e8vk
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
AMKOR TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE
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000-29472
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23-1722724 |
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(State or Other Jurisdiction of
Incorporation)
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(Commission File Number)
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(IRS Employer
Identification No.) |
1900 SOUTH PRICE ROAD
CHANDLER, AZ 85248
(Address of Principal Executive Offices, including Zip Code)
(480) 821-5000
(Registrants telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)) |
TABLE OF CONTENTS
Item 2.02 Results of Operations and Financial Condition
Attached hereto as Exhibit 99.1 and incorporated by reference herein is financial information for
Amkor Technology, Inc. for the three months ended March 31, 2007 and forward-looking statements
relating to the second quarter of 2007 as presented in a press release of May 1, 2007. The
information in this Form 8-K and the exhibit attached hereto is being furnished and shall not be
deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the
Exchange Act) or otherwise subject to the liabilities of that section, nor shall it be deemed
incorporated by reference in any filing under the Securities Act of 1933, as amended, or the
Exchange Act, regardless of any general incorporation language in such filing.
Exhibit 99.1 discloses free cash flow for the three months ended March 31, 2007. Free cash flow
is considered a non-GAAP financial measure. Generally, a non-GAAP financial measure is a numerical
measure of a companys 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 generally accepted accounting principles. We believe
free cash flow to be relevant and useful information to our investors in assessing our financial
operating results as this measure is used by our management in evaluating our liquidity, our
ability to service debt and 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 may not be
comparable to similarly titled measures reported by other companies. The non-GAAP measures included
in our press release have been reconciled to the nearest GAAP measure as required under SEC rules
regarding the use of non-GAAP financial measures.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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AMKOR TECHNOLOGY, INC. |
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By:
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/s/ Kenneth T. Joyce
Kenneth T. Joyce
Chief Financial Officer
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Date: May 1, 2007 |
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EXHIBIT INDEX:
99.1 Text of Press Release dated May 1, 2007
exv99w1
Exhibit 99.1
News Release
Amkor
Reports First Quarter Sales
CHANDLER, Ariz., May 1, 2007 Amkor Technology, Inc. (NASDAQ: AMKR) reported first quarter
2007 sales of $651 million, up 1% from the first quarter of 2006 and down 5% sequentially from the
fourth quarter of 2006. Amkors first quarter 2007 net income was $35 million, or $0.18 per
diluted share, compared with net income of $34 million, or $0.19 per diluted share, in the first
quarter of 2006.
Our first quarter performance reflected a seasonal slowdown in demand together with an inventory
correction at the customer level, said James Kim, Amkors Chairman and Chief Executive Officer.
We remain committed to maintaining our technology and product leadership in key growth markets and
to exercising capital and pricing discipline so that we can achieve consistent profitability and
free cash flow. We are investing capital in strategic growth areas of flip chip, wafer level
processing, 3D and other advanced packaging, and we continue to prudently expand our capabilities
in test development, wafer probe and final test.
While our first quarter volumes were seasonally lower in most product categories, we saw continued
growth in flip chip and modules, said Kim. Our flip chip solutions encompass turnkey wafer bump,
wafer probe, assembly and final test, and Amkor is well positioned to support a broad range of
high-performance applications, including gaming, networking, wireless and advanced servers. Our
module solutions currently support customers in the wireless market.
Commencing with the second quarter of 2005 and through the third quarter of 2006, we enjoyed six
consecutive quarters of above-average growth in our business. Within this context, and mindful of
the fact that our business is increasingly influenced by growth in the world economy and levels of
consumer spending, we expect the softness we experienced in the first
quarter will be followed by modest growth
for the rest of 2007, said Kim.
Our first quarter financial performance was in line with guidance and is further evidence of our
success in achieving consistent levels of profitability and generating free cash flow, said Ken
Joyce, Amkors Chief Financial Officer.
First quarter 2007 net sales increased $6 million or 1% over the first quarter of 2006. A
nearly 10% decline in unit shipments in 2007 was more than offset by a stable pricing environment
and mix shift to packages with higher average selling prices, said Joyce. Compared with the
fourth quarter of 2006, sales were down 5% on lower unit volumes across most of our product lines,
with notable exceptions for flip chip and modules. The lower unit
volumes in the first quarter were due to
anticipated seasonal declines and to a lesser extent customer inventory corrections during the
quarter.
