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    Amkor Technology Reports Financial Results for the Third Quarter 2018


    Third Quarter Highlights

    • Third quarter net sales $1,144 million, up 7% sequentially
    • Net Income $57 million, earnings per diluted share $0.24
    • EBITDA $235 million, up 13% sequentially
    • Completed debt refinancing, reducing interest expense by $11 million annually

    TEMPE, Ariz.–(BUSINESS WIRE)–Oct. 29, 2018– Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of semiconductor packaging and test services, today announced financial results for the third quarter ended September 30, 2018.

    “Third quarter revenue grew 7% sequentially, reflecting strength in mobile communications,” said Steve Kelley, Amkor’s CEO.

    Results Q3 2018 Q2 2018 Q3 2017
    ($ in millions, except per share data)
    Net sales $1,144 $1,066 $1,149
    Gross margin 17.5% 15.9% 19.5%
    Net income attributable to Amkor $57 $33 $59
    Earnings per diluted share $0.24 $0.14 $0.25
    EBITDA1 $235 $208 $251

    1) EBITDA is a non-GAAP measure. The reconciliation to the comparable GAAP measure is included below under “Selected Operating Data.”

    “Better than expected gross profit and EPS were driven primarily by improved operating leverage,” said Megan Faust, Amkor’s CFO. “We also completed a debt refinancing which will generate annual interest savings of approximately $11 million.”

    Business Outlook

    Fourth quarter 2018 outlook (unless otherwise noted):

    • Net sales of $1.02 billion to $1.10 billion
    • Gross margin of 13% to 15%
    • Net income of $5 million to $34 million, or $0.02 to $0.14 per diluted share
    • Full year capital expenditures of approximately $600 million

    Conference Call Information

    Amkor will conduct a conference call on Monday, October 29, 2018, at 5:00 p.m. Eastern Time. This call may include material information not included in this press release. This call is being webcast and can be accessed at Amkor’s website: www.amkor.com. You may also access the call by dialing 1-877-645-6380 or 1-404-991-3911. A replay of the call will be made available at Amkor’s website or by dialing 1-855-859-2056 or 1-404-537-3406 (conference ID 8196238). The webcast is also being distributed over NASDAQ OMX’s investor distribution network to both institutional and individual investors. Institutional investors can access the call via NASDAQ OMX’s password-protected event management site, Street Events (www.streetevents.com).

    About Amkor Technology, Inc.

    Amkor Technology, Inc. is one of the world’s largest providers of outsourced semiconductor packaging and test services. Founded in 1968, Amkor pioneered the outsourcing of IC packaging and test, and is now a strategic manufacturing partner for more than 250 of the world’s leading semiconductor companies, foundries and electronics OEMs. Amkor’s operational base includes production facilities, product development centers, and sales and support offices located in key electronics manufacturing regions in Asia, Europe and the USA. For more information, visit www.amkor.com.


    Selected Operating Data

    Q3 2018 Q2 2018 Q3 2017
    Net Sales Data:
    Net sales (in millions):
    Advanced products* $ 582 $ 496 $ 563
    Mainstream products** 562 570 586
    Total net sales $ 1,144 $ 1,066 $ 1,149
    Packaging services 84 % 83 % 82 %
    Test services 16 % 17 % 18 %
    Net sales from top ten customers 62 % 65 % 67 %
    End Market Data:
    Communications (smartphones, tablets, handheld devices) 47 % 42 % 46 %
    Automotive, industrial and other (driver assist, infotainment, safety, performance) 25 % 26 % 24 %
    Computing (datacenter, infrastructure, PC/laptop, storage) 17 % 19 % 17 %
    Consumer (set-top boxes, televisions, connected home, personal electronics, visual imaging) 11 % 13 % 13 %
    Total 100 % 100 % 100 %
    Gross Margin Data:
    Net sales 100.0 % 100.0 % 100.0 %
    Cost of sales:
    Materials 40.3 % 38.9 % 36.9 %
    Labor 15.1 % 16.0 % 15.1 %
    Other manufacturing 27.1 % 29.2 % 28.5 %
    Gross margin 17.5 % 15.9 % 19.5 %

    * Advanced products include flip chip and wafer-level processing and related test services
    ** Mainstream products include wirebond packaging and related test services

    Selected Operating Data

    In the press release above we provide EBITDA, which is not defined by U.S. GAAP. We define EBITDA as net income before interest expense, income tax expense and depreciation and amortization. We believe EBITDA to be relevant and useful information to our investors because it provides additional information in assessing our financial operating results. Our management uses EBITDA in evaluating our operating performance, our ability to service debt and our ability to fund capital expenditures. However, EBITDA has certain limitations in that it does not reflect the impact of certain expenses on our consolidated statements of income, including interest expense, which is a necessary element of our costs because we have borrowed money in order to finance our operations, income tax expense, which is a necessary element of our costs because taxes are imposed by law, and depreciation and amortization, which is a necessary element of our costs because we use capital assets to generate income. EBITDA should be considered in addition to, and not as a substitute for, or superior to, operating income, net income or other measures of financial performance prepared in accordance with U.S. GAAP. Furthermore our definition of EBITDA may not be comparable to similarly titled measures reported by other companies. Below is our reconciliation of EBITDA to U.S. GAAP net income.

