Amkor Reports Record Second Quarter Sales.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. -- 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 NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : AMKR AMKR Amkor Technology ) reported record second quarter 2006 sales of $687 million, up 40% from the second quarter of 2005 and up 6% from the first quarter of 2006. Amkor's second quarter 2006 net income was $24 million, or $0.13 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with a net loss of $52 million, or ($0.30) per share, in the second quarter of 2005. During the second quarter of 2006, in connection with refinancing Refinancing An extension and/or increase in amount of existing debt. transactions to address near-term near-term adj. Of, for, or involving a short period of time in the near future. debt maturities, Amkor recorded charges, with no net tax effect, of $28 million, or $0.14 per share. "I am pleased with our performance this quarter, as we realized continued strong growth in 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 , 3D packaging and test, consistent with the strategic investments we've we've Contraction of we have. we've have made in these areas during the past two years," 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 , Chairman and Chief Executive Officer. "During the quarter, we continued to build on our industry leadership in a variety of advanced package applications." "We expect that the robust year-over-year growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. achieved over the past several quarters will begin to moderate," said Kim Kim orphan wanders streets of India with lama. [Br. Lit.: Kim] See : Adventurousness . "While there are signs that the U.S. economy is slowing, the global economy does not appear to be slowing as fast. Given the breadth of our customer base and end markets that we support, we believe that this should provide some stability with respect to overall demand." "During the second quarter, we completed a series of financing transactions to address our near-term debt maturities and reduce ongoing interest expense. We also used available cash to retire $132 million in 5.75% convertible subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. notes at maturity on June June: see month. 1, 2006 and to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. $4 million in 5% convertible notes due March 2007," said Kim. "To put our improved liquidity into perspective, at the beginning of 2005, we had more than $1.1 billion of debt maturing through 2009. Today the amount is approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $360 million." "We remain committed to maintaining a disciplined approach to our business model, with rational capital investments, continued cost management, and a clear focus on driving operating efficiencies throughout the organization," said Kim. "I expect that we will make additional progress in utilizing free cash flow to reduce our remaining debt. Based on current forecasts, we believe we will have sufficient cash resources available to retire the remaining $142 million of 5% convertible notes due March 2007." "We achieved record sales and units in the second quarter, driven by high performance applications, cell phones and other portable devices," 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. Second quarter gross margin rose to 25% from 24% in the first quarter. "During the second quarter, we commenced the build out of our new 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. bumping Bumping can refer to:
During the quarter, we recorded a $3 million 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 an equity investment, which is reflected in Other (income) expense, net. Capital expenditures totaled $93 million in the second quarter and $196 million for the first six months. "We currently plan to limit our full year 2006 capital additions to $300 million, which includes approximately $50 million for facilities principally for our new factories in China and Singapore," said Joyce. "Our 2006 capital equipment budget remains focused on strategic growth areas of wafer level processing, test, and flip chip assembly. We will continue to monitor business conditions and are prepared to adjust this estimate." "During the quarter, we took several steps to strengthen our financial liquidity," said Joyce. "We issued $400 million of 9.25% senior notes due 2016 and used most of the net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). to repurchase $352 million of our 9.25% senior notes due 2008. In addition, we issued $190 million in 2.5% convertible senior subordinated notes due 2011 and used the net proceeds to redeem redeem v. to buy back, as when an owner who had mortgaged his/her real property pays off the debt. The term also refers to paying the amount due and all charges after a foreclosure (due to failure to make payments when due) has begun. $178 million of our $200 million in 10.5% senior subordinated notes due 2009. In connection with the repurchased and redeemed re·deem tr.v. re·deemed, re·deem·ing, re·deems 1. To recover ownership of by paying a specified sum. 2. To pay off (a promissory note, for example). 3. notes, we recognized charges, with no net tax effect, totaling $28 million, or $0.14 per share. Going forward, we expect to realize substantial interest savings from refinancing most of the 10.5% senior subordinated notes with 2.5% senior subordinated convertible debt." "We have achieved positive free cash flow for the past three quarters, and given our financial strategy and current view of business conditions, we anticipate that this trend should continue for the rest of the year," said Joyce. For the full year 2006, we anticipate an effective tax rate of 7.8% which reflects the 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 U.S. and foreign net operating loss carryforwards Net operating loss carryforwards Application of losses to offset earnings in future years. and tax holidays in certain of our foreign jurisdictions. At June 30, 2006, Amkor had U.S. net operating losses Net operating losses Losses that a firm can take advantage of to reduce taxes. 