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Original Source: FD (FAIR DISCLOSURE) WIRE
. James Kim, Amkor Technology, Inc., Chairman & CEO . John Boruch, Amkor Technology, Inc., Vice Chairman . Bruce Freyman, Amkor Technology, Inc., President & COO . Ken Joyce, Amkor Technology, Inc., CFO
AMKR has achieved its 4Q03 financial targets and has entered 2004 with considerable business momentum. The co. reached its 4Q target GM of 25% for 2003. AMKR's goal is to bring in enough equipment to get ahead of demand and thus avoid having to go on allocation in 2004. Q&A Focus: Depreciation expense ramp, CAPEX, Japan factory, DSO, inventory, and CSP packages.
S1. 4Q03 Results (J.K.) 1. Highlights: 1. Earlier this month AMKR announced that John Boruch has been named Vice Chairman and Bruce Freyman was promoted to President and COO. 2. John will be developing and overseeing the strategy initiatives and will enable AMKR to reach the $3-5b revenue level. 3. Bruce will manage AMKR's day-to-day operations. 4. The co. has achieved its 4Q03 financial targets and has entered 2004 with considerable business momentum. 5. The market for outsourced assembly and test will expand at a remarkable rate. 2. Goals: 1. AMKR enters 2004 with the following primary goals: 1. To achieve above the industry growth and exceed the previous peak revenue levels.
2. Enhance the capital structure and deliver the balance sheet.
3. Increase the operational footprint in Taiwan and China.
4. Capitalize on several key packaging and test technologies, including MicroLeadFrame, test packages, flip chip, camera modules, and strip test. 2. The co. is in an excellent position to exceed $2b revenue in 2004.
S2. 4Q03 Financial Highlights (K.J.) 1. Highlights: 1. 4Q03 revenue came in at the high end of expectation. 2. As customer demand remained strong during the qtr. the co. has continued to benefit from broad-based demand for advanced packages that support wireless and consumer electronics application. 3. 4Q03 unit volume of 1.6b is a record for AMKR, exceeding the peak in 3Q02 by nearly 200m units. 4. The co. has a bigger operational footprint today which gives it the capacity to assemble and test more ICs than it did in 2000. 5. The ASP environment remains favorable. 6. For 2003, ASP declined around 6% on a per penny basis which is well below the normal range. 7. AMKR currently expects a similar pricing environment for 2004. 2. GM And CAPEX:
1. The co. reached its 4Q target GM of 25% for 2003. 2. In response to strong customer demand, the co. increased its CAPEX in 4Q03 and is accelerating equipment purchases in 1Q04 to accommodate continued strong demand. 3. AMKR's goal is to bring in enough equipment to get ahead of demand and thus avoid having to go on allocation in 2004. 4. Investment in CAPEX together with the associated increase in depreciation and overhead expenses led to a slight negative
impact on GM and cash flow in 1Q. 5. The co. expects GM and cash flow to build later in the year as the new equipment is utilized. 3. G&A: 1. 4Q03 G&A expenses were $3m greater than in 3Q03 principally reflecting increased legal expenses in connection with the low compound litigation. 2. The co. will continue to incurr related legal expenses until the litigation is resolved.
3. AMKR expects the dollar amount to be either flat or decline in 1Q. 4. SG&A: 1. The co. expects SG&A expenses to increase modestly during 2004 but at a pace that is well below the revenue growth rate. 2. During 4Q03, the co. examined and verified the balance of the capitalized deferred debt issuance costs which resulted in $1.6m reduction in interest expense. 3. In 2003, the co. made significant progress in improving the capital structure.
4. AMKR simplified its bank facility to better reflect its own
fundamental, decreased interest rates, and length in the
maturity profile of the long-term debt. 5. The co. raised a modest amount of equity, and applied the proceeds to pay down debt. 6. The co. will realize approx. $15m in annualized interest
savings from the debt reduction and refinancing activities in
2003. 7. AMKR will seek additional opportunities during 2004 to further reduce debt and interest expense. 5. 1Q04 Guidance: 1. Revenue should be up between 2-4% sequentially.
2. GM should be around 24%. 3. The co. expects net income in the range of $0.08-0.11 per share.
S3. Technology Performance (B.F.) 1. Highlights: 1. Performance in 2003 and outlook for 2004 are confirmations of the technology and capacity bets that the co. placed during the downturn.
2. AMKR's six-month forecast increased consistently during the
qtr. across a broad range of device technologies and end
markets. 3. The co. is seeing strong demand from the leading-edge packages as well as the legacy products. 4. The legacy products are showing up due to the very high utilization that it now sees within the IDMs factories. 5. The co. is also pleased to see increasing order activity from customers supplying high ASP packages in the networking sector. 6. As the IDMs made minimal investments in advanced packaging technology during the downturn, the co. anticipates continued growth through 2004 on most of the leading-edge packages including micron stacked packages, chip scale BGA, system-in-package, flip chip, and camera modules.
1. This should lead to a better than avg. product mix, as these
products become a larger part of the business. 7. AMKR's leadership position combined with the lack of IDM investment, positions the co. to compete for a much greater share of the available market in the strategically important package technologies.
8. The co.'s work force factories in Korea and the Philippines
continue to expand capacity to support the strong demand for
advanced and legacy packages. 9. The factories in Taiwan and China are growing rapidly and profitably and are achieving revenue growth rates that fall outside of the industry avg.
10. AMKR has recently completed the buyout of the joint venture
factory with Toshiba and looks for continuing growth from AMKR
Japan. 11. The test business, especially strip test continues to …