthen our
relationships with the key semiconductor companies in Japan and
enhance our position in the rapidly growing automotive market,”
continued Kelley. “As a result, Amkor is now the world’s largest
OSAT provider for automotive ICs, with around $750 million in
combined automotive application revenue. We believe that
consolidating J-Devices with Amkor will facilitate the acceleration
of synergies and cost savings across the organization.”
Amkor has invested an aggregate of $202 million since 2009 to
acquire its 100% interest in J-Devices, and this investment has
generated $84 million of equity in earnings for Amkor through
December 31, 2015. For the year ended December 31, 2015, J-Devices
had revenues of $813 million, EBITDA of $114 million and net income
of $30 million. Cash and cash equivalents were $128 million and
total debt was $56 million for J-Devices at December 31, 2015.
Amkor’s balance sheet at December 31, 2015 reflects the
consolidation of J-Devices, and the operating results of J-Devices
will be consolidated beginning in 2016. The reconciliation to the
comparable GAAP measure for EBITDA is included below under
"Selected Operating Data."
Cash and cash equivalents were $523 million, and total debt was
$1.6 billion, at December 31, 2015.
Business Outlook
“Market conditions in Q1 remain sluggish, with particular
weakness in the high-end smartphone market,” said Kelley. “Despite
challenging market conditions, we expect that Q1 revenues will
increase 21% sequentially, driven by incremental revenue from
J-Devices. At this time, we expect full year 2016 capital
expenditures of around $650 million.”
Based upon currently available information, we have the
following expectations for the first quarter 2016, which will
include J-Devices’ operating results:
- Net sales of $785 million to
$835 million, up 17% to 25% from the prior quarter
- Gross margin of 9% to 13%
- Net loss of ($37) million to
($7) million, or ($0.15) to ($0.03) per diluted share
Conference Call Information
Amkor will conduct a conference call on Thursday, February 11,
2016, 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 39845912). 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 Technology Inc. is one of the world’s largest providers of
semiconductor packaging and test services. Founded in 1968, Amkor
pioneered the outsourcing of IC assembly and test and is now a
strategic manufacturing partner for more than 250 of the world’s
leading semiconductor companies, foundries and electronics OEMs.
Amkor’s operational base encompasses more than 7 million square
feet of floor space with production facilities, product development
centers and sales & support offices located in key electronics
manufacturing regions in Asia, Europe and the USA. For more
information visit www.amkor.com.
AMKOR TECHNOLOGY, INC.
Selected Operating Data
Q4 2015 Q3 2015 Q4 2014 2015
2014 Net Sales Data: Net sales (in millions):
Advanced products* $ 333 $ 365 $ 462 $ 1,433 $ 1,553 Mainstream
products** 338 369 391 1,452 1,576
Total net sales $ 671 $ 734 $ 853 $
2,885 $ 3,129 Packaging services 85 % 85 % 85
% 85 % 85 % Test services 15 % 15 % 15 % 15 % 15 % Net sales
from top ten customers 64 % 61 % 64 % 63 % 61 % Packaged
units (in millions): Advanced products* 1,196 1,305 1,174 4,965
3,776 Mainstream products** 2,492 2,750 3,001
10,616 13,112 Total packaged units 3,688 4,055
4,175 15,581 16,888
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) 54 % 55 % 60 % 55 % 56 % Automotive,
industrial and other (infotainment, safety, performance, comfort)
15 % 13 % 10 % 14 % 11 % Consumer (television, set top boxes,
