Exhibit 99.1
[AMKOR TECHNOLOGY LOGO]
News Release
AMKOR REPORTS THIRD QUARTER 2003 RESULTS
RETURNS TO PROFITABILITY FOLLOWING EXTENDED INDUSTRY DOWNTURN
EXPECTING CONTINUED GROWTH IN FOURTH QUARTER AND 2004
CHANDLER, AZ. --October 27, 2003 -- Amkor Technology, Inc. (Nasdaq: AMKR)
reported third quarter sales of $424 million, up 12% sequentially and up 8% over
the third quarter of 2002. Amkor returned to profitability in the third quarter,
with net income of $16 million, or $0.09 per share, compared with a loss of $59
million, or ($0.36) per share, in the third quarter of 2002.
Amkor's third quarter net income includes a non-cash gain of $10 million, or
$0.06 per share, in connection with the reversal of a tax accrual related to tax
periods that have closed. Third quarter results also include a charge, with no
tax effect, of $2 million, or $0.01 per share, for debt retirement costs in
connection with open market purchases of $28 million in 9 1/4% Senior Notes due
2008. Amkor's results for the third quarter of 2002 included $11 million in
after-tax charges associated with factory consolidation and operating efficiency
initiatives.
"This was a landmark quarter, in which we achieved record unit shipments in most
of our ten factories and returned the corporation to positive net income after
an unprecedented industry downturn," said James Kim, Amkor's chairman and chief
executive officer.
"We believe the outsourced semiconductor assembly and test industry is poised
for a period of sustainable growth, at a rate that will outpace the
semiconductor industry. We are encouraged that strengthening customer forecasts
may partially offset the seasonal weakness typical of our first calendar
quarter. Looking broadly at 2004, we are positioning our organization to achieve
annual revenues in the neighborhood of $2 billion, and to reach a peak quarterly
gross margin of 27% to 30% during the second half of 2004. We remain committed
to improve productivity and profitability, maintain strong liquidity, reduce
debt and enhance shareholder value," said Kim.
"During the third quarter we saw accelerating demand, particularly from
customers supplying the cell phone industry, for a wide range of advanced
packages, including stacked CSP, ChipArray BGA, MicroLeadFrame(TM) and camera
modules," said John Boruch, Amkor's president and chief operating officer.
"Business strengthened as the quarter progressed, with a large number of
customers over-supporting their forecasts as demand materialized faster than
initially projected. As customer forecasts continued to strengthen, we
accelerated our investment in leading-edge assembly and test equipment, and now
expect total 2003 capital expenditures to exceed $200 million. As previously
announced, Amkor's bank credit facility has been modified to accommodate this
increased capital budget."
"Third quarter gross margin rose to 23.9% from 19.6% in the second quarter.
Third quarter operating margin rose to 11.2% from 6.0% in the second quarter
reflecting the positive operating leverage in our business and the continued
high utilization of assets supporting our high growth package families," said
Ken Joyce, Amkor's chief financial officer. "Over the past two years we have
made substantial progress enhancing the profitability of our business by
improving operating efficiencies, increasing manufacturing capacity in strategic
growth areas and managing costs."
"Our liquidity remained solid, with cash and equivalents of $341 million at
September 30," said Joyce. "During the quarter we received $19 million as the
first scheduled payment of a $38 million receivable from Dongbu relating to the
sale in 2002 of 20 million shares of Anam Semiconductor Inc. common stock. The
remaining $19 million payment is scheduled for February 2004. In the third
quarter we also sold an additional five million shares of ASI for net cash
proceeds of $12 million. At September 30, short-term debt totaled $54 million,
principally relating to working capital lines of credit supporting our
operations in Japan and Taiwan. As noted earlier, during the third quarter we
purchased and retired $28 million of our 9 1/4% Senior Notes due 2008."
"We are approaching the third anniversary of our successful joint venture with
Toshiba, and in January 2004 we will purchase the remaining 40% of the JV with
cash payments ranging from $10 million to $15 million. This amount includes a
payment of $2 million to terminate our commitment to purchase a tract of land
adjacent to the Amkor Iwate facility," said Joyce.
Selected operating data for the third quarter of 2003 is included on a separate
page of this release.
