Record 2014 Sales $3.13 Billion ----- GAAP EPS $0.55, Non-GAAP EPS $0.88
TEMPE, Ariz.-- Amkor Technology, Inc. (AMKR), a leading provider of semiconductor packaging and test services, today announced financial results for the fourth quarter and full year ended December 31, 2014.
“We delivered a strong finish to the year with fourth quarter operating results well above the high end of our guidance," said Steve Kelley, Amkor's president and chief executive officer. "Driven by notable strength in mobile communications using our advanced packaging and test technologies, we saw record sales for the quarter and full year, and a substantial improvement in profitability. And over the last two years, net sales have grown 13% to more than $3.13 billion and our non-GAAP earnings per share have nearly doubled. These results demonstrate that our strategic initiatives are gaining traction, and we anticipate another year of sales and earnings growth in 2015."
GAAP Results | Q4 2014 | Q3 2014 | Q4 2013 | 2014 | 2013 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
($ in millions, except per share amounts) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net sales | $853 | $813 | $755 | $3,129 | $2,956 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross margin | 14.1% | 18.8% | 19.9% |
17.7% |
18.4% | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | $13 | $47 | $41 | $130 | $109 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per diluted share |
$0.06 | $0.20 | $0.18 |
|
$0.55 | $0.50 |
Non-GAAP Results | Q4 2014 | Q3 2014 | Q4 2013 | 2014 | 2013 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
($ in millions, except per share amounts) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net sales | $853 | $813 | $755 | $3,129 | $2,956 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross margin | 22.9% | 18.8% | 19.9% | 20.1% | 18.8% | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | $90 | $47 | $41 | $208 | $119 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per diluted share |
$0.38 | $0.20 | $0.18 | $0.88 | $0.54 |
The gross margin, net income and earnings per diluted share information presented above under Non-GAAP Results excludes charges relating to the settlement of our litigation with Tessera and are non-GAAP measures. The charges are $89 million ($78 million, net of tax) in 2014 and $11 million ($10 million, net of tax) in 2013. The reconciliation to the comparable GAAP measures is included below under "Selected Operating Data."
Cash and cash equivalents were $450 million, and total debt was $1.5 billion, at December 31, 2014.
Business Outlook
"We expect that first quarter 2015 revenues will be up 6% year-on-year and down 13% sequentially," said Kelley. "We also expect full year 2015 capital expenditures of around $600 million, including around $150 million of spending for our new K5 factory and R&D center in Incheon, Korea."
Based upon currently available information, we have the following expectations for the first quarter 2015:
Conference Call Information
Amkor will conduct a conference call on Monday, February 9, 2015, 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 68501790). 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
Amkor is a leading provider of semiconductor packaging and test services to semiconductor companies and electronics OEMs. More information about Amkor is available from the company's filings with the Securities and Exchange Commission and at Amkor's website: www.amkor.com.
AMKOR TECHNOLOGY, INC. | |||||||||||||||||||||||||
Selected Operating Data | |||||||||||||||||||||||||
Q4 2014 | Q3 2014 | Q4 2013 | 2014 | 2013 | |||||||||||||||||||||
Net Sales Data: | |||||||||||||||||||||||||
Net sales (in millions): | |||||||||||||||||||||||||
Advanced products* | $ | 462 | $ | 411 | $ | 346 | $ | 1,553 | $ | 1,451 | |||||||||||||||
Mainstream products** | 391 | 402 | 409 | 1,576 | 1,505 | ||||||||||||||||||||
Total net sales | $ | 853 | $ | 813 | $ | 755 | $ | 3,129 | $ | 2,956 | |||||||||||||||
Packaging services | 85 | % | 86 | % | 85 | % | 85 | % | 86 | % | |||||||||||||||
Test services | 15 | % | 14 | % | 15 | % | 15 | % | 14 | % | |||||||||||||||
Net sales from top ten customers | 64 | % | 60 | % | 63 | % | 61 | % | 63 | % | |||||||||||||||
