Amkor Reports First Quarter 2003 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)--April 29, 2003 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 first quarter sales of $343 million, down 8% sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen and up 19% over the first quarter of 2002. Amkor's first quarter net income was $14.5 million, or $0.09 per share, compared with a loss of $188 million, or ($1.15) per share, in the first quarter of 2002. The results of the company's 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. services business, which was sold on February February: see month. 28, 2003, have been reported separately as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. and include a net gain of $52 million in connection with the sale of that business. Prior period results have been restated to present the wafer fabrication services business as discontinued operations. Amkor's first quarter loss from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the was $40 million, or ($0.24) per share, compared with a loss of $190 million, or ($1.17) per share in the first quarter of last year. First quarter 2002 results included a loss of $97 million, or ($0.59) per share, on 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. of equity investment in ASI ASI, n See Anxiety Sensitivity Index. . First quarter revenue was slightly ahead of guidance, and gross margin exceeded the company's expectations. Gross margin rose to 13.6% from negative 6.8% in the year-ago period, due in part to lower levels of depreciation, ongoing cost efficiency programs, and higher utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be of assembly and test assets used to support advanced packages. The reduced depreciation reflects the impact of the fixed asset impairment recorded in the second quarter of 2002 and the change in estimated useful lives of certain assembly equipment from four years to seven years effective with the fourth quarter of 2002. "During the quarter we achieved several important strategic objectives designed to increase liquidity and focus management resources on our core business," 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. "In February we completed the sale of our wafer fabrication services business for $62 million. We also continued to monetize Monetize 1. To convert into money. 2. To convert from securities into currency that can be used to purchase goods and services. Notes: For example, you'll often hear Internet marketers talk about "monetizing website visitors. our investment in ASI, selling an additional seven million shares in March, which reduced our ownership interest to 19.7 million shares, or 16% of ASI's voting stock Voting stock The shares in a corporation that entitle the shareholder to vote. voting stock Stock for which the holder has the right to vote in the election of directors, in the appointment of auditors, or in other matters brought up at the . As of March 24 we ceased accounting for our investment in ASI under the equity method and now account for this investment as a marketable security marketable security A security that may be resold by one investor to another. Most securities are marketable; they develop secondary markets for trading. Also called negotiable security. . We intend to further monetize this investment." "Our first quarter revenue reflected seasonally weak demand and a conservative manufacturing posture posture /pos·ture/ (pos´choor) the attitude of the body.pos´tural pos·ture n. 1. A position of the body or of body parts. 2. among companies in the electronics supply chain," 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. . "Our primary goals for 2003 are to prepare our operations for profitable growth and execute on an increasing number of customer program wins." "Our customers' forecasts have begun to trend upward from the seasonally slow first quarter," said Boruch. "During the downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. design engineers have focused on incorporating more functionality and higher levels of performance in their end products. These efforts are driving increased reliance on 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, image sensing, MEMS (MicroElectroMechanical Systems) Tiny mechanical devices that are built onto semiconductor chips and are measured in micrometers. In the research labs since the 1980s, MEMS devices began to materialize as commercial products in the mid-1990s. , and MicroLeadFrame A MicroLeadFrame (MLF) is a type of chip scale microchip package. Amkor Technology introduced the MicroLeadFrame package in late 1999. The leads are flush with the package body, and the leadframe's metal die-attach paddle is exposed on the bottom of the package, enabling the (TM), all of which fall into our core competency A core competency is something that a firm can do well and that meets the following three conditions specified by Hamel and Prahalad (1990):
"First quarter gross margin of 13.6% was better than we expected and reflects ongoing efforts to manage costs and enhance operating efficiencies," said Ken Joyce Joyce - A distributed language based on Pascal and CSP, by Per Brinch Hansen. ["Joyce - A Programming Language for Distributed Systems", Per Brinch Hansen, Soft Prac & Exp 17(1):29-50 (Jan 1987)]. , Amkor's chief financial officer. "Looking back over the past several quarters, we have made excellent progress streamlining our manufacturing organization in support of our expected return Expected Return The average of a probability distribution of possible returns, calculated by using the following formula: to bottom line profitability during the second half of this year." "We continue to improve our financial liquidity," noted Joyce. "Our cash balance increased to $351 million on March 31, reflecting positive cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses , completion of sale of our wafer fabrication services business, and the sale of additional shares of ASI. Early in the second quarter we refinanced our secured credit facility on more favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. terms, which is a strong vote of confidence from our lenders. The new $200 million credit facility replaces the previous $197 credit facility and will have no significant principal amortization until June June: see month. 30, 2005. Selected operating data for the first quarter of 2003 is included on a separate page of this release. Business outlook Our customers' long-range long-range adj. 1. Of, suitable for, or reaching long distances: long-range missiles. 