艾克爾 (AMKR) 2002 Q3 法說會逐字稿

Good afternoon ladies and gentlemen and welcome to the Amkor third quarter earnings conference call.

At this time all participants are in a listen- only mode.

Following today's presentation instructions will be given for the question and answer session.

If anyone needs assistance at any time during the conference please press the star key followed by the '0' key.

As a reminder, this conference is being recorded today Tuesday, October 29th, 2002.

I'd now like to turn the conference over to Mr. James Kim, CEO of Amkor Technology.

Please go ahead sir.

Thank you.

Thank you for joining us today.

I am James Kim, Chairman and Chief Executive Officer of Amkor.

With me today are John Boruch, President and Chief Operating Officer, and Kenneth Joyce, Chief Financial Officer.

I will make some brief remarks.

Ken will discuss our operating results and then John will have some closing comments.

The third quarter marked several important milestones.

We have a definite action designed to monetize our interest in Anam Semiconductor.

We strengthened our financial liquidity and we achieved positive cash flow.

During the third quarter, we completed a transaction with Dongbu in which we sold 20 million shares of ASI for approximately $95 million.

We received an initial payment of $59 million, the balance of the $36 million is payable in two installments due in September 2003 and February 2004.

With this transaction our ownership interest in ASI is reduced to 21% and Dongbu is now ASI's largest shareholder.

Regarding liquidity, the initial payments and Dongbu transactions brought our cash balance up to $235 million and as we further monetize our investment in ASI, our cash should continue to increase.

We are committed to further divesting our investment in ASI by reducing our ownership position and by monetizing the marketing rights under the Family agreement.

Kenneth Joyce will now review our financial results.

Thank you Jim.

Before we discuss our financial results I would like to remind you that during the course of this conference call, we will make forward-looking statements regarding the future events and the future performance of Amkor.

We wish to caution you that such statements represent the current view of management.

We refer you to today's press release and our filings with the SEC for information on risk factors that could cause actual results to differ materially from our current expectations.

Our results for the quarter exceeded our expectations across the board, with the single exception being our share of the non-core, which was greater than anticipated due to a write-down of certain inventories.

Assembly and test revenue of $394 million was up 12% from $350 million in Q2.

September finished much stronger than we had originally expected.

Wafer fab revenue was also higher than planned.

Gross profits and operating income dollars rose sharply due to higher revenue, lower depreciation and ongoing cost reduction initiatives.

EBITDA of $71 million also exceeded plans.

Our results for the quarter included $14 million in pre-tax charges, consisting of a write-down of leasehold improvements and other facility exit costs.

These actions were primarily related to consolidation and efficiency improvements in Taiwan where we are in the process of merging of the operations of two factories into a single facility.

The bulk of this $14 million charge is non-cash.

Our third quarter units increased 7%.

During the quarter, ASP rose 4% due to the favorable product mix.

Overall capacity utilization was around 65%.

During the quarter, we saw strong unit growth across a broad range of packages including MicroLeadFrame, System in a Package, Chip Aray BGA and Strip Test.

Our new factory in China continues to increase production and we are getting more customers qualified.

If our customers' long-range forecasts hold, the factory may breakeven during the second quarter of 2003.

Third quarter depreciation and amortization was $77 million compared to $95 million in the second quarter and $112 million in the third quarter of 2001.

The lower levels of depreciation reflect the impact of the impairments recorded in the second quarter, which were primarily related to our fixed assets.

Operating expenses were down 6% sequentially and 5% from the third quarter of 2001, reflecting ongoing cost reduction activity.

During the third quarter, we recorded a charge of $1.8 million, reflecting $4.5 million in transaction fees and expenses partially offset by a gain of $2.7 million on the sale of ASI shares to Dongbu.

At September 30th, our cash balance was $235 million and our $100 million revolver remained unused.

Compared with our balance sheet at June 30th, receivables rose modestly, reflecting higher business levels.

Inventories were down slightly and capital expenditures were $31 million for the third quarter and totaled $82 million for the first 9 months.

Capacity related expenditures were focused on MicroLeadFrames, Flip Chip and Fine Stitch Wire Bond Programs.

Our CAPEX program for 2002 remained around the $100 million mark.

During the quarter, we took several steps to enhance our financial liquidity.

As Jim mentioned earlier we received $59 million in cash as an initial payment in connection with the sale of 20million shares of ASI to Dongbu.

We elected to retain this cash on the balance sheet rather than reduce debt as we believe that until there are clearer signs of an industry recovery, it is preferable to have additional balance sheet liquidity.

In addition, as previously announced, we received a strong vote of confidence from our lenders when they agreed to extend the covenants in our existing facility for an additional one-year term.

Thus removing any concern about having to repay our term loan before the scheduled amortization.

On our second quarter conference call, we expressed the hope that we would turn cash flow positive in the fourth quarter.

I am pleased to note that we achieved this goal in the third quarter.

Effective with the fourth quarter, we are changing the estimated useful lives of certain of our assembly