Fourth Quarter 2017 Highlights:



  • Record sales $1.15 billion, 12% year-on-year growth


  • Gross margin 19.6%

Full Year 2017 Highlights:



  • Record sales $4.2 billion, 8% year-on-year growth


  • Net income $261 million, earnings per diluted share $1.09


  • EBITDA $971 million, net cash provided by operating activities $618
    million and free cash flow $209 million


  • Gross margin 18.1%

TEMPE, Ariz.--(BUSINESS WIRE)--Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of

semiconductor packaging and test services, today announced financial

results for the fourth quarter and full year ended December 31, 2017.

“Fourth quarter results were above the high end of our guidance, with

sales up 12% year-over-year and 1% sequentially," said Steve Kelley,

Amkor’s president and chief executive officer. “For full year 2017, we

delivered record sales of $4.2 billion, an increase of nearly $300

million, or 8%, over 2016. Strong demand across all of our end markets,

particularly mobile communications, combined with solid execution on our

strategic initiatives in automotive, Greater China and advanced

System-in-Package (SiP), produced another good year of profitable growth

for Amkor.”

“Record fourth quarter sales drove gross margin well above the high end

of guidance,” said Megan Faust, Amkor’s corporate vice president and

chief financial officer. “Our results also benefitted from the

completion of our Japan factory consolidation in the quarter. Our CapEx

discipline and prudent asset management generated 209 million dollars of

free cash flow in 2017, our third consecutive year of free cash flow

growth."


Results

 

Q4 2017

 

Q3 2017

 

Q4 2016

 

2017

 

2016


 

($ in millions, except per share amounts)

Net sales


$

1,148


 

$

1,135


 

$

1,022


 

$

4,186


 

$

3,894


Gross margin



19.6

%



19.1

%



22.2

%



18.1

%



17.9

%

Net income attributable to Amkor1


$

101



$

54



$

100



$

261



$

164


Earnings per diluted share1


$

0.42



$

0.23



$

0.42



$

1.09



$

0.69


EBITDA1,2


$

256



$

243



$

281



$

971



$

855


Net cash provided by operating activities


$

204



$

214



$

238



$

618



$

729


Free cash flow1,2


$

76



$

74



$

117



$

209



$

140

1) Q4 2017 net income includes an estimated one-time net tax benefit of

$42 million, or $0.17 per diluted share, primarily due to the reversal

of a valuation allowance on certain U.S. deferred tax assets as a result

of the enactment of U.S. tax reform. In Q4 2016, we received

approximately $26 million of insurance proceeds related to the second

quarter 2016 Japan earthquakes which contributed 250 basis points to

gross margin and $0.08 to earnings per diluted share. Full year 2017 net

income also includes an after-tax gain of $82 million, or $0.34 per

diluted share, from the sale of our K1 factory in Korea.

2) EBITDA and free cash flow are non-GAAP measures. The reconciliations

to the comparable GAAP measures are included below under "Selected

Operating Data."

Cash and cash equivalents were $600 million, and total debt was $1.4

billion, at December 31, 2017.

Business Outlook

“We expect first quarter 2018 revenues to be around $1.02 billion, up

12% year-on-year," said Kelley.

First quarter 2018 outlook:



  • Net sales of $0.98 billion to $1.06 billion, up 7% to 16% from the
    first quarter 2017


  • Gross margin of 14% to 16%


  • Net loss of $5 million to net income of $25 million, or ($0.02) to
    $0.11 per diluted share


  • Full year 2018 capital expenditures of around $600 million

Conference Call Information

Amkor will conduct a conference call on Monday, February 12, 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

4297967). 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 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



 


 

 


 

 


 

 


 

 



AMKOR TECHNOLOGY, INC.




Selected Operating Data

















 



Q4 2017



Q3 2017



Q4 2016



2017



2016

Net Sales Data:















Net sales (in millions):















Advanced products1


$

581




$

554




$

451




$

1,950




$

1,680


Mainstream products2


567

 



581

 



571

 



2,236

 



2,214

 

Total net sales


$

1,148

 



$

1,135

 



$

1,022

 



$

4,186

 



$

3,894

 















 

Packaging services


82

%



82

%



83

%



82

%



82

%

Test services


18

%



18

%



17

%



18

%



18

%















 

Net sales from top ten customers


68

%



67

%



66

%



67

%



67

%















 

End Market Distribution Data (an approximation including
representative devices and applications based on a sampling of our
largest customers)3:















Communications (smartphones, tablets, handheld devices)


48

%



45

%



42

%



43

%



42

%

Automotive, industrial and other (driver assist, infotainment,
safety, performance)


23

%



25

%



26

%



26

%



26

%

Computing (data center, PC/laptops, infrastructure, storage)