gaming, portable media, digital cameras) 12 % 12 % 11 % 12 % 13 %
Networking (servers, routers, switches) 11 % 12 % 10 % 11 % 11 %
Computing (PCs, hard disk drive, printers, peripherals, servers) 8
% 8 % 9 % 8 % 9 % Total 100
% 100 % 100 % 100 % 100 %
Gross Margin Data: Net sales 100.0 % 100.0 % 100.0 % 100.0 %
100.0 % Cost of sales: Materials 35.8 % 36.8 % 36.0 % 36.6 % 36.8 %
Labor 15.8 % 14.9 % 13.2 % 15.1 % 14.0 % Other manufacturing 33.1 %
31.1 % 27.9 % 31.7 % 29.1 % Litigation settlement — % —
% 8.8 % — % 2.4 % Gross margin 15.3
% 17.2 % 14.1 % 16.6 % 17.7 %
*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 net income and
non-GAAP earnings per diluted share for the quarter and year ended
December 31, 2015. We also provide non-GAAP gross margin, non-GAAP
net income and non-GAAP earnings per diluted share for the quarter
and year ended December 31, 2014. We present these non-GAAP amounts
to demonstrate the impact of the consolidation of J-Devices, the
sale of our subsidiary to J-Devices, the early extinguishment of
debt and 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 2015 Q4 2014
2015 2014 (in millions, except per share
amounts) Gross margin 14.1 % 17.7 % Plus: Litigation settlement
charges divided by net sales 8.8 % 2.4 % Non-GAAP gross margin 22.9
% 20.1 % Net income $ (9 ) $ 13 $ 58 $ 130 Plus: Litigation
settlement charges, net of tax — 77 — 78 Plus: Net loss on
acquisition of J-Devices, net of tax 14 — 14 — Plus: Loss on early
extinguishment of debt, net of tax — — 9 — Less: Gain on sale of
subsidiary to J-Devices, net of tax — — — (18
) Non-GAAP net income $ 5 $ 90 $ 81 $ 190
Earnings per diluted share $ (0.04 ) $ 0.06 $ 0.24 $
0.55 Plus: Litigation settlement charges per diluted share, net of
tax — 0.32 — 0.33 Plus: Net loss on acquisition of J-Devices per
diluted share, net of tax 0.06 — 0.06 — Plus: Loss on early
extinguishment of debt per diluted share, net of tax — — 0.04 —
Less: Gain on sale of subsidiary to J-Devices per diluted share,
net of tax — — — (0.07 ) Non-GAAP earnings per
diluted share $ 0.02 $ 0.38 $ 0.34 $ 0.81
AMKOR TECHNOLOGY, INC.
Selected Operating Data
In the press release above we provide EBITDA and Adjusted
EBITDA, which are not defined by U.S. GAAP. We define EBITDA as net
income before interest expense, income tax expense and depreciation
and amortization. We believe EBITDA and Adjusted EBITDA to be
relevant and useful information to our investors because they
provide additional information in assessing our financial operating
results. Our management uses EBITDA and Adjusted EBITDA in
evaluating our operating performance, our ability to service debt
and our ability to fund capital expenditures. However, EBITDA and
Adjusted EBITDA have certain limitations in that they do not
reflect the impact of certain expenses on our consolidated
statements of income, including interest expense, which is a
necessary element of our costs because we have borrowed money in
order to finance our operations, income tax expense, which is a
necessary element of our costs because taxes are imposed by law,
and depreciation and amortization, which is a necessary element of
our costs because we use capital assets to generate income. EBITDA
and Adjusted EBITDA should be considered in addition to, and not as
a substitute for, or superior to, operating income, net income or
other measures of financial performance prepared in accordance with
U.S. GAAP. Furthermore our definition of EBITDA and Adjusted EBITDA
may not be comparable to similarly titled measures reported by
other companies. Below is our reconciliation of EBITDA and Adjusted
EBITDA to U.S. GAAP net income.
