Amkor Reports First Quarter 2002 Results.Business Editors CHANDLER Chandler, city (1990 pop. 90,533), Maricopa co., S central Ariz., in the Salt River valley; inc. 1920. It is both a residential community and a center for research and technology. Tourism is also important, and the San Marcos Golf Resort is in Chandler. , Ariz.--(BUSINESS WIRE)--May 2, 2002 Amkor Technology Amkor Technology, Inc. (NASDAQ: AMKR) is a high-tech semiconductor product manufacturer that includes Intel and IBM among its primary customers. Previously headquartered in West Chester, Pennsylvania, United States, Amkor recently announced that it will move to Chandler, , Inc. (Nasdaq: AMKR AMKR Amkor Technology ) reported a first quarter 2002 net loss of $188 million, or ($1.15) per share, which includes two items related to Amkor's equity investment in Anam Semiconductor, Inc. ("ASI ASI, n See Anxiety Sensitivity Index. "): a non-cash impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge of $97 million, or ($0.59) per share, and a one-time net gain of approximately $12 million, or $0.07 per share, in "Equity in (loss) of investees." For the first quarter of 2001, Amkor's pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net loss, excluding the amortization of goodwill and other intangibles, was $69 million, or ($0.26) per share. Including the amortization of goodwill and other intangibles, the net loss for the fourth quarter of 2001 was $40 million, or ($0.45) per share. Effective January 1, 2002 Amkor adopted Statement of Financial Accounting Standards Number 142, "Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. ." The new FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). standard eliminates the amortization of goodwill and requires an annual review for impairment. First quarter 2002 revenue was $350 million, down 1% sequentially and down 27% year-over-year. First quarter assembly & test revenue was $289 million; wafer (1) A small, thin continuous-loop magnetic tape cartridge that has been used from time to time for data storage and specialized applications. (2) The base unit of chip making. It is a slice taken from a salami-like silicon crystal ingot up to 12" (300mm) in diameter. fab revenue was $61 million. "Our first quarter revenue tracked largely to plan and confirmed expectations that improving business conditions would transcend the seasonal weakness typically associated with the first quarter," said James Kim This article is about the CNET editor. For the Korean guitarist, see Kim Se Hwang. For the Korean-American physician, see Jim Kim. James Kim (August 9, 1971 – December 3/4, 2006) was an American television personality and technology analyst for the former , Amkor's chairman and chief executive officer. "We remain firmly convinced that the initiatives we implemented during 2001 - investing in new technology, penetrating penetrating breaching the tissues of the body. key growth regions, and strengthening customer relationships - have created a platform that should enable Amkor to achieve above-industry growth in 2002." "Our primary goal for 2002 is to execute on the abundance Abundance See also Fertility. Amalthea’s horn horn of Zeus’s nurse-goat which became a cornucopia. [Gk. Myth.: Walsh Classical, 19] cornucopia conical receptacle which symbolizes abundance. [Rom. Myth. of growth opportunities and make the most effective use of our resources," said John Boruch, Amkor's president and chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . "We have streamlined our operations in Korea and the Philippines and are making progress with our new factories in Japan, Taiwan and China." Operating Environment In computing, an operating environment is the environment in which users run programs, whether in a command line interface, such as in MS-DOS or the Unix shell, or in a graphical user interface, such as in the Macintosh operating system. "During the quarter, our business strengthened on a month-to-month basis, and as the quarter progressed, our customers' long-range forecasts began to trend upward," said Boruch. "In early March we suggested that on the basis of these trends, we could achieve double-digit revenue growth in the second quarter. Our forecasts have continued to build, and we currently expect second quarter revenue to increase around 20%. Our visibility into the third quarter is also getting better, and our long-range forecasts currently suggest that, even excluding revenue from the proposed Fujitsu venture, we are likely to achieve a double-digit sequential increase in third quarter revenue." "The growth in our customers' forecasts has been broad-based. Excess inventory continues to be worked off, and production is now rising to meet end market demand. In addition, we are seeing an acceleration of strategic outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. together with increased adoption of advanced packaging solutions such as flip chip A chip packaging technique in which the active area of the chip is "flipped over" facing downward. Instead of facing up and bonded to the package leads with wires from the outside edges of the chip, any surface area of the flip chip can be used for interconnection, which is typically done , system in package, stacked Stacked is an American television sitcom that premiered on Fox on April 13, 2005. On May 18, 2006, Stacked was cancelled, leaving five episodes unaired in