Gross margin in the first quarter of 2007 was 22.6% down from 24.0% in the first quarter of 2006
and 25.3% in the fourth quarter of 2006. On a year-over-year basis, factory wage increases and
increased factory overhead costs more than offset the benefit of factory workforce reductions.
Compared with the fourth quarter of 2006, the
decline in gross margin principally reflected the impact of our operating leverage on lower sales
volume, coupled with growth in packages with a higher material content.
Selling,
general & administrative expenses in the first quarter of 2007 were $2.5 million higher
than the first quarter of 2006, reflecting higher spending for professional fees, indirect factory
costs, and incentive compensation partially offset by a $3 million gain recognized on disposition
of real property used for administrative purposes. Compared with the fourth quarter of 2006, and
including the above $3 million gain, the first quarter of 2007 SG&A expenses were essentially flat. Our current
expectation is that SG&A costs in the second quarter of 2007
will be up slightly from the first quarter reflecting increased indirect
factory administrative expenses and litigation activity.
Capital additions totaled $55 million in the first quarter of 2007. Our continued focus
on improving overall asset productivity allowed us to moderate our capital additions, said Joyce.
Our capacity expansion continues to focus on strategic growth areas, including wafer bump, wafer
level packaging and flip chip. We are currently targeting second quarter 2007 capital additions of
$70 million and full year capital additions in the range of $250 $300 million. We are prepared
to adjust these figures depending on business conditions.
We have achieved positive free cash flow for the past six quarters, and given our current view of
business conditions, we anticipate this trend will continue throughout 2007, said Joyce. We
continue to address our capital structure and reduce ongoing interest expense. In March we used
available cash to retire the remaining $142 million of 5% convertible debt at maturity. In April
we refinanced a $300 million term loan due 2010 (accruing interest at LIBOR + 450 bp) with a
seven-year amortizing loan due 2014 (accruing interest at approximately LIBOR + 125 bp). Taken
together, these actions will result in approximately $13 million of interest savings for the
remainder of 2007. In connection with the April 2007 refinancing, Amkor will record a charge
in the second quarter, with no tax effect, of $16 million, reflecting $9 million in prepayment fees
and $7 million to write off unamortized deferred debt issuance costs.
The income tax rate was 10.5% for the first quarter of 2007 and we anticipate an effective tax rate
of 6.7% for the year. This reflects the utilization of foreign net operating loss carryforwards
and tax holidays in certain of our foreign jurisdictions. At March 31, 2007, Amkor had U.S. net
operating losses available for carryforward totaling $400 million expiring through 2027 and $60
million of non-U.S. operating losses available for carryforward, expiring through 2012.
Selected operating data for the first quarter 2007 is included in a section before the financial
tables.
Business Outlook
On the basis of our customers forecasts, we have the following expectations for the second quarter
of 2007:
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Sales up 3% to 4% from the first quarter of 2007 |
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Gross margin of around 23% |
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Net income in the range of $0.13 to $0.16 per diluted share, which includes
charges of $0.08 per share associated with the April 2007 refinancing |
Amkor will conduct a conference call on May 1, 2007 at 5:00 p.m. eastern time. The call can be
accessed by dialing 303-262-2175 or by visiting the investor relations page of our web site:
www.amkor.com or CCBNs
2
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: 11087561#.
About Amkor
Amkor is a leading provider of advanced 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 companys SEC filings and
on Amkors web site: www.amkor.com.