Non-GAAP Financial Measures
Reconciliation: Q4 2015 Q3 2015
Q4 2014 2015 2014 (in
millions) EBITDA Data:
J-Devices' net income
$ 30
Plus: Interest expense
1
Plus: Income tax expense
13
Plus: Depreciation & amortization
70 J-Devices' EBITDA $ 114
Amkor's net (loss) income
$ (9 ) $ 28 $ 13 $ 58 $ 130
Plus: Interest expense
18 19 36 86 110
Plus: Income tax expense
1 17 1 28 34
Plus: Depreciation & amortization
122 123 125 494 465 Amkor's
EBITDA $ 132 $ 187 $ 175 $ 666 $ 739
Plus: Cost of goods sold portion of litigation
settlement charges $ — $ — $ 75 $ — $ 75 Plus: Net loss on
acquisition of J-Devices 14 — — 14 — Plus: Loss on early
extinguishment of debt — — — 9 — Less: Gain on sale of subsidiary
to J-Devices — — — — (18 ) Amkor's
Adjusted EBITDA $ 146 $ 187 $ 250 $ 689
$ 796
In the press release above we refer to free cash flow, which is
not defined by U.S. GAAP. We define free cash flow as net cash
provided by operating activities less payments for property, plant
and equipment. We believe free cash flow to be relevant and useful
information to our investors because it provides them with
additional information 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, free cash
flow has certain limitations, including that it does not represent
the residual cash flow available for discretionary expenditures
since other, non-discretionary expenditures, such as mandatory debt
service, are not deducted from the measure. The amount of mandatory
versus discretionary expenditures can vary significantly between
periods. This measure should be considered in addition to, and not
as a substitute for, or superior to, other measures of liquidity or
financial performance prepared in accordance with U.S. GAAP, such
as net cash provided by operating activities. Furthermore, our
definition of free cash flow may not be comparable to similarly
titled measures reported by other companies. Below is our
reconciliation of free cash flow to U.S. GAAP net cash provided by
operating activities.
Non-GAAP Financial Measures
Reconciliation: Q4 2015 Q3 2015
Q4 2014 2015 2014 (in
millions) Free Cash Flow Data: Net cash provided by
operating activities $ 154 $ 195 $ 208 $ 578 $ 614 Less purchases
of property, plant and equipment (185 ) (158 ) (239 ) (538 ) (681 )
Free cash flow
$ (31 ) $ 37 $ (31 ) $ 40 $ (67 )
AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited)
For the Three Months Ended For the Year Ended
December 31, December 31, 2015
2014 2015 2014 (In thousands, except
per share data) Net sales $ 670,644 $ 853,113 $ 2,884,603 $
3,129,440 Cost of sales 568,024 733,042 2,405,338
2,576,618 Gross profit 102,620 120,071
479,265 552,822 Selling, general and administrative
58,045 62,800 231,654 254,498 Research and development 22,898
17,303 82,017 76,864 Total operating
expenses 80,943 80,103 313,671 331,362
Operating income 21,677 39,968 165,594 221,460
Interest expense 17,090 34,917 81,407 104,956 Interest
expense, related party 1,242 1,242 4,969 4,969 Other (income)
expense, net 15,712 (9,254 ) 10,928 (24,543 ) Total
other expense, net 34,044 26,905 97,304 85,382
(Loss) income before taxes and equity in earnings of
unconsolidated affiliate (12,367 ) 13,063 68,290 136,078 Income tax
expense 837 1,420 28,035 33,845
(Loss) income before equity in earnings of
unconsolidated affiliate
(13,204 ) 11,643 40,255 102,233 Equity in earnings of J-Devices
4,647 2,485 20,107 31,654 Net (loss)
income (8,557 ) 14,128 60,362 133,887 Net income attributable to
noncontrolling interests (409 ) (993 ) (2,795 ) (3,501 ) Net (loss)
income attributable to Amkor $ (8,966 ) $ 13,135 $ 57,567
$ 130,386 Net (loss)income attributable to
Amkor per common share: Basic $ (0.04 ) $ 0.06 $ 0.24
$ 0.56 Diluted $ (0.04 ) $ 0.06 $ 0.24 $ 0.55
Shares used in computing per common share amounts: Basic
236,961 236,578 236,850 230,710 Diluted 236,961 236,937 237,170
236,731
AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31, 2015 2014 (In
thousands) ASSETS Current assets: Cash and cash
equivalents $ 523,172 $ 449,946 Restricted cash 2,000 2,681
Accounts receivable, net of allowances 526,143 469,683 Inventories