17

%



17

%



18

%



18

%



18

%

Consumer (television, set-top boxes, personal electronics)


12

%



13

%



14

%



13

%



14

%

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


37.5

%



37.1

%



36.6

%



36.4

%



37.2

%

Labor


14.5

%



15.2

%



14.5

%



15.6

%



15.3

%

Other manufacturing4


28.4

%



28.6

%



26.7

%



29.9

%



29.6

%

Gross margin


19.6

%



19.1

%



22.2

%



18.1

%



17.9

%

1) Advanced products include flip chip and wafer-level processing and

related test services

2) Mainstream products include wirebond packaging and related test

services

3) Based on our periodic evaluation of end markets, we aggregated our

networking end market into our computing end market. All prior periods

have been retrospectively recasted to conform with current year

presentation.

4) Fourth quarter and full year 2016 results include approximately $26

million of insurance proceeds related to the second quarter 2016 Japan

earthquakes

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 Measures Reconciliation:

 


 

 


 

 


 

 


 

 




Q4 2017



Q3 2017



Q4 2016



2017



2016



(in millions)

EBITDA Data:















Net income


$

102




$

56




$

101




$

265




$

167

Plus: Interest expense


20




20




22




85




85

Plus: Income tax expense (benefit)


(13

)



19




19




39




48

Plus: Depreciation & amortization


147

 



148

 



139

 



582

 



555

EBITDA


$

256

 



$

243

 



$

281

 



$

971

 



$

855

In the press release above we refer to free cash flow, which is not

defined by U.S. GAAP. We define free cash flow as net cash provided by

operating activities less payments for property, plant and equipment,

plus proceeds from the sale of and insurance recovery for property,

plant and equipment, if applicable. 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, free cash flow has

certain limitations, including that it does not represent the residual

cash flow available for discretionary expenditures since other,

non-discretionary expenditures, such as mandatory debt service, are not

deducted from the measure. The amount of mandatory versus discretionary

expenditures can vary significantly between periods. This measure should

be considered in addition to, and not as a substitute for, or superior

to, other measures of liquidity or financial performance prepared in

accordance with U.S. GAAP, such as net cash provided by operating

activities. Furthermore, our definition of free cash flow may not be

comparable to similarly titled measures reported by other companies.

Below is our reconciliation of free cash flow to U.S. GAAP net cash

provided by operating activities.


Non-GAAP Financial Measures Reconciliation:

 


 

 


 

 


 

 


 

 




Q4 2017



Q3 2017



Q4 2016



2017



2016



(in millions)

Free Cash Flow Data:















Net cash provided by operating activities


$

204




$

214




$

238




$

618




$

729


Less: Purchases of property, plant and equipment


(137

)



(142

)



(168

)



(551

)



(650

)

Plus: Proceeds from sale of and insurance recovery for property,
plant and equipment


9

 



2

 



47

 



142

 



61

 

Free cash flow


$

76

 



$

74

 



$

117

 



$

209

 



$

140

 



 


 

 



AMKOR TECHNOLOGY, INC.




CONSOLIDATED STATEMENTS OF INCOME




(Unaudited)








 




For the Three Months Ended
December 31,






For the Year Ended
December 31,





2017

 

 

2016



2017

 

 

2016



(In thousands, except per share data)

Net sales


$

1,148,423




$

1,021,613




$

4,186,497




$

3,893,635


Cost of sales


922,929

 



794,426

 



3,429,224

 



3,198,158

 

Gross profit


225,494

 



227,187

 



757,273

 



695,477

 

Selling, general and administrative


77,410




67,437




297,455




284,331


Research and development


37,956




33,061




166,614




117,206


Gain on sale of real estate




 





 



(108,109

)





 

Total operating expenses


115,366

 



100,498

 



355,960

 



401,537

 

Operating income


110,128

 



126,689

 



401,313

 



293,940

 

Interest expense


20,106




21,172




83,839




79,668


Interest expense, related party







1,242




1,715




4,969


Other (income) expense, net


861

 



(15,461

)



11,889

 



(5,854

)

Total other expense, net


20,967

 



6,953

 



97,443

 



78,783

 

Income before taxes


89,161




119,736




303,870




215,157


Income tax expense (benefit)


(12,782

)



18,534

 



38,982

 



47,853

 

Net income


101,943




101,202




264,888




167,304


Net income attributable to noncontrolling interests


(1,173

)



(939

)



(4,182

)



(3,114

)

Net income attributable to Amkor


$

100,770

 



$

100,263

 



$

260,706

 



$

164,190

 












 

Net income attributable to Amkor per common share:












Basic


$

0.42

 



$

0.42

 



$

1.09

 



$

0.69

 

Diluted


$

0.42

 



$

0.42

 



$

1.09

 



$

0.69

 

Shares used in computing per common share amounts:












Basic


239,128




238,190




238,937




237,416


Diluted


239,814




239,187




239,651




238,034



 



AMKOR TECHNOLOGY, INC.