    Non-GAAP Financial Measure Reconciliation:
    Q3 2018 Q2 2018 Q3 2017
    (in millions)
    EBITDA Data:
    Net income $ 57 $ 33 $ 60
    Plus: Interest expense 20 21 21
    Plus: Income tax expense 14 11 21
    Plus: Depreciation & amortization 144 143 149
    EBITDA $ 235 $ 208 $ 251

    For the Three Months Ended September 30, For the Nine Months Ended September 30,
    2018 2017* 2018 2017*
    (In thousands, except per share data)
    Net sales $ 1,144,192 $ 1,148,884 $ 3,235,195 $ 3,056,553
    Cost of sales 943,485 924,996 2,707,000 2,519,815
    Gross profit 200,707 223,888 528,195 536,738
    Selling, general and administrative 70,463 75,568 225,886 219,635
    Research and development 37,541 42,841 119,546 128,690
    Gain on sale of real estate (108,109 )
    Total operating expenses 108,004 118,409 345,432 240,216
    Operating income 92,703 105,479 182,763 296,522
    Interest expense 19,770 20,321 60,908 63,733
    Interest expense, related party 180 1,715
    Other (income) expense, net 1,315 3,257 (6,254 ) 11,150
    Total other expense, net 21,085 23,758 54,654 76,598
    Income before taxes 71,618 81,721 128,109 219,924
    Income tax expense 14,326 21,263 27,438 53,404
    Net income 57,292 60,458 100,671 166,520
    Net income attributable to non-controlling interests (630 ) (1,194 ) (1,874 ) (3,029 )
    Net income attributable to Amkor $ 56,662 $ 59,264 $ 98,797 $ 163,491
    Net income attributable to Amkor per common share:
    Basic $ 0.24 $ 0.25 $ 0.41 $ 0.68
    Diluted $ 0.24 $ 0.25 $ 0.41 $ 0.68
    Shares used in computing per common share amounts:
    Basic 239,370 239,068 239,312 238,873
    Diluted 239,766 239,640 239,783 239,610

    * Effective January 1, 2018, we adopted Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), utilizing the full retrospective transition method. The prior periods presented here have been revised to reflect this change.

    September 30,
    December 31,
    (In thousands)
    Current assets:
    Cash and cash equivalents $ 547,665 $ 596,364
    Restricted cash 2,559 2,000
    Accounts receivable, net of allowances 797,678 798,264
    Inventories 228,108 213,649
    Other current assets 35,226 33,727
    Total current assets 1,611,236 1,644,004
    Property, plant and equipment, net 2,714,084 2,695,065
    Goodwill 24,813 25,036
    Restricted cash 3,896 4,487
    Other assets 141,440 139,796
    Total assets $ 4,495,469 $ 4,508,388
    Current liabilities:
    Short-term borrowings and current portion of long-term debt $ 97,646 $ 123,848
    Trade accounts payable 548,864 569,085
    Capital expenditures payable 253,756 294,258
    Accrued expenses 271,067 330,868
    Total current liabilities 1,171,333 1,318,059
    Long-term debt 1,267,992 1,240,581
    Pension and severance obligations 179,900 182,216
    Other non-current liabilities 54,403 47,823
    Total liabilities 2,673,628 2,788,679
    Stockholders’ equity:
    Preferred stock
    Common stock 285 285
    Additional paid-in capital 1,908,171 1,903,357
    Retained earnings (accumulated deficit) 84,894 (13,903 )
    Accumulated other comprehensive income (loss) 19,729 22,519
    Treasury stock (216,135 ) (215,982 )
    Total Amkor stockholders’ equity 1,796,944 1,696,276
    Non-controlling interests in subsidiaries 24,897 23,433
    Total equity 1,821,841 1,719,709
    Total liabilities and equity $ 4,495,469 $ 4,508,388
    For the Nine Months Ended September 30,
    2018 2017
    (In thousands)
    Cash flows from operating activities:
    Net income $ 100,671 $ 166,520
    Depreciation and amortization 429,181 435,667
    Gain on sale of real estate (108,109 )
    Other operating activities and non-cash items (2,006 ) (8,124 )
    Changes in assets and liabilities (100,628 ) (72,043 )
    Net cash provided by operating activities 427,218 413,911
    Cash flows from investing activities:
    Payments for property, plant and equipment (478,036 ) (413,974 )
    Proceeds from sale of property, plant and equipment 1,606 133,320
    Acquisition of business, net of cash acquired (43,771 )
    Other investing activities 3,160 (1,600 )
    Net cash used in investing activities (473,270 ) (326,025 )
    Cash flows from financing activities:
    Proceeds from revolving credit facilities 75,000
    Payments of revolving credit facilities (75,000 )
    Proceeds from short-term debt 23,341 50,333
    Payments of short-term debt (35,125 ) (52,068 )
    Proceeds from issuance of long-term debt 372,226 223,976
    Payments of long-term debt (279,697 ) (398,755 )
    Payments of long-term debt, related party (17,837 )
    Payment of deferred consideration for purchase of facility (3,890 )
    Payments of capital lease obligations (2,669 ) (4,123 )
    Other financing activities (2,482 ) 425
    Net cash provided by (used in) financing activities 594 (126,939 )
    Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash (3,273 ) 9,231
    Net decrease in cash, cash equivalents and restricted cash (48,731 ) (29,822 )
    Cash, cash equivalents and restricted cash, beginning of period 602,851 555,495
    Cash, cash equivalents and restricted cash, end of period $ 554,120 $ 525,673