BUSINESS OUTLOOK
Our customers' forecasts have continued to build through most of the third
quarter. On the basis of these forecasts, we have the following expectations for
the fourth quarter:
- Sequential revenue increase in the range of 5% to 8%.
- Gross margin around 25%.
- Net income in the range of 7 to 10 cents per diluted share.
The provision for U.S. taxes related to our positive earnings is offset by the
use of net operating loss carryforwards. We anticipate recognizing approximately
$3 million per quarter in foreign tax expense. At September 30, 2003 our company
had U.S. net operating losses totaling $400 million expiring between 2021 and
2022. Additionally, at September 30, 2003 we had $53 million of non-U.S. net
operating losses available for carryforward, expiring between 2003 and 2012.
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Amkor will conduct a conference call on October 27, 2003 at 5:00 p.m. eastern
time to discuss the results of the third quarter in more detail. The call can be
accessed by dialing 303-262-2130 or by visiting the investor relations 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 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: 550705#.
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 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 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 terrorist attacks,
military conflict in the Middle East and potential military conflict in Asia and
Africa; potential effects of business disruption caused by SARS; competitive
pricing and declines in average selling prices; 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 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 for the
year ended December 31, 2002 and the Report on Form 10-Q for the quarter ended
June 30, 2003.
Contact:
Jeffrey Luth
VP Corporate Communications
480-821-2408 ext. 5130
jluth@amkor.com
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SELECTED OPERATING DATA FOR THE THIRD QUARTER OF 2003
3RD QUARTER YEAR-TO-DATE
- - Capital expenditures: $64 million $148 million
- - Depreciation and amortization: $53 million $165 million
- - Free cash flow * ($19 million) ($ 49 million)
* Reconciliation of free cash flow to the most directly comparable GAAP measure:
Net cash provided by continuing operating activities $45 million $ 99 million
Less purchases of property, plant and equipment ($64 million) ($148 million)
------------ -------------
Free cash flow from continuing operations ($19 million) ($ 49 million)
============ =============
We define free cash flow from continuing operations as net cash
provided by continuing operating activities less purchases of property,
plant and equipment. 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.
- - End market distribution (an approximation based on a sampling of
programs with our largest customers)
- Communications: 41%
- Computing 24%
- Consumer 23%
- Other 12%
- - Combined assembly & test capacity utilization (based on front-of-line
capacity) was approximately 80%.
- - Assembly average selling price (calculated on a per pin basis) declined
approximately 1% from Q2 2003. (Excludes results of Amkor Iwate joint
venture)
- - Assembly unit shipments were 1.45 billion, up 10% from Q2 2003.
- Percentage of assembly revenue:
- Advanced packages 77%
- Traditional packages 23%
- - Test revenue as a proportion of total revenue was approximately 9%.
(tables to follow)
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AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
FOR THE THREE MONTHS ENDED
SEPTEMBER 30,
--------------------------
2003 2002
------------ -----------
(unaudited) (unaudited)
Net revenues $ 423,784 $ 393,563
Cost of revenues 322,369 346,053
------------ -----------
Gross profit 101,415 47,510
------------ -----------
Operating expenses:
Selling, general and administrative 45,023 45,118
Research and development 6,836 7,622
Gain on disposal of assets (148) (200)
Amortization of acquired intangibles 2,035 2,000
Special charges (1) - 13,819
------------ -----------
Total operating expenses 53,746 68,359
------------ -----------
Operating income (loss) 47,669 (20,849)
------------ -----------
Other (income) expense:
Interest expense, net 35,151 37,391
Foreign currency gain (895) (821)
Other expense, net 671 996
Debt retirement costs (2) 2,071 -
------------ -----------
Total other expense 36,998 37,566
------------ -----------
Income (loss) before income taxes, equity investment losses,
minority interest and discontinued operations 10,671 (58,415)
Equity investment losses - (14,299)