2. Requiring or involving an extended span of time: long-range planning. forecasts have generally been building since the beginning of the year. On the basis of these forecasts we have the following expectations for the second quarter: -- Revenue increase of around 10%. -- Gross margin of around 19%. -- Net loss of around 12 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. . Our capital budget for 2003 has been increased to $150 million. During the year we expect to accelerate our purchases of fine pitch wire bonders, testers and related equipment in response to strengthening customer demand for advanced assembly and test solutions. Given this scenario, we expect second quarter capex to exceed $50 million. We will resume the recognition of deferred tax assets when Amkor returns to profitability. We anticipate recognizing approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $4 million per quarter in foreign tax expense for the remainder of 2003. At March 31, 2003 our company had U.S. net operating losses Net operating losses Losses that a firm can take advantage of to reduce taxes. totaling $335 million expiring ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. between 2021 and 2022. Additionally, at March 31, 2003 we had $50 million of non-U non-U adj. Chiefly British Not characteristic of the upper class, especially in language usage. [non- + U2. .S. net operating losses available for carryforward carryforward 1. A business operating loss that, for tax purposes, may be claimed a certain number of years in the future, often up to 15 years. , expiring between 2003 and 2012. Amkor will hold a conference call on April 29, 2003 at 5:00 p.m. eastern time to discuss the results of the first quarter in more detail. The call will be webcast and can be accessed through the investor relations Investor relations The process by which the corporation communicates with its investors. page of our web site: www.amkor.com/ir as well as through CCBN's website, www.companyboardroom.com. An archive (1) A file that contains one or more compressed files. Most archive formats are also capable of storing folders in order to reconstruct the file/folder relationship when decompressed. See archive formats. of the webcast can be accessed through the same links and will be available until the company's 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: 534350. 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 Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the of consumer demand for products incorporating our semiconductor packages; worldwide economic effects of terrorist attacks, military conflict in the Middle East and potential military conflict in Asia; potential effects of business disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. caused by SARS; 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. ; 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; and environmental regulations. Further information on risk factors that could affect the outcome of the events set forth in these statements and that could affect the company's operating results and financial condition is detailed in the company's filings with the Securities and Exchange Commission, including the Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended December December: see month. 31, 2002. Selected operating data for the first quarter of 2003 -- Capital expenditures: $17 million -- Depreciation and amortization: $58 million -- 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 : $52 million (a) (a) Please refer to attached page for a reconciliation of EBITDA to the most directly comparable GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). measure -- End market distribution (an approximation approximation /ap·prox·i·ma·tion/ (ah-prok?si-ma´shun) 1. the act or process of bringing into proximity or apposition. 2. a numerical value of limited accuracy. based on a sampling of programs with our largest customers) -- Communications: 40% -- Computing computing - computer 25% -- Consumer 20% -- Other 15% -- Combined assembly & test capacity utilization Capacity Utilization measures the rate at which a firm makes use of their capital productive capacities, such as factories and machinery. Capacity Utilization generally rises when the economy is healthy and falls when demand softens. (based on front-of-line capacity) was approximately 60%. -- Assembly average selling price (calculated on a per pin basis) declined approximately 1% from Q4 2002. -- Assembly unit shipments were 1.14 billion, down 7% from Q4 2002. -- Units as a percentage of assembly revenue: -- Advanced packages 75% -- Traditional packages 25% -- Test revenue as a proportion of total revenue was approximately 8%.
AMKOR TECHNOLOGY, INC.
RECONCILIATION OF EBITDA AND FREE CASH FLOW
(in thousands)
For the Three Months Ended
March 31,
--------------------------
2003 2002
----------- ----------
(unaudited) (unaudited)
EBITDA (1) reconciliation:
Loss before income taxes, equity in loss of
investees, loss on impairment of equity
investment, minority interest and
discontinued operations: $(40,728) $(113,818)
Depreciation and amortization 57,793 93,653
Foreign currency (gain)/loss (925) 1,998
Interest expense, net 35,862 36,185
Loss on disposal of assets 69 1,674
--------- ----------
EBITDA from continuing operations $52,071 $19,692
========= ==========
Free cash flow (2) reconciliation:
Net cash provided (used) by continuing operating
activities $29,464 $(19,341)
Purchases of property, plant and equipment,
net (16,057) (22,247)
--------- ----------
Free cash flow from continuing operations $13,407 $(41,588)
========= ==========
(1) Earnings before interest, taxes, depreciation and amortization
("EBITDA") is defined as loss before income taxes, equity in loss
of investees, loss on impairment of equity investment, minority
interest, discontinued operations, depreciation and amortization,
net foreign currency, net interest expense and loss on disposal of
assets. EBITDA is not defined by generally accepted accounting
principles, and our definition of EBITDA may not be comparable to
similar companies.
(2) Free cash flow from continuing operations is defined as net cash
from continuing operating activities less purchases of property,
plant and equipment, net. Free cash flow is not defined by
generally accepted accounting principles, and our definition of
free cash flow may not be comparable to similar companies.
AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
For the Three Months Ended
March 31,
--------------------------
2003 2002
----------- -----------
(unaudited) (unaudited)
Net revenues $343,131 $288,955
Cost of revenues 296,562 308,478
----------- -----------
Gross profit (loss) 46,569 (19,523)
----------- -----------
Operating expenses:
Selling, general and administrative 42,544 45,540
Research and development 6,488 8,144
Loss on disposal of assets 69 1,674
Amortization of acquired intangibles 2,030 1,252
----------- -----------
Total operating expenses 51,131 56,610
----------- -----------
Operating loss (4,562) (76,133)
----------- -----------
Other (income) expense:
Interest expense, net 35,862 36,185
Foreign currency (gain) loss (925) 1,998
Other (income) expense, net 1,229 (498)
----------- -----------
Total other expense 36,166 37,685
----------- -----------
Loss before income taxes, equity in loss of
investees, loss on impairment of equity
investment, minority interest and
discontinued operations (40,728) (113,818)
Equity in loss of investees (3,628) (2,094)
Loss on impairment of equity investment - (96,576)
Minority interest gain (loss) 149 (1,753)
----------- -----------
Loss from continuing operations before income
taxes (44,207) (214,241)
----------- -----------
Income tax benefit (4,177) (24,104)
----------- -----------
Loss from continuing operations (40,030) (190,137)
----------- -----------
Discontinued operations:
Income from wafer fabrication services
business, net of tax of $419 and $1,553 3,047 2,329
Gain on sale of wafer fabrication services
business, net of tax $7,081 and $-0- 51,519 -
----------- -----------
Income from discontinued operations 54,566 2,329
----------- -----------
Net income (loss) $14,536 $(187,808)
=========== ===========
Per Share Data:
Basic and diluted loss per common share
from continuing operations $(0.24) $(1.17)
Basic and diluted income per common share
from discontinued operations 0.33 0.02
----------- -----------
Net income (loss) per common share $0.09 $(1.15)
=========== ===========
Shares used in computing basic and diluted net
(loss) income per common share 165,156 162,766
=========== ===========
AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, December 31,
2003 2002
(unaudited)
Assets
Current assets:
Cash and cash equivalents $351,485 $311,249
Accounts receivable--
Trade, net of allowance for
doubtful accounts of $6,938 and
$7,122 213,573 234,056
Due from affiliates 152 298
Other 7,132 8,234
Inventories 68,433 72,121
Other current assets 69,194 48,661
----------- -----------
Total current assets 709,969 674,619
----------- -----------
Property, plant and equipment, net 926,581 966,338
----------- -----------
Investments 55,166 83,235
----------- -----------
Other assets:
Due from affiliates 20,855 20,852
Goodwill 628,147 628,099
Acquired intangibles 43,055 45,033
Other 89,815 114,178
Assets of discontinued operations 5,086 25,630
----------- -----------
Total other assets 786,958 833,792
----------- -----------
Total assets $2,478,674 $2,557,984
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Bank overdraft $5,183 $4,633
Short-term borrowings and current
portion of long-term debt 76,876 71,023
Trade accounts payable 146,982 180,999
Due to affiliates 18,122 70,243
Accrued expenses 188,131 184,223
----------- -----------
Total current
liabilities 435,294 511,121
Long-term debt 1,723,370 1,737,690
Other noncurrent liabilities 69,203 67,661
----------- -----------
Total liabilities 2,227,867 2,316,472
----------- -----------
Minority Interest 9,996 10,145
Stockholders' equity:
Common stock 166 166
Additional paid-in capital 1,170,227 1,170,227
Accumulated deficit (919,198) (933,734)
Receivable from stockholder (2,887) (2,887)
Accumulated other comprehensive losses (7,497) (2,405)
----------- -----------
Total stockholders'
equity 240,811 231,367
----------- -----------
Total liabilities and
stockholders' equity $2,478,674 $2,557,984
=========== ===========
AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the Three Months Ended
March 31,
--------------------------
2003 2002
----------- ----------
(unaudited)
Cash flows from continuing
operating activities:
Loss from continuing operations $(40,030) $(190,137)
Depreciation and amortization 57,793 93,653
Equity in loss of investees 3,628 2,094
Loss on impairment of equity investment - 96,576
Other adjustments to reconcile
loss to net cash provided by operating
activities 4,186 (13,190)
Changes in assets and liabilities excluding
effects of acquisitions 3,887 (8,337)
----------- ----------
Net cash provided by (used in) operating
activities 29,464 (19,341)
----------- ----------
Cash flows from investing activities:
Purchases of property, plant and equipment,
net (16,057) (22,247)
Other investing activities 12,764 (70)
----------- ----------
Net cash used in investing
activities (3,293) (22,317)
----------- ----------
Cash flows provided by (used in) financing
activities (7,867) 5,240
----------- ----------
Effect of exchange rate fluctuations on cash
and cash equivalents related to continuing
operations (207) 1,783
----------- ----------
Cash flows provided by discontinued operations 22,139 9,859
----------- ----------
Net increase (decrease) in cash and cash
equivalents 40,236 (24,776)
Cash and cash equivalents, beginning of
period 311,249 200,057
----------- ----------
Cash and cash equivalents, end of period $351,485 $175,281
=========== ==========
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $31,390 $31,289
Income taxes $4,028 $4,331
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