the United States. The last episode aired on January 11, 2006. chips, high performance BGA (Ball Grid Array) A popular surface mount chip package that uses a grid of solder balls as its connectors. Available in plastic and ceramic varieties, BGA is noted for its compact size, high lead count and low inductance, which allows lower voltages to be used. and MicroLeadFrame(TM)," said Boruch. Outsourcing Trends "During the first quarter we saw further evidence that semiconductor companies are becoming more serious about rationalizing their manufacturing infrastructure," said James Kim. "In January we commenced a long-term alliance with Agilent Technologies This article needs sources or references that appear in reliable, third-party publications. Alone, primary sources and sources affiliated with the subject of this article are not sufficient for an accurate encyclopedia article. to take over the assembly of printer ASIC (Application Specific Integrated Circuit) Pronounced "a-sick." A chip that is custom designed for a specific application rather than a general-purpose chip such as a microprocessor. chips. This alliance has the potential to make Agilent a top-10 customer. We also agreed to acquire the semiconductor assembly business of Citizen Watch Company, which will augment aug·ment v. aug·ment·ed, aug·ment·ing, aug·ments v.tr. 1. To make (something already developed or well under way) greater, as in size, extent, or quantity: our high-end packaging capabilities in Japan and enhance our intellectual property portfolio," said Kim. "Following on our successful joint venture with Toshiba, we announced last week a similar transaction with Fujitsu Ltd., wherein where·in adv. In what way; how: Wherein have we sinned? conj. 1. In which location; where: the country wherein those people live. 2. Amkor intends to acquire a 67% interest in a joint venture acquisition of Fujitsu's high-end assembly & test factory in Kagoshima, Japan," said Kim. "This transaction, which incorporates a five-year supply agreement with Fujitsu, is expected to close early in the third quarter and should generate an annual revenue stream of $100 million or more. As was the case with our Toshiba venture, the Fujitsu transaction involves a very modest cash outlay and should be accretive to earnings." Financial Highlights During the first quarter Amkor recorded an impairment charge of $97 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc our equity investment in ASI. The charge reflects the difference between ASI's stock price as of March 31, 2002 and the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of the investment. Although we believe that ASI's stock price does not take into account all of the information relevant for determining the value of our investment in ASI, in view of the length of time ASI's stock price has traded below our carrying value, we elected to record an impairment charge. Amkor continues to explore opportunities to maximize the value of our investment in ASI. During the first quarter we recognized a one-time net gain of approximately $12 million, or $0.07 per share, in "Equity in (loss) of investees" principally attributable to ASI's recovery of receivables from certain affiliated companies Affiliated Companies A situation that occurs when one company owns a minority interest (less than 50%) in another company. Also refers to companies that are related to each other in some way. Notes: An affiliated company is sometimes referred to as a subsidiary. of ASI that had been previously written off. "Our first quarter gross margin was negatively impacted by two principal factors: the recognition of $2.5 million in severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs related to additional workforce reductions undertaken in the Philippines, and the acceleration of our build-up build·up also build-up n. 1. The act or process of amassing or increasing: a military buildup; a buildup of tension during the strike. 2. of personnel and support systems in China and Taiwan," said Ken Joyce, Amkor's chief financial officer. "During the first quarter we added more than 400 people in China and Taiwan in preparation for expected increases in business activity during 2002." First quarter EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become was $22 million, compared to $103 million in Q1 of 2001 and $28 million in Q4 of 2001. "We expect the current build in customer forecasts, coupled with the benefits of positive operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. , to result in significantly improved levels of cash flow and EBITDA through the remainder of 2002," said Joyce. We have calculated EBITDA as earnings before income taxes; equity in income (loss) of affiliates; foreign currency gain or loss; interest expense, net; depreciation and amortization; loss on disposal of assets; and loss on impairment of equity investment. EBITDA is a common measure used by investors to evaluate a company's ability to service debt. EBITDA is not defined by generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting , and our definition of EBITDA may not be comparable to similar companies. "Capital expenditures were $20 million for the first quarter. Depreciation and amortization totaled $94 million. Our capital budget for 2002 remains in the neighborhood of $100 million, however if business conditions continue to improve and our customers' forecasts