Amkor Technology Reports Financial Results for the Fourth Quarter and Full Year 2010

Other important risk factors that could affect the outcome of the events set forth in these statements and that could affect our operating results and financial condition are discussed in the company’s Annual Report on Form 10-K for the year ended December 31, 2009 and in the company’s subsequent filings with the Securities and Exchange Commission made prior to or after the date hereof. Amkor undertakes no obligation to review or update any forward-looking statements to reflect events or circumstances occurring after the date of this press release.

AMKOR TECHNOLOGY, INC.
Selected Operating Data
           
Sales Data: Q4 2010 Q3 2010 Q4 2009 2010 2009
 
Packaging services (in millions):
Chip scale package $ 272 $ 244 $ 224 $ 954 $ 695
Ball grid array 186 212 142 747 500
Leadframe 176 204 184 761 587
Other packaging   46     52     47     188     152  
Packaging services 680 712 597 2,650 1,934
Test services   71     82     71     289     245  
Total sales $ 751   $ 794   $ 668   $ 2,939   $ 2,179  
 
Packaging services:
Chip scale package 36 % 31 % 33 % 33 % 32 %
Ball grid array 25 % 27 % 21 % 25 % 23 %
Leadframe 24 % 26 % 28 % 26 % 27 %
Other packaging   6 %   6 %   7 %   6 %   7 %
Packaging services 91 % 90 % 89 % 90 % 89 %
Test services   9 %   10 %   11 %   10 %   11 %
Total sales   100 %   100 %   100 %   100 %   100 %
 
Packaged units (in millions):
Chip scale package 590 618 519

2,130

1,652
Ball grid array 61 72 53

228

205
Leadframe 1,579 2,185 1,856

7,466

5,773
Other packaging   4     8     7    

24

    24  
Total packaged units   2,234     2,883     2,435    

9,848

    7,654  
 
Net sales from top ten customers 57 % 55 % 55 % 54 % 53 %
 

Capacity Utilization (Packaging and test utilization separately presented beginning in Q4 2010. Prior periods were recalculated based on current methodology for comparability):

Packaging 78 % 85 % 87 % 82 % 76 %
Test 74 % 87 % 74 % 78 % 67 %
 

End Market Distribution Data (an approximation including representative devices and applications based on a sampling of our largest customers. Prior periods were revised for an expanded sampling methodology and refinement of our classifications):

 
Communications (cell phones, Ethernet, WiMAX, wireless LAN, Bluetooth) 40 % 34 % 39 % 36 % 37 %
Consumer (gaming, set top boxes, TV, portable media) 26 % 30 % 26 % 28 % 28 %
Computing (PCs, servers, displays, hard disk drive, printers, other peripherals) 12 % 14 % 13 % 14 % 14 %
Networking (infrastructure, routers, network servers) 13 % 13 % 13 % 13 % 13 %
Other (auto, industrial)   9 %   9 %   9 %   9 %   8 %
Total   100 %   100 %   100 %   100 %   100 %
 
Gross Margin Data:
Net sales 100 % 100 % 100 % 100 % 100 %

Cost of sales:

Materials 43 % 43 % 40 % 43 % 40 %
Labor 13 % 12 % 13 % 12 % 13 %

Other manufacturing

  23 %   21 %   21 %   22 %   25 %
Gross margin   21 %   24 %   26 %   23 %   22 %
 
AMKOR TECHNOLOGY, INC.
Selected Operating Data
         
2010 2009
(in millions)

Return on Invested Capital:

Operating income $ 374 $ 225
Income tax (expense) benefit   (19 )   30  
Net operating profit after tax (NOPAT) $ 355   $ 255  
 
Invested capital:
Average debt $ 1,399 $ 1,464
Plus average equity 507 310
Less average cash   (400 )   (410 )
Average invested capital $ 1,506   $ 1,364  
 

Return on invested capital (NOPAT / average invested capital)*

  24 %   19 %
 
Q4 2010 Q3 2010 Q4 2009 2010 2009
(in millions, except per share data)

Capital Investment Data:

Property, plant and equipment additions $ 103 $ 171 $ 69 $ 505 $ 198
Net change in related accounts payable and deposits   66     (37 )   (7 )   (59 )   (24 )
Purchases of property, plant and equipment $ 169   $ 134   $ 62   $ 446   $ 174  
Depreciation and amortization $ 87 $ 83 $ 75 $ 324 $ 306
 

Free Cash Flow Data:

Net cash provided by operating activities $ 176 $ 176 $ 106 $ 543 $ 262
Less purchases of property, plant and equipment   (169 )   (134 )   (62 )   (446 )   (174 )
Free cash flow* $ 7   $ 42   $ 44   $ 97   $ 88  
 

Earnings per Share Data:

Net income attributable to Amkor - basic

$ 51 $ 78 $ 88 $ 232 $ 156
Adjustment for dilutive securities on net income:
Interest on 2.5% convertible notes due 2011, net of tax - - - 1 2
Interest on 6.25% convertible notes due 2013, net of tax 2 2 2 7 7
Interest on 6.0% convertible notes due 2014, net of tax   4     4     4     16     12  
Net income attributable to Amkor - diluted $ 57   $ 84   $ 94   $ 256   $ 177  
 
Weighted average shares outstanding - basic 183 183 183 183 183
Effect of dilutive securities:
Stock options and unvested restricted shares 1 - - 1 -
2.5% convertible notes due 2011 3 3 3 3 5
6.25% convertible notes due 2013 13 13 13 13 13
6.0% convertible notes due 2014   83     83     83     83     62  
Weighted average shares outstanding - diluted   283     282     282     283     263  
 
Net income attributable to Amkor per common share:
Basic $ 0.28  

 

$ 0.42   $ 0.48   $ 1.26   $ 0.85  
Diluted $ 0.20   $ 0.30   $ 0.33   $ 0.91   $ 0.67  
 

* Return on invested capital (“ROIC”) is defined as net operating profit after tax divided by average invested capital (the sum of average debt plus average equity minus average cash). ROIC is not defined by generally accepted accounting principles (“GAAP”). We believe that ROIC is useful information for our investors in evaluating whether our capital investments are generating shareholder value.

 

We define free cash flow as net cash provided by operating activities less purchases of property, plant and equipment. Free cash flow is not defined by GAAP. 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 additions.

 

However, these measures should be considered in addition to, and not as a substitute for, or superior to, other measures of financial performance prepared in accordance with GAAP, and our definitions of ROIC and free cash flow may not be comparable to similarly titled measures reported by other companies.

 

 
AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
         
 
For the Three Months

For the Year

Ended December 31,

Ended December 31,
2010 2009 2010 2009
(In thousands, except per share data)
 
 
Net sales $ 750,609 $ 667,612 $ 2,939,483 $ 2,179,109
Cost of sales   591,266     492,258     2,275,727     1,698,713  
Gross profit   159,343     175,354     663,756     480,396  
 
Operating expenses:
Selling, general and administrative 62,037 54,640 242,424 210,626
Research and development   11,097     10,907     47,534     44,453  
Total operating expenses   73,134     65,547     289,958     255,079  
Operating income   86,209     109,807     373,798     225,317  

Other (income) expense:

Interest expense 19,202 23,434 85,595 102,396
Interest expense, related party 3,813 3,813 15,250 13,000
Interest income (675 ) (841 ) (2,950 ) (2,367 )
Foreign currency loss 4,746 1,178 13,756 3,339
Loss (gain) on debt retirement, net - 570 18,042 (15,088 )
Equity in earnings of unconsolidated affiliate (1,552 ) (2,373 ) (6,435 ) (2,373 )
Other income, net   (144 )   (36 )   (619 )   (113 )
Total other expense, net   25,390     25,745     122,639     98,794  
Income before income taxes 60,819 84,062 251,159 126,523
Income tax expense (benefit)   10,058     (3,820 )   19,012     (29,760 )
Net income 50,761 87,882 232,147 156,283
Net (income) loss attributable to noncontrolling interests   (157 )   104     (176 )   (303 )
Net income attributable to Amkor $ 50,604   $ 87,986   $ 231,971   $ 155,980  
 