CONSOLIDATED BALANCE SHEETS




(Unaudited)





 



December 31,



2017

 

 

2016



(In thousands)

ASSETS






Current assets:






Cash and cash equivalents


$

596,364




$

549,518


Restricted cash


2,000




2,000


Accounts receivable, net of allowances


692,287




563,107


Inventories


326,492




267,990


Other current assets


33,727

 



27,081

 

Total current assets


1,650,870




1,409,696


Property, plant and equipment, net


2,695,065




2,564,648


Goodwill


25,036




24,122


Restricted cash


4,487




3,977


Other assets


146,051

 



89,643

 

Total assets


$

4,521,509

 



$

4,092,086

 






 

LIABILITIES AND EQUITY






Current liabilities:






Short-term borrowings and current portion of long-term debt


$

123,848




$

35,192


Trade accounts payable


569,085




487,430


Capital expenditures payable


294,258




144,370


Accrued expenses


374,598

 



338,669

 

Total current liabilities


1,361,789




1,005,661


Long-term debt


1,240,581




1,364,638


Long-term debt, related party







75,000


Pension and severance obligations


182,216




166,701


Other non-current liabilities


46,144

 



76,682

 

Total liabilities


2,830,730

 



2,688,682

 






 

Amkor stockholders’ equity:






Preferred stock










Common stock


285




284


Additional paid-in capital


1,903,357




1,895,089


Accumulated deficit


(42,851

)



(303,557

)

Accumulated other comprehensive income (loss)


22,519




6,262


Treasury stock


(215,982

)



(214,490

)

Total Amkor stockholders’ equity


1,667,328




1,383,588


Noncontrolling interests in subsidiaries


23,451

 



19,816

 

Total equity


1,690,779

 



1,403,404

 

Total liabilities and equity


$

4,521,509

 



$

4,092,086

 



 



AMKOR TECHNOLOGY, INC.




CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS




(Unaudited)





 




For the Year Ended
December 31,





2017

 

 

2016



(In thousands)

Cash flows from operating activities:






Net income


$

264,888




$

167,304


Depreciation and amortization


581,940




555,186


Gain on sale of real estate


(108,109

)






Proceeds from insurance recovery for property, plant and equipment







(15,166

)

Deferred income taxes


(42,998

)



(1,746

)

Other operating activities and non-cash items


424




8,902


Changes in assets and liabilities


(77,878

)



14,922

 

Net cash provided by operating activities


618,267

 



729,402

 






 

Cash flows from investing activities:






Payments for property, plant and equipment


(550,943

)



(650,038

)

Proceeds from sale of property, plant and equipment


141,530




45,635


Proceeds from insurance recovery for property, plant and equipment







15,166


Acquisition of business, net of cash acquired


(43,771

)






Other investing activities


(1,648

)



(190

)

Net cash used in investing activities


(454,832

)



(589,427

)






 

Cash flows from financing activities:






Proceeds from revolving credit facilities


75,000




125,000


Payments of revolving credit facilities







(255,000

)

Proceeds from short-term debt


77,781




49,131


Payments of short-term debt


(70,236

)



(49,500

)

Proceeds from issuance of long-term debt


223,976




46,000


Payments of long-term debt


(405,269

)



(32,078

)

Payments of long-term debt, related party


(17,837

)






Payment of deferred consideration for purchase of facility


(3,890

)






Payments of capital lease obligations


(5,340

)



(2,543

)

Proceeds from issuance of stock through share-based compensation
plans


3,124




8,247


Other financing activities


(2,195

)



(1,436

)

Net cash (used in) provided by financing activities


(124,886

)



(112,179

)






 

Effect of exchange rate fluctuations on cash, cash equivalents and
restricted cash


8,807

 



351

 






 

Net increase in cash, cash equivalents and restricted cash


47,356




28,147


Cash, cash equivalents and restricted cash, beginning of period


555,495

 



527,348

 

Cash, cash equivalents and restricted cash, end of period


$

602,851

 



$

555,495

 

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

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;


  • 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, 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 newly 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 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;


  • environmental and other governmental regulations, including regulatory
    efforts by foreign governments to support local competitors; 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, 2016 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.

Contacts

Amkor Technology, Inc.

Megan Faust

Corporate Vice President &

Chief Financial Officer

480-786-7707

or

Greg

Johnson

Vice President, Finance and Investor Relations

480-786-7594