Packaged units (in millions): | |||||||||||||||||||||||||
Advanced products* | 1,174 | 1,012 | 816 | 3,776 | 2,845 | ||||||||||||||||||||
Mainstream products** | 3,001 | 3,545 | 3,261 | 13,112 | 10,060 | ||||||||||||||||||||
Total packaged units | 4,175 | 4,557 | 4,077 | 16,888 | 12,905 | ||||||||||||||||||||
End Market Distribution Data (an approximation including representative devices and applications based on a sampling of our largest customers): | |||||||||||||||||||||||||
Communications (smart phones, tablets, handheld devices, wireless LAN) | 60 | % | 56 | % | 55 | % | 56 | % | 56 | % | |||||||||||||||
Consumer (television, set top boxes, gaming, portable media, digital cameras) | 11 | % | 13 | % | 14 | % | 13 | % | 15 | % | |||||||||||||||
Automotive, industrial and other (infotainment, safety, performance, comfort) | 10 | % | 11 | % | 11 | % | 11 | % | 10 | % | |||||||||||||||
Networking (servers, routers, switches) | 10 | % | 11 | % | 11 | % | 11 | % | 10 | % | |||||||||||||||
Computing (PCs, hard disk drive, printers, peripherals, servers) | 9 | % | 9 | % | 9 | % | 9 | % | 9 | % | |||||||||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||
Gross Margin Data: | |||||||||||||||||||||||||
Net sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||
Cost of sales: | |||||||||||||||||||||||||
Materials | 36.0 | % | 37.5 | % | 37.2 | % | 36.8 | % | 40.0 | % | |||||||||||||||
Labor | 13.2 | % | 14.1 | % | 14.6 | % | 14.0 | % | 14.4 | % | |||||||||||||||
Other manufacturing | 27.9 | % | 29.6 | % | 28.3 | % | 29.1 | % | 26.8 | % | |||||||||||||||
Litigation settlement | 8.8 | % | — | % | — | % | 2.4 | % | 0.4 | % | |||||||||||||||
Gross margin | 14.1 | % | 18.8 | % | 19.9 | % | 17.7 | % | 18.4 | % | |||||||||||||||
Earnings per Share Data: | |||||||||||||||||||||||||
Net income available to Amkor common stockholders - basic | $ | 13 | $ | 47 | $ | 41 | $ | 130 | $ | 109 | |||||||||||||||
Adjustment for dilutive securities on net income: | |||||||||||||||||||||||||
Interest on 6.0% convertible notes due 2014, net of tax | — | — | 1 | 1 | 9 | ||||||||||||||||||||
Net income attributable to Amkor - diluted | $ | 13 | $ | 47 | $ | 42 | $ | 131 | $ | 118 | |||||||||||||||
Weighted average shares outstanding - basic | 237 | 236 | 216 | 231 | 187 | ||||||||||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||||||
Stock options and unvested restricted shares | — | 1 | — | 1 | — | ||||||||||||||||||||
6.0% convertible notes due 2014 | — | — | 19 | 5 | 48 | ||||||||||||||||||||
Weighted average shares outstanding - diluted | 237 | 237 | 235 | 237 | 235 | ||||||||||||||||||||
Net income attributable to Amkor per common share: | |||||||||||||||||||||||||
Basic | $ | 0.06 | $ | 0.20 | $ | 0.19 | $ | 0.56 | $ | 0.58 | |||||||||||||||
Diluted | $ | 0.06 | $ | 0.20 | $ | 0.18 | $ | 0.55 | $ | 0.50 |
*Advanced products include flip chip and wafer-level processing and related test services |
**Mainstream products include wirebond packaging and related test services and since August 1, 2013, include the results of our newly acquired power discrete business in Malaysia which has a high volume of units relative to revenue. |
AMKOR TECHNOLOGY, INC. |
Selected Operating Data |
In the press release above we provide non-GAAP gross margin, non-GAAP net income, and non-GAAP earnings per diluted share for the years ended December 31, 2014 and 2013, respectively. We also provide non-GAAP gross margin, non-GAAP net income and non-GAAP earnings per diluted share for the quarter ended December 31, 2014. We present these non-GAAP amounts to demonstrate the impact of the charges we recognized related to the settlement of our litigation with Tessera. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). These measures have limitations, including that they exclude the charges for the settlement payments, which are amounts that the company will ultimately have to pay in cash, and should be considered in addition to, and not as a substitute for, or superior to, gross margin, net income and earnings per diluted share prepared in accordance with U.S. GAAP. Below is the reconciliation of non-GAAP gross margin, non-GAAP net income and non-GAAP earnings per diluted share to U.S. GAAP gross margin, net income and earnings per diluted share.