Net income attributable to Amkor

per common share:

Basic $ 0.28   $ 0.48   $ 1.26   $ 0.85  
Diluted $ 0.20   $ 0.33   $ 0.91   $ 0.67  
 
Shares used in computing per common share amounts:
Basic 183,404 183,134 183,312 183,067
Diluted 282,830 282,495 282,602 263,379
AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
   
December 31, December 31,
2010 2009
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 404,998 $ 395,406
Restricted cash 17,782 2,679
Accounts receivable:
Trade, net of allowances 392,327 328,252
Other 17,970 18,666
Inventories 191,072 155,185
Other current assets   37,918     32,737  
Total current assets 1,062,067 932,925
 
Property, plant and equipment, net 1,537,226 1,364,630
Intangibles, net 13,524 9,975
Investments 28,215 19,108
Restricted cash 1,945 6,795
Other assets   93,845     99,476  
Total assets $ 2,736,822   $ 2,432,909  
 
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt $ 150,081 $ 88,944
Trade accounts payable 443,333 361,263
Accrued expenses   178,794     155,630  
Total current liabilities 772,208 605,837
 
Long-term debt 964,219 1,095,241
Long-term debt, related party 250,000 250,000
Pension and severance obligations 103,543 83,067
Other non-current liabilities   10,171     9,063  
Total liabilities   2,100,141     2,043,208  
 
Equity:
Amkor stockholders' equity:
Preferred stock - -

Common stock, $0.001 par value, 500,000 shares authorized, 183,467 and 183,171 shares issued, and 183,420 and 183,171 shares outstanding, in 2010 and 2009, respectively

183 183
Additional paid-in capital 1,504,927 1,500,246
Accumulated deficit (890,270 ) (1,122,241 )
Accumulated other comprehensive income 15,457 5,021
Treasury stock, at cost, 47 shares in 2010   (284 )   -  
Total Amkor stockholders’ equity 630,013 383,209
Noncontrolling interests in subsidiaries   6,668     6,492  
Total equity   636,681     389,701  
Total liabilities and equity $ 2,736,822   $ 2,432,909  
 
AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 

For the Year Ended

December 31,

2010   2009
(In thousands)
Cash flows from operating activities:
Net income $ 232,147 $ 156,283
Depreciation and amortization 323,608 305,510
Loss (gain) on debt retirement, net 10,562 (15,088 )
Other operating activities and non-cash items 11,522 (17,595 )
Changes in assets and liabilities   (35,244 )   (167,385 )
Net cash provided by operating activities   542,595     261,725  
 
Cash flows from investing activities:
Purchases of property, plant and equipment (445,669 ) (173,496 )
Proceeds from the sale of property, plant and equipment 3,125 3,116
Purchase of equipment leased to unconsolidated affiliate - (44,681 )
Investment in unconsolidated affiliate - (16,735 )
Financing lease payment from unconsolidated affiliate 13,384 -
Other investing activities   (15,761 )   (9,082 )
Net cash used in investing activities   (444,921 )   (240,878 )
 
Cash flows from financing activities:
Borrowings under revolving credit facilities 3,261 41,410
Payments under revolving credit facilities (34,253 ) (10,171 )
Proceeds from issuance of short-term working capital facility 15,000 15,000
Payments of short-term working capital facility (15,000 ) -
Proceeds from issuance of long-term debt 611,007 100,000
Proceeds from issuance of long-term debt, related party - 150,000
Payments of long-term debt, net of redemption premiums and discounts (663,433 ) (338,104 )
Payments for debt issuance costs (7,487 ) (8,479 )
Proceeds from issuance of stock through stock compensation plans   1,048     693  
Net cash used in financing activities   (89,857 )   (49,651 )
 
Effect of exchange rate fluctuations on cash and cash equivalents   1,775     (106 )
 
Net increase (decrease) in cash and cash equivalents 9,592 (28,910 )
Cash and cash equivalents, beginning of period   395,406     424,316  
Cash and cash equivalents, end of period $ 404,998   $ 395,406  

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