Forward Looking Statement Disclaimer
This press release contains forward-looking statements within the meaning of federal securities
laws, including, without limitation, statements regarding the following: plans to exercise
discipline in our capital investments, build capabilities in technology and key growth areas;
expectations of modest industry growth; expectations regarding
SG&A costs in the second quarter of 2007; expectations
regarding 2007 capital expenditures; expectations to achieve positive free cash flow throughout
2007; expectations regarding interest savings for the remainder of 2007; expectations regarding the
effective tax rate for full year 2007 and the level of operating loss carryforwards; and the
statements regarding sales, gross margin and net income per diluted share 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; inability to achieve high capacity utilization
rates; volatility of consumer demand for products incorporating our semiconductor packages;
weakness in the forecasts of Amkors customers; customer modification of and follow through with
respect to forecasts provided to Amkor; curtailment of outsourcing by our customers; our
substantial indebtedness and restrictive covenants; failure to realize sufficient cash flow to fund
capital expenditures; deterioration of the U.S. or other economies; the highly unpredictable nature
and costs of litigation and other legal activities and the risk of adverse results of such matters;
the outcome of the pending SEC investigation; worldwide economic effects of terrorist attacks,
natural disasters 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; 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 companys operating results and financial condition is
detailed in the companys filings with the Securities and Exchange Commission, including Form 10-K
for the year ended December 31, 2006. 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
jluth@amkor.com
(selected operating data and tables to follow)
3
Selected operating data for the first quarter 2007
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1st Quarter |
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Capital additions |
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$ |
55 million |
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Net increase in related accounts payable and deposits |
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4 million |
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Payments for property, plant & equipment |
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$ |
51 million |
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Depreciation and amortization |
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$ |
71 million |
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Free cash flow * |
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$ |
72 million |
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* |
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Reconciliation of free cash flow to the most directly comparable US GAAP measure: |
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Net cash provided by operating activities |
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123 million |
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Less payments for property, plant and equipment |
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(51 million |
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Free cash flow from continuing operations |
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$ |
72 million |
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We define free cash flow as net cash 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 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, 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.
For the First Quarter of 2007:
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Capacity utilization was approximately 75% |
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First quarter assembly unit shipments were 2.0 billion, down 9% from Q4 2006 |
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Our top ten customers accounted for 44% of net sales |
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End market distribution (an approximation based on a sampling of our largest customers): |
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Communications |
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38 |
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Consumer |
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32 |
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Computing |
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20 |
% |
Other |
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10 |
% |
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As a percentage of net sales: |
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Laminate packages |
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52 |
% |
Leadframe packages |
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33 |
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Other |
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4 |
% |
Test |
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11 |
% |
(tables to follow)
4
AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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For the Three Months Ended |
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March 31, |
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2007 |
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2006 |
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(In thousands, except per share data) |
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Net sales |
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$ |
650,988 |
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$ |
645,089 |
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Cost of sales |
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503,650 |
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490,352 |
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Gross profit |
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147,338 |
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154,737 |
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Operating expenses: |
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Selling, general and administrative |
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62,667 |
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60,204 |
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Research and development |
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9,625 |
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9,430 |
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Provision for legal settlements and contingencies |
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1,000 |
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Total operating expenses |
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72,292 |
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70,634 |
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Operating income |
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75,046 |
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84,103 |
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Other (income) expense: |
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Interest expense, net |
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35,160 |
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41,157 |
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Interest expense, related party |
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1,563 |
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1,788 |
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Foreign currency (gain) loss, net |
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(15 |
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3,928 |
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Debt retirement (gain) loss, net |
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(451 |
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Other (income) expense, net |
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(686 |
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(485 |
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Total other expense, net |
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36,022 |
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45,937 |
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Income before income taxes
and minority interests |
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39,024 |
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38,166 |
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Income tax expense |
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4,107 |
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3,612 |
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Income before minority interests |
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34,917 |
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34,554 |
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Minority interests, net of tax |
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(327 |
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(115 |
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Net income |
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$ |
34,590 |
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$ |
34,439 |
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Net income per common share: |