Non-GAAP Financial Measures Reconciliation: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Q4 2014 | 2014 | 2013 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross margin | 14.1 | % | 17.7 | % | 18.4 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Plus: Litigation settlement charges divided by net sales | 8.8 | % | 2.4 | % | 0.4 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-GAAP gross margin | 22.9 | % | 20.1 | % | 18.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income (In millions) | $ | 13 | $ | 130 | $ | 109 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Plus: Litigation settlement charges, net of tax (In millions) | 77 | 78 | 10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-GAAP net income (In millions) | $ | 90 | $ | 208 | $ | 119 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per diluted share | $ | 0.06 | $ | 0.55 | $ | 0.50 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Plus: Litigation settlement charges per diluted share | 0.32 | 0.33 | 0.04 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-GAAP earnings per diluted share | $ | 0.38 | $ | 0.88 | $ | 0.54 |
AMKOR TECHNOLOGY, INC. |
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CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
(Unaudited) | ||||||||||||||||
For the Three Months Ended |
For the Year Ended |
|||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Net sales | $ | 853,113 | $ | 754,875 | $ | 3,129,440 | $ | 2,956,450 | ||||||||
Cost of sales | 733,042 | 604,702 | 2,576,618 | 2,411,937 | ||||||||||||
Gross profit | 120,071 | 150,173 | 552,822 | 544,513 | ||||||||||||
Selling, general and administrative | 62,800 | 58,255 | 254,498 | 247,779 | ||||||||||||
Research and development | 17,303 | 17,364 | 76,864 | 64,625 | ||||||||||||
Total operating expenses | 80,103 | 75,619 | 331,362 | 312,404 | ||||||||||||
Operating income | 39,968 | 74,554 | 221,460 | 232,109 | ||||||||||||
Interest expense | 34,917 | 24,818 | 104,956 | 96,739 | ||||||||||||
Interest expense, related party | 1,242 | 1,242 | 4,969 | 9,169 | ||||||||||||
Other (income) expense, net | (9,254 | ) | (4,112 | ) | (24,543 | ) | 2,214 | |||||||||
Total other expense, net | 26,905 | 21,948 | 85,382 | 108,122 | ||||||||||||
Income before taxes and equity in earnings of unconsolidated affiliate | 13,063 | 52,606 | 136,078 | 123,987 | ||||||||||||
Income tax expense | 1,420 | 16,685 | 33,845 | 22,646 | ||||||||||||
Income before equity in earnings of unconsolidated affiliate | 11,643 | 35,921 | 102,233 | 101,341 | ||||||||||||
Equity in earnings of J-Devices | 2,485 | 5,637 | 31,654 | 10,316 | ||||||||||||
Net income | 14,128 | 41,558 | 133,887 | 111,657 | ||||||||||||
Net income attributable to noncontrolling interests | (993 | ) | (720 | ) | (3,501 | ) | (2,361 | ) | ||||||||
Net income attributable to Amkor | $ | 13,135 | $ | 40,838 | $ | 130,386 | $ | 109,296 | ||||||||
Net income attributable to Amkor per common share: | ||||||||||||||||
Basic | $ | 0.06 | $ | 0.19 | $ | 0.56 | $ | 0.58 | ||||||||
Diluted | $ | 0.06 | $ | 0.18 | $ | 0.55 | $ | 0.50 | ||||||||
Shares used in computing per common share amounts: | ||||||||||||||||
Basic | 236,578 | 216,598 | 230,710 | 187,032 | ||||||||||||
Diluted | 236,937 | 235,297 | 236,731 | 235,330 |
AMKOR TECHNOLOGY, INC. | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
(Unaudited) | ||||||||
December 31, | ||||||||
2014 | 2013 | |||||||
(In thousands) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 449,946 | $ | 610,442 | ||||
Restricted cash | 2,681 | 2,681 | ||||||
Accounts receivable, net of allowances | 469,683 | 385,542 | ||||||
Inventories | 223,379 | 200,423 | ||||||
Other current assets | 52,259 | 33,328 | ||||||
Total current assets | 1,197,948 | 1,232,416 | ||||||
Property, plant and equipment, net | 2,206,476 | 2,006,553 | ||||||
Investments | 117,733 | 105,214 | ||||||
Restricted cash | 2,123 | 2,234 | ||||||
Other assets | 111,125 | 80,881 | ||||||
Total assets | $ | 3,635,405 | $ | 3,427,298 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Short-term borrowings and current portion of long-term debt | $ | 5,000 | $ | 61,350 | ||||
Trade accounts payable | 309,025 | 260,534 | ||||||
Capital expenditures payable | 127,568 | 104,800 | ||||||
Accrued expenses | 258,997 | 264,252 | ||||||
Total current liabilities | 700,590 | 690,936 | ||||||
Long-term debt | 1,450,824 | 1,516,390 | ||||||
Long-term debt, related party | 75,000 | 75,000 | ||||||
Pension and severance obligations | 152,673 | 165,073 | ||||||