Minority interest income (expense) (1,809) 423
------------ -----------
Income (loss) from continuing operations before income taxes 8,862 (72,291)
------------ -----------
Income tax benefit (6,908) (11,078)
------------ -----------
Income (loss) from continuing operations 15,770 (61,213)
------------ -----------
Discontinued operations:
Income from wafer fabrication services business, net of tax of $969 for 2002 - 1,906
------------ -----------
Net income (loss) $ 15,770 $ (59,307)
============ ===========
Per Share Data:
Basic and diluted income (loss) per common share from continuing operations $ 0.09 $ (0.37)
Basic and diluted income per common share from discontinued operations - 0.01
------------ -----------
Basic and diluted income (loss) per common share $ 0.09 $ (0.36)
============ ===========
Shares used in computing basic income (loss) per common share 166,628 164,489
============ ===========
Shares used in computing diluted income (loss) per common share 171,440 164,489
============ ===========
(1) Special charges include the following:
Loss on facility shutdowns $ - $ 13,819
------------ -----------
- 13,819
============ ===========
(2) Debt retirement costs include the following:
Call premium related to redemption of senior notes due February 2008 $ 1,648 $ -
Write-off of unamortized deferred debt acquisition costs 423 -
------------ -----------
2,071 -
============ ===========
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AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
FOR THE NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------
2003 2002
------------ -----------
(unaudited) (unaudited)
Net revenues $ 1,144,862 $ 1,032,989
Cost of revenues 922,617 998,557
------------ -----------
Gross profit 222,245 34,432
------------ -----------
Operating expenses:
Selling, general and administrative 131,828 137,639
Research and development 19,454 24,535
Loss (gain) on disposal of assets (870) 2,912
Amortization of acquired intangibles 6,103 4,995
Special charges (1) - 281,985
------------ -----------
Total operating expenses 156,515 452,066
------------ -----------
Operating income (loss) 65,730 (417,634)
------------ -----------
Other (income) expense:
Interest expense, net 107,494 111,010
Foreign currency (gain) loss (1,083) 1,881
Other (income) expense, net 2,076 (11)
Debt retirement costs (2) 32,632 -
------------ -----------
Total other expense 141,119 112,880
------------ -----------
Loss before income taxes, equity investment losses,
minority interest and discontinued operations (75,389) (530,514)
Equity investment losses (3,555) (166,040)
Minority interest expense (2,135) (2,238)
------------ -----------
Loss from continuing operations before income taxes (81,079) (698,792)
------------ -----------
Income tax benefit (6,072) (61,891)
------------ -----------
Loss from continuing operations (75,007) (636,901)
------------ -----------
Discontinued operations:
Income from wafer fabrication services business, net of tax of
$419 and $3,791 3,047 6,258
Gain on sale of wafer fabrication services business, net of tax of
$7,081 in 2003 51,519 -
------------ -----------
Income from discontinued operations 54,566 6,258
------------ -----------
Net loss $ (20,441) $ (630,643)
============ ===========
Per Share Data:
Basic and diluted loss per common share from continuing operations $ (0.45) $ (3.89)
Basic and diluted income per common share from discontinued operations 0.33 0.04
------------ -----------
Basic and diluted net loss per common share $ (0.12) $ (3.85)
============ ===========
Shares used in computing basic and diluted income (loss) per common share 165,883 163,854
============ ===========
(1) Special charges include the following:
Loss on FAS 142 impairment $ - $ 73,080
Loss on FAS 144 impairment - 190,266
Loss on facility shutdowns - 18,639
------------ -----------
- 281,985
============ ===========
(2) Debt retirement costs include the following:
Call premium related to redemption of senior notes due May 2006 and
February 2008 $ 21,304 $ -
Write-off of unamortized deferred debt acquisition costs 8,787 -
Other debt retirement costs 2,541 -
------------ -----------
32,632 -
============ ===========
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AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
SEPTEMBER 30, DECEMBER 31,
2003 2002
------------ -----------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 340,503 $ 311,249
Accounts receivable--
Trade, net of allowance for doubtful accounts of $6,862 and $7,122 280,959 234,056
Other 6,452 8,532
Inventories 88,280 72,121
Other current assets 48,071 48,661