238,205 223,379 Other current assets 27,960 52,259
Total current assets 1,317,480 1,197,948 Property, plant and
equipment, net 2,579,017 2,206,476 Goodwill 19,443 — Investments —
117,733 Restricted cash 2,176 2,123 Other assets 113,184
111,125 Total assets $ 4,031,300 $ 3,635,405
LIABILITIES AND EQUITY Current liabilities:
Short-term borrowings and current portion of long-term debt $
76,770 $ 5,000 Trade accounts payable 434,222 309,025 Capital
expenditures payable 242,980 127,568 Accrued expenses 263,457
258,997 Total current liabilities 1,017,429 700,590
Long-term debt 1,444,107 1,450,824 Long-term debt, related party
75,000 75,000 Pension and severance obligations 167,197 152,673
Other non-current liabilities 101,679 125,382 Total
liabilities 2,805,412 2,504,469 Amkor
stockholders’ equity: Preferred stock — — Common stock 283 282
Additional paid-in capital 1,883,592 1,878,810 Accumulated deficit
(459,395 ) (516,962 ) Accumulated other comprehensive loss (2,084 )
(32,867 ) Treasury stock (213,758 ) (213,028 ) Total Amkor
stockholders’ equity 1,208,638 1,116,235 Noncontrolling interests
in subsidiaries 17,250 14,701 Total equity 1,225,888
1,130,936 Total liabilities and equity $ 4,031,300
$ 3,635,405
AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
For the Year Ended December 31, 2015
2014 (In thousands) Cash flows from operating
activities: Net income $ 60,362 $ 133,887 Depreciation and
amortization 494,200 464,706 Loss on debt retirement 2,530 — Loss
from acquisition of J-Devices 13,878 — Gain on sale of subsidiary
to J-Devices — (9,155 ) Other operating activities and non-cash
items (10,083 ) (40,762 ) Changes in assets and liabilities 17,058
65,233 Net cash provided by operating activities
577,945 613,909 Cash flows from investing
activities: Payments for property, plant and equipment (537,975 )
(681,120 ) Proceeds from sale of property, plant and equipment
6,945 2,815
Cash received from business acquisition of
J-Devices, net
22,577 — Cash received (transferred) on sale of subsidiary to
J-Devices, net 8,355 (15,774 ) Investment in J-Devices (12,908 ) —
Other investing activities (1,356 ) (399 ) Net cash used in
investing activities (514,362 ) (694,478 ) Cash flows from
financing activities: Borrowings under revolving credit facilities
290,000 — Payments under revolving credit facilities (150,000 ) —
Proceeds from issuance of long-term debt 400,000 80,000 Payments of
long-term debt (530,000 ) (145,000 ) Payments for debt issuance
costs (312 ) (903 ) Payment of deferred consideration for an
acquisition — (18,763 ) Proceeds from issuance of stock through
share-based compensation plans 931 6,250 Payments of tax
withholding for restricted shares (730 ) (1,579 ) Payments of
subsidiary dividends to noncontrolling interests (246 ) —
Net cash provided by (used in) financing activities 9,643
(79,995 ) Effect of exchange rate fluctuations on cash and
cash equivalents — 68 Net increase (decrease)
in cash and cash equivalents 73,226 (160,496 ) Cash and cash
equivalents, beginning of period 449,946 610,442 Cash
and cash equivalents, end of period $ 523,172 $ 449,946
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 our
gaining market share in Japan and enhancing our SiP business,
position in the automotive market, realizing synergies and cost
savings from the acquisition of J-Devices 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 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;
- 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
major economies worldwide, particularly the recent slowdown in
China;
- disruptions in our business or
deficiencies in our controls resulting from the integration of
newly acquired operations, particularly J-Devices, 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/20160211006444/en/
Amkor Technology, Inc.Joanne SolomonExecutive Vice President
& Chief Financial
Officer480-786-7878joanne.solomon@amkor.comorGreg JohnsonSenior
Director, Finance and Investor
Relations480-786-7594greg.johnson@amkor.com
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