Other non-current liabilities | 125,382 | 14,959 | ||||||
Total liabilities | 2,504,469 | 2,462,358 | ||||||
Amkor stockholders’ equity: | ||||||||
Preferred stock | — | — | ||||||
Common stock | 282 | 262 | ||||||
Additional paid-in capital | 1,878,810 | 1,812,530 | ||||||
Accumulated deficit | (516,962 | ) | (647,348 | ) | ||||
Accumulated other comprehensive loss | (32,867 | ) | (255 | ) | ||||
Treasury stock | (213,028 | ) | (211,449 | ) | ||||
Total Amkor stockholders’ equity | 1,116,235 | 953,740 | ||||||
Noncontrolling interests in subsidiaries | 14,701 | 11,200 | ||||||
Total equity | 1,130,936 | 964,940 | ||||||
Total liabilities and equity | $ | 3,635,405 | $ | 3,427,298 |
AMKOR TECHNOLOGY, INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Unaudited) | ||||||||
For the Year Ended |
||||||||
2014 | 2013 | |||||||
(In thousands) | ||||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 133,887 | $ | 111,657 | ||||
Depreciation and amortization | 464,706 | 410,346 | ||||||
Loss on debt retirement | — | 11,619 | ||||||
Gain on sale of subsidiary to J-Devices | (9,155 | ) | — | |||||
Other operating activities and non-cash items | (40,762 | ) | (15,978 | ) | ||||
Changes in assets and liabilities | 65,233 | 39,892 | ||||||
Net cash provided by operating activities | 613,909 | 557,536 | ||||||
Cash flows from investing activities: | ||||||||
Payments for property, plant and equipment | (681,120 | ) | (566,256 | ) | ||||
Proceeds from sale of property, plant and equipment | 2,815 | 27,209 | ||||||
Acquisition of business, net of cash acquired | — | (41,865 | ) | |||||
Cash transferred on sale of subsidiary to J-Devices, net of proceeds | (15,774 | ) | — | |||||
Payments from J-Devices | — | 8,843 | ||||||
Investment in J-Devices | — | (67,372 | ) | |||||
Other investing activities | (399 | ) | (1,053 | ) | ||||
Net cash used in investing activities | (694,478 | ) | (640,494 | ) | ||||
Cash flows from financing activities: | ||||||||
Borrowings under revolving credit facilities | — | 5,000 | ||||||
Payments under revolving credit facilities | — | (5,000 | ) | |||||
Proceeds from issuance of long-term debt | 80,000 | 375,000 | ||||||
Payments of long-term debt | (145,000 | ) | (80,000 | ) | ||||
Payments for debt issuance costs | (903 | ) | (3,216 | ) | ||||
Payments for retirement of debt | — | (11,619 | ) | |||||
Payment of deferred consideration for an acquisition | (18,763 | ) | — | |||||
Proceeds from issuance of stock through share-based compensation plans | 6,250 | 446 | ||||||
Payments of tax withholding for restricted shares | (1,579 | ) | (466 | ) | ||||
Net cash (used in) provided by financing activities | (79,995 | ) | 280,145 | |||||
Effect of exchange rate fluctuations on cash and cash equivalents | 68 | 207 | ||||||
Net (decrease) increase in cash and cash equivalents | (160,496 | ) | 197,394 | |||||
Cash and cash equivalents, beginning of period | 610,442 | 413,048 | ||||||
Cash and cash equivalents, end of period | $ | 449,946 | $ | 610,442 | ||||
Note to unaudited consolidated financial statements:
In January 2015, Amkor entered into a settlement agreement with Tessera to resolve their outstanding litigation. Under the terms of the settlement, Amkor agreed to pay Tessera a total of $155 million in equal quarterly installments of $9.6875 million over the next four years in exchange for a mutual release and dismissal of all claims relating to their pending litigation and arbitration proceedings. As a result of the settlement, Amkor recorded the net present value of the settlement obligation ($137 million), less the previously accrued expense ($50 million), as a charge allocated between cost of sales ($75 million) and interest expense ($12 million). The remaining amount of the gross settlement charge ($18 million) will be accreted through interest expense over the four year term of the arrangement to reflect the impact of the time value of money due to the long term nature of the obligation and related payment terms. The settlement liability has been recorded in accrued expenses (current) and other long-term liabilities (non-current) for the present value of payments due within one year and those due in excess of one year, respectively.
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 our strategic initiatives, our 2015 sales and earnings growth 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:
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, 2013 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.