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Basic |
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$ |
0.19 |
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$ |
0.19 |
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Diluted |
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$ |
0.18 |
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$ |
0.19 |
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Shares used in computing net income
per common share: |
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Basic |
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178,513 |
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176,801 |
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Diluted |
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206,540 |
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190,764 |
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5
AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
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March 31, |
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December 31, |
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2007 |
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2006 |
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(In thousands) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
177,138 |
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$ |
244,694 |
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Restricted cash |
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2,510 |
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2,478 |
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Accounts receivable: |
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Trade, net of allowances |
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381,394 |
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380,888 |
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Other |
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5,520 |
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5,969 |
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Inventories, net |
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147,835 |
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164,178 |
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Other current assets |
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39,947 |
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39,650 |
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Total current assets |
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754,344 |
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837,857 |
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Property, plant and equipment, net |
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1,428,082 |
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1,443,603 |
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Goodwill |
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672,345 |
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671,900 |
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Intangibles, net |
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26,911 |
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29,694 |
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Investments |
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6,006 |
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6,675 |
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Restricted cash |
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1,680 |
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1,688 |
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Other assets |
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51,612 |
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49,847 |
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Total assets |
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$ |
2,940,980 |
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$ |
3,041,264 |
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LIABILITIES AND STOCKHOLDERS EQUITY |
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Current liabilities: |
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Short-term borrowings and current portion of long-term debt |
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$ |
120,681 |
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$ |
185,414 |
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Trade accounts payable |
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|
284,824 |
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291,847 |
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Accrued expenses |
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143,774 |
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145,501 |
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Total current liabilities |
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549,279 |
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622,762 |
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Long-term debt |
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1,629,278 |
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1,719,901 |
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Long-term debt, related party |
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100,000 |
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100,000 |
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Pension and severance obligations |
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182,985 |
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|
170,070 |
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Other non-current liabilities |
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34,155 |
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|
30,008 |
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Total liabilities |
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2,495,697 |
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|
2,642,741 |
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Commitments and contingencies |
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Minority interests |
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|
4,877 |
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|
4,603 |
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Stockholders equity: |
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Preferred stock |
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Common stock |
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|
179 |
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|
178 |
|
Additional paid-in capital |
|
|
1,454,519 |
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|
|
1,441,194 |
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Accumulated deficit |
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|
(1,006,800 |
) |
|
|
(1,041,390 |
) |
Accumulated other comprehensive loss |
|
|
(7,492 |
) |
|
|
(6,062 |
) |
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|
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Total stockholders equity |
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|
440,406 |
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|
|
393,920 |
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|
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Total liabilities and stockholders equity |
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$ |
2,940,980 |
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|
$ |
3,041,264 |
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6
AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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For the Three Months Ended |
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|
March 31, |
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|
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2007 |
|
|
2006 |
|
|
|
(In thousands) |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
34,590 |
|
|
$ |
34,439 |
|
Depreciation and amortization |
|
|
71,364 |
|
|
|
66,061 |
|
Other operating activities and non-cash items |
|
|
4,055 |
|
|
|
15,007 |
|
Changes in assets and liabilities |
|
|
13,440 |
|
|
|
3,462 |
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
123,449 |
|
|
|
118,969 |
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Cash flows from investing activities: |
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|
|
|
|
|
Payments for property, plant and equipment |
|
|
(51,386 |
) |
|
|
(79,098 |
) |
Proceeds from the sale of property, plant and equipment |
|
|
3,945 |
|
|
|
923 |
|
Other investing activities |
|
|
(1,177 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(48,618 |
) |
|
|
(78,175 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Borrowings under revolving credit facilities |
|
|
35,221 |
|
|
|
63,092 |
|
Payments under revolving credit facilities |
|
|
(45,272 |
) |
|
|
(52,628 |
) |
Payments for debt issuance costs |
|
|
(351 |
) |
|
|
(485 |
) |
Payments on long-term debt |
|
|
(145,149 |
) |
|
|
(32,742 |
) |
Proceeds from issuance of stock through stock compensation plans |
|
|
12,524 |
|
|
|
832 |
|
|
|
|
|
|
|
|
Net cash used in financing activities |
|
|
(143,027 |
) |
|
|
(21,931 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate fluctuations on cash and cash equivalents |
|
|
640 |
|
|
|
805 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
|
(67,556 |
) |
|
|
19,668 |
|
Cash and cash equivalents, beginning of period |
|
|
244,694 |
|
|
|
206,575 |
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
177,138 |
|
|
$ |
226,243 |
|
|
|
|
|
|
|
|
7