------------ -----------
Total current assets 764,265 674,619
------------ -----------
Property, plant and equipment, net 978,409 966,338
------------ -----------
Investments 47,281 83,235
------------ -----------
Other assets:
Goodwill 629,502 628,099
Acquired intangibles 39,504 45,033
Due from affiliates - 20,852
Other 76,711 114,178
Assets of discontinued operations 247 25,630
------------ -----------
Total other assets 745,964 833,792
------------ -----------
Total assets $ 2,535,919 $ 2,557,984
============ ===========
Liabilities and Stockholders' Equity
Current liabilities:
Bank overdraft $ 5,130 $ 4,633
Short-term borrowings and current portion of long-term debt 54,240 71,023
Trade accounts payable 195,882 180,999
Due to affiliates 3,109 70,243
Accrued expenses 166,109 184,223
------------ -----------
Total current liabilities 424,470 511,121
Long-term debt 1,785,765 1,737,690
Other noncurrent liabilities 79,418 67,661
------------ -----------
Total liabilities 2,289,653 2,316,472
------------ -----------
Minority Interest 11,224 10,145
Stockholders' equity:
Common stock 167 166
Additional paid-in capital 1,179,904 1,170,227
Accumulated deficit (954,175) (933,734)
Receivable from stockholder - (2,887)
Accumulated other comprehensive gains (losses) 9,146 (2,405)
------------ -----------
Total stockholders' equity 235,042 231,367
------------ -----------
Total liabilities and stockholders' equity $ 2,535,919 $ 2,557,984
============ ===========
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AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
FOR THE THREE MONTHS ENDED
SEPTEMBER 30,
---------------------------
2003 2002
----------- ----------
(UNAUDITED) (UNAUDITED)
Cash flows from continuing operating activities:
Income (loss) from continuing operations $ 15,770 $ (61,213)
Depreciation and amortization 52,660 76,048
Equity investment losses - (127,004)
Other adjustments to reconcile loss to net cash provided by operating activities 16,297 141,216
Changes in assets and liabilities excluding effects of acquisitions (39,739) 19,003
----------- ----------
Net cash provided by operating activities 44,988 48,050
----------- ----------
Cash flows from investing activities:
Purchases of property, plant and equipment (63,649) (20,202)
Other investing activities 14,600 46,420
----------- ----------
Net cash provided by (used in) investing activities (49,049) 26,218
----------- ----------
Cash flows used in financing activities (3,841) (16,977)
----------- ----------
Effect of exchange rate fluctuations on cash and cash equivalents related to continuing operations 2,041 (1,554)
----------- ----------
Cash flows provided by discontinued operations 60 17,363
----------- ----------
Net increase (decrease) in cash and cash equivalents (5,801) 73,100
Cash and cash equivalents, beginning of period 346,304 161,938
----------- ----------
Cash and cash equivalents, end of period $ 340,503 $ 235,038
=========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 32,105 $ 31,658
Income taxes $ 3,030 $ 3,054
AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
FOR THE NINE MONTHS ENDED
SEPTEMBER 30,
---------------------------
2003 2002
----------- ----------
(UNAUDITED) (UNAUDITED)
Cash flows from continuing operating activities:
Loss from continuing operations $ (75,007) $ (636,901)
Depreciation and amortization 165,360 264,108
Equity investment losses 3,555 24,737
Other adjustments to reconcile loss to net cash provided by operating activities 53,980 374,330
Changes in assets and liabilities excluding effects of acquisitions (48,792) 23,148
----------- ----------
Net cash provided by operating activities 99,096 49,422
----------- ----------
Cash flows from investing activities:
Purchases of property, plant and equipment (148,230) (82,298)
Other investing activities 34,612 47,531
----------- ----------
Net cash used in investing activities (113,618) (34,767)
----------- ----------
Cash flows provided by (used in) financing activities 27,621 (13,798)
----------- ----------
Effect of exchange rate fluctuations on cash and cash equivalents related to continuing operations 2,522 905
----------- ----------
Cash flows provided by discontinued operations 13,633 33,219
----------- ----------
Net increase in cash and cash equivalents 29,254 34,981
Cash and cash equivalents, beginning of period 311,249 200,057
----------- ----------
Cash and cash equivalents, end of period $ 340,503 $ 235,038
=========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 107,869 $ 103,174
Income taxes $ 7,553 $ 5,754
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