continue to build, we will consider increasing this budget," noted Joyce. "During the downturn we redeployed approximately $60 million of under-utilized equipment to our newer factory locations in Taiwan, China and Japan in connection with business opportunities in these markets," said Joyce. "We believe this operating flexibility will have positive implications for our asset utilization as overall business conditions recover." Business Outlook While worldwide economic conditions remain sluggish, and the timing of a rebound rebound (rē´bownd), n/v 1. a recovery from illness. n 2. an outbreak of fresh reflex activity after withdrawal of a stimulus rebound adjective in market demand is uncertain, there are several positive indicators for our business. We are seeing additional evidence that semiconductor companies are accelerating their outsourcing strategies. Inventories continue to be reduced throughout most of the supply chain. Within Amkor, customer die banks are being reduced, and customer die support has generally exceeded forecast for several months. Over the past several semiconductor cycles, these have generally been leading indicators Leading Indicator A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators are used to predict changes in the economy, but are not always accurate. of an upturn. Our customers' long-range forecasts have generally been building since the beginning of the year. On the basis of these forecasts, we currently expect second quarter assembly & test revenue to be around 20% higher than the first quarter, with a modest increase in wafer fab revenue. Our gross margin should increase to around 3%, reflecting the positive operating leverage in our business. Wafer loadings at the Anam foundry A semiconductor manufacturer that makes chips for third parties. It may be a large chip maker that sells its excess manufacturing capacity or one that makes chips exclusively for other companies. should continue to increase throughout the year, in connection with TI's announced strategy to outsource a larger part of their wafer requirements. We expect Texas Instruments See TI. (company) Texas Instruments - (TI) A US electronics company. A TI engineer, Jack Kilby invented the integrated circuit in 1958. Three TI employees left the company in 1982 to start Compaq. to fully utilize Anam's 0.18 micron micron: see micrometer. One micrometer, which is one millionth of a meter or approximately 1/25,000 of an inch. The tiny elements that make up a transistor on a chip are measured in micrometers and nanometers. See process technology. capacity during 2002. Amkor will be holding a conference call on May 2 at 5:00 p.m. eastern time to discuss the results of the first quarter in more detail and to provide additional guidance for the second quarter of 2002. Participants can access the call at 630-395-0017; the passcode is "Amkor." The call will be webcast and can be accessed through our web site: www.amkor.com, and through CCBN's website, www.companyboardroom.com. A replay of the conference call will be available for one week at 402-998-0533. Amkor is the world's largest provider of contract semiconductor assembly and test services. The company offers semiconductor companies and electronics OEMs a complete set of microelectronic The miniaturization of electronic circuits. See chip. design and manufacturing services. More information on Amkor is available from the company's SEC filings and on Amkor's web site: www.amkor.com. The statements by James Kim, John Boruch and Ken Joyce, and the above statements contained in our Business Outlook, are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve a number of risks and uncertainties. Factors that could affect future operating results and cause actual results to vary materially from historical and expected results include, but are not limited to: the highly unpredictable nature of the semiconductor industry; volatility of consumer demand for products incorporating our semiconductor packages; worldwide economic effects of the recent terrorist attacks on the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and the United States military actions in response; competitive pricing and declines in average selling prices The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. ; dependence on our relationship with ASI for all of our wafer fabrication Wafer Fabrication is a procedure composed of many repeated sequential processes to produce complete electrical or photonic circuits. Examples include production of radio frequency (RF) amplifiers, LEDs, optical computer components, and CPUs for computers. output; reliance on a small group of principal customers; timing and volume of orders relative to the production capacity; availability of manufacturing capacity and fluctuations in manufacturing yields; availability of financing; competition; dependence on international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. 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 the results of ASI through the equity method of accounting. Further information on risk factors that could affect the outcome of the events set forth in these statements and that would affect the company's operating results and financial condition is detailed in the company's filings with the Securities and Exchange Commission, including the Report on Form 10-QK for the fiscal quarter ended December 31, 2001.
AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
For the Three Months Ended
March 31,
(unaudited)
--------------------------------------
Pro Forma (a)
2002 2001 2001
Net revenues
Assembly and Test $ 288,955 $ 439,413 $ 439,413
Wafer Fab 60,686 41,210 41,210
--------- --------- ---------
Total 349,641 480,623 480,623
Cost of revenues--including
purchases from ASI 363,112 398,838 398,838
--------- --------- ---------
Gross profit (loss) (13,471) 81,785 81,785
--------- --------- ---------
Operating expenses:
Selling, general and
administrative 47,687 53,994 53,994
Research and development 8,144 10,502 10,502
Loss on disposal of assets 1,674 1,124 1,124
Amortization of goodwill &
other acquired intangibles 1,252 21,912 1,158
--------- --------- ---------
Total operating expenses 58,757 87,532 66,778
--------- --------- ---------
Operating income (loss) (72,228) (5,747) 15,007
--------- --------- ---------
Other (income) expense:
Interest expense, net 36,185 44,795 44,795
Foreign currency loss (gain) 2,003 (1,310) (1,310)
Other expense (income), net (498) (956) (956)
--------- --------- ---------
Total other expense 37,690 42,529 42,529
--------- --------- ---------
Income (loss) before income
taxes and equity in income
of investees (109,918) (48,276) (27,522)
Provision (benefit) for
income taxes (22,533) (5,310) (5,310)
Equity in (loss) of investees (2,094) (26,248) (17,385)
Loss on impairment of equity
investment (96,576) 0 0
Minority Interest (1,753) 0 0
--------- --------- ---------
Net income (loss) $(187,808) $ (69,214) $ (39,597)
========= ========= =========
Per Share Data:
Basic net income (loss)
per common share $ (1.15) $ (0.45) $ (0.26)
========= ========= =========
Diluted net income (loss)
per common share $ (1.15) $ (0.45) $ (0.26)
========= ========= =========
Shares used in computing
basic net income (loss)
per common share 162,766 152,185 152,185
========= ========= =========
Shares used in computing
diluted net income (loss)
per common share 162,766 152,185 152,185
========= ========= =========
(a) The Pro Forma results exclude the effects of the amortization of
goodwill and the amortization of the difference between the cost of
our equity investments and our share of the underlying net assets.
AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, December 31,
2002 2001
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 175,281 $ 200,057
Accounts receivable--
Trade, net of allowance for
doubtful accounts of $6,557
and $6,842 218,079 211,419
Due from affiliates 874 871
Other 9,796 8,953
Inventories 73,441 73,784
Other current assets 33,693 37,106
----------- -----------
Total current assets 511,164 532,190
----------- -----------
Property, plant and equipment, net 1,319,518 1,392,274
----------- -----------
Investments 284,385 382,951
----------- -----------
Other assets:
Due from affiliates 21,963 20,518
Goodwill and acquired intangibles 731,372 696,180
Other 218,928 199,205
----------- -----------
Total other assets 972,263 915,903
----------- -----------
Total assets $ 3,087,330 $ 3,223,318
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Bank overdraft $ 13,767 $ 5,116
Short-term borrowings and current
portion of long-term debt 53,969 54,815
Trade accounts payable 145,018 148,923
Due to affiliates 26,311 16,936
Accrued expenses 143,898 145,544
----------- -----------
Total current liabilities 382,963 371,334
Long-term debt 1,765,899 1,771,453
Other noncurrent liabilities 68,985 64,077
----------- -----------
Total liabilities 2,217,847 2,206,864
----------- -----------
Minority Interest 9,669 7,737
Stockholders' equity:
Common stock 164 162
Additional paid-in capital 1,160,500 1,123,541
Retained earnings (deficit) (294,786) (106,975)
Receivable from stockholder (3,276) (3,276)
Accumulated other comprehensive losses (2,788) (4,735)
----------- -----------
Total stockholders' equity 859,814 1,008,717
----------- -----------
Total liabilities and
stockholders' equity $ 3,087,330 $ 3,223,318
=========== ===========
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