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. totaling $336 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. through 2025. Additionally, at June 30, 2006, we had $78 million of non-U non-U adj. Chiefly British Not characteristic of the upper class, especially in language usage. [non- + U2. .S. operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. available for carryforward, expiring through 2011. Selected operating data for the second quarter 2006 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 third quarter of 2006: --Sales flat to up 2% from the second quarter of 2006 --Gross margin in the range of 24% to 25% --Net income in the range of $0.23 to $0.27 per diluted share The Company also announced today that its Board of Directors has formed a special committee of independent directors to undertake a voluntary review of Amkor's historical stock option practices. The committee will be assisted by independent counsel. Amkor will conduct a conference call on July July: see month. 26, 2006 at 5:00 p.m. eastern time. The call can be accessed by dialing 303-205-0033 or by visiting the investor relations Investor relations The process by which the corporation communicates with its investors. page of our web site: www.amkor.com or CCBN's 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: 11061882. 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 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. Forward Looking Statement Disclaimer (networking) disclaimer - Statement ritually appended to many Usenet postings (sometimes automatically, by the posting software) reiterating the fact (which should be obvious, but is easily forgotten) that the article reflects its author's opinions and not necessarily those of the This press release contains 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. within the meaning of federal securities laws, including, without limitation, statements regarding the following: expectations regarding year-over-year growth rates; anticipated growth rates of the U.S. and global economies; expectations with respect to level of overall demand; expectations regarding the reduction of remaining debt from free cash flow; expectations regarding sufficiency of cash resources to satisfy the $142 million of 5% convertible notes due March 2007; expectations regarding impact of depreciation expense and other costs associated with new factories on gross margin; expectations regarding the level and focus of additional capital expenditures for 2006; expectations regarding the achievement of positive free cash flow for the rest of 2006; expectations regarding the effective tax rate for full year 2006 and the statements regarding sales, gross margin and net income 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 Capacity utilization rate The percentage of the economy's total plant and equipment that is currently in production. Usually, a decrease in this percentage signals an economic slowdown, while an increase signals economic expansion. ; 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; weakness in the forecasts of Amkor's customers; customer modification of and follow through with respect to forecasts provided to Amkor; curtailment Curtailment The act of contracting or reducing operations of a company in the hope of bringing it financial or operational stability. This management technique is often used when a company has grown too fast and is unable to effectively manage its operations. of 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. by our customers; our high leverage and restrictive covenants Restrictive covenants Provisions that place constraints on the operations of borrowers, such as restrictions on working capital, fixed assets, future borrowing, and payment of dividends. ; failure to realize sufficient cash flow to fund capital expenditures; deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. of the U.S. or other economies; the highly unpredictable nature and costs of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. and other legal activities and the risk of adverse results of such matters; worldwide economic effects of terrorist attacks, natural disasters and military conflict; 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. ; timing and volume of orders relative to the production capacity; fluctuations in manufacturing yields; 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 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 company's operating results and financial condition is detailed in the company's filings with the Securities and Exchange Commission, including 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 year ended December December: see month. 31, 2005, and Form 10-Q Form 10-Q See 10-Q. for the quarter ended March 31, 2006, and current reports on Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. . Amkor undertakes no obligation to update forward-looking statements to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or occurring after the date of this document.
Selected operating data for the second quarter and six month 2006
2nd Quarter Six Months
-- Capital additions $ 93 million $196 million
Net decrease in related accounts
payable and deposits ($ 2 million) ($ 26 million)
------------- --------------
Payments for property, plant &
equipment $ 91 million $ 170 million
============ ==============
-- Depreciation and amortization $ 67 million $ 134 million
-- Free cash flow (1) $ 30 million $ 70 million
(1) Reconciliation of free cash flow to the most directly
comparable GAAP measure:
Net cash provided by
operating activities $ 121 million $ 240 million
Less payments for property,
plant and equipment ($ 91 million) ($ 170 million)
------------- --------------
Free cash flow from
continuing operations $ 30 million $ 70 million
============ ==============
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.
-- Second quarter capacity utilization was approximately 84%.
-- Assembly unit shipments for Q2 2006 were 2.2 billion, up 2%
from Q1 2006.
-- For Q2 2006, our top ten customers accounted for 46% of net sales.
-- Q2 2006 end market distribution (an approximation based on a
sampling of programs with some of our largest customers):
Communications 35%
Computing 20%
Consumer 34%
Other 11%
-- Q2 2006 percentage of net sales:
Leadframe packages 39%
Laminate packages 47%
Other 4%
Test 10%
AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except net income (loss) per share data)
(unaudited)
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
------------------- ----------------------
2006 2005 2006 2005
--------- --------- ----------- ----------
(In thousands, except per share data)
Net sales $686,631 $489,335 $1,331,720 $906,816
Cost of sales 516,950 422,837 1,007,021 796,923
--------- --------- ----------- ----------
Gross profit 169,681 66,498 324,699 109,893
--------- --------- ----------- ----------
Operating expenses:
Selling, general and
administrative 59,155 66,865 119,406 127,331
Research and development 10,315 9,924 19,745 18,824
Provision for legal
settlements and
contingencies - - 1,000 50,000
--------- --------- ----------- ----------
Total operating
expenses 69,470 76,789 140,151 196,155
--------- --------- ----------- ----------
Operating income (loss) 100,211 (10,291) 184,548 (86,262)
--------- --------- ----------- ----------
Other (income) expense:
Interest expense, net 40,600 41,395 81,757 81,908
Interest expense, related
party 1,563 - 3,351 -
Foreign currency loss
(income) 1,079 (1,773) 5,007 459
Debt retirement costs,
net 27,860 - 27,389 -
Other (income) expense,
net 2,840 2,063 2,375 2,241
--------- --------- ----------- ----------
Total other expense,
net 73,942 41,685 119,879 84,608
--------- --------- ----------- ----------
Income (loss) before income
taxes and minority
interests 26,269 (51,976) 64,669 (170,870)
Income tax expense 1,867 1,353 5,479 2,540
--------- --------- ----------- ----------
Income (loss) before
minority interest income
(expense) 24,402 (53,329) 59,190 (173,410)
Minority interest income
(expense), net of tax (340) 926 (455) 1,937
--------- --------- ----------- ----------
Net income (loss) $24,062 $(52,403) $58,735 $(171,473)
========= ========= =========== ==========
Net income (loss) per
common share:
Basic $0.14 $(0.30) $0.33 $(0.97)
========= ========= =========== ==========
Diluted $0.13 $(0.30) $0.32 $(0.97)
========= ========= =========== ==========
Shares used in computing
net income (loss) per
common share:
Basic 177,689 176,371 177,245 176,045
========= ========= =========== ==========
Diluted 197,175 176,371 193,839 176,045
========= ========= =========== ==========
AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
June 30, December 31,
2006 2005
----------- ------------
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $143,507 $206,575
Restricted cash 2,413 -
Accounts receivable:
Trade, net of allowance for doubtful
accounts of $4,764 and $4,947 402,773 381,495
Other 8,038 5,089
Inventories, net 163,982 138,109
Other current assets 32,305 35,222
----------- ------------
Total current assets 753,018 766,490
Property, plant and equipment, net 1,482,365 1,419,472
Goodwill 672,069 653,717
Intangibles, net 34,317 38,391
Investments 5,829 9,668
Other assets 52,818 67,353
----------- ------------
Total assets $3,000,416 $2,955,091
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current portion
of long-term debt $208,230 $184,389
Trade accounts payable 356,558 326,712
Accrued expenses 132,641 123,631
----------- ------------
Total current liabilities 697,429 634,732
Long-term debt 1,729,750 1,856,247
Long-term debt, related party 100,000 100,000
Other non-current liabilities 177,162 135,861
----------- ------------
Total liabilities 2,704,341 2,726,840
----------- ------------
Minority interests 3,879 3,950
----------- ------------
Stockholders' equity:
Common stock 178 178
Additional paid-in capital 1,333,303 1,326,426
Accumulated deficit (1,047,226) (1,105,961)
Accumulated other comprehensive income 5,941 3,658
----------- ------------
Total stockholders' equity 292,196 224,301
----------- ------------
Total liabilities and stockholders'
equity $3,000,416 $2,955,091
=========== ============
AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the Six Months Ended
June 30,
------------------------
2006 2005
----------- ----------
(In thousands)
Cash flows from operating activities:
Net income (loss) $58,735 $(171,473)
Depreciation and amortization 133,525 122,044
Other operating activities and non-cash
items 50,381 6,398
Changes in assets and liabilities (2,835) 25,318
----------- ----------
Net cash provided by (used in)
operating activities 239,806 (17,713)
----------- ----------
Cash flows from investing activities:
Payments for property, plant and
equipment (169,469) (124,397)
Proceeds from the sale of property, plant
and equipment 1,333 443
----------- ----------
Net cash used in investing activities (168,136) (123,954)
----------- ----------
Cash flows from financing activities:
Net change in bank overdrafts - (102)
Borrowings under revolving credit
facilities 111,185 111,760
Payments under revolving credit
facilities (95,462) (111,488)
Proceeds from issuance of long-term debt 590,000 12,722
Payments for debt issuance costs (14,852) -
Payments on long-term debt (731,634) (17,619)
Proceeds from issuance of stock through
stock compensation plans 4,959 2,733
----------- ----------
Net cash used in financing activities (135,804) (1,994)
----------- ----------
Effect of exchange rate fluctuations on
cash and cash equivalents 1,066 (419)
----------- ----------
Net decrease in cash and cash equivalents (63,068) (144,080)
Cash and cash equivalents, beginning of
period 206,575 372,284
----------- ----------
Cash and cash equivalents, end of period $143,507 $228,204
=========== ==========
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $94,469 $82,957
Income taxes $3,216 $1,916
Non cash investing and financing
activities:
Application of deposit upon closing of
acquisition of minority interest $17,822 $-
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