    Forward-Looking Statement Disclaimer

    This press release contains forward-looking statements within the meaning of federal securities laws. All statements other than statements of historical fact are considered forward-looking statements including, without limitation, statements regarding the interest savings generated by a debt refinancing, and all of the statements made under “Business Outlook” above. These forward-looking statements involve a number of risks, uncertainties, assumptions and other factors that could affect future results and cause actual results and events to differ materially from historical and expected results and those expressed or implied in the forward-looking statements, including, but not limited to, the following:

    • the highly unpredictable nature, cyclicality, and rate of growth of the semiconductor industry;
    • timing and volume of orders relative to production capacity and the inability to achieve high capacity utilization rates, control costs and improve profitability;
    • laws, rules, regulations and policies imposed by the U.S. or foreign governments in areas such as tariffs, customs, duties and other restrictive trade barriers, national security, data privacy and cybersecurity, antitrust and competition, tax, currency and banking, privacy, labor, environmental, health and safety, and in particular the recent increase in protectionist measures considered or adopted by the U.S. and foreign governments;
    • laws, rules, regulations and policies within China and other countries that may favor domestic companies over non-domestic companies, including customer or government supported efforts to promote the development and growth of local competitors;
    • volatility of consumer demand, double booking by customers and deterioration in forecasts from our customers for products incorporating our semiconductor packages, including any slowdown in demand or changes in customer forecasts for smartphones or other mobile devices and generally soft end market demand for electronic devices;
    • delays, lower manufacturing yields and supply constraints relating to wafers, particularly for advanced nodes and related technologies;
    • dependence on key customers, the impact of changes in our market share and prices for our services with those customers and the business and financial condition of those customers;
    • the performance of our business, interest rate fluctuations and other economic and market conditions, the cash needs and investment opportunities for the business, the need for additional capacity and facilities to service customer demand and the availability of cash flow from operations or financing;
    • the effect of the global economy on credit markets, financial institutions, customers, suppliers and consumers, including the uncertain macroeconomic environment;
    • the highly unpredictable nature and costs of litigation and other legal activities and the risk of adverse results of such matters and the impact of other legal proceedings;
    • changes in tax rates and taxes as a result of changes in U.S. or foreign tax law or the interpretations thereof (including the impact of recent U.S. tax reform), changes in our organizational structure, changes in the jurisdictions in which our income is determined to be earned and taxed, the outcome of tax reviews, audits and ruling requests, our ability to realize deferred tax assets and the expiration of tax holidays;
    • curtailment of outsourcing by our customers;
    • our substantial indebtedness and restrictive covenants;
    • failure to realize sufficient cash flow or access to other sources of liquidity to fund capital expenditures;
    • the effects of an economic slowdown in major economies worldwide;
    • disruptions in our business or deficiencies in our controls resulting from the integration of acquired operations, particularly J-Devices, or the implementation and security of, and changes to, our enterprise resource planning, factory shop floor systems and other management information systems;
    • there can be no assurance regarding when our new K5 factory and research and development center in Korea will be fully utilized, or that the actual scope, costs, timeline or benefits of the project will be consistent with our current expectations;
    • economic effects of terrorist attacks, political instability, natural disasters and military conflict;
    • competition, competitive pricing and declines in average selling prices;
    • fluctuations in packaging and test manufacturing yields;
    • dependence on international operations and sales and fluctuations in foreign currency exchange rates, particularly in Japan and Korea;
    • dependence on raw material and equipment suppliers and changes in raw material and precious metal costs;
    • dependence on key personnel;
    • enforcement of and compliance with intellectual property rights; and
    • technological challenges.

    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, 2017 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.

    Source: Amkor Technology, Inc.

    Amkor Technology, Inc.
    Chris Chaney
    Vice President, Investor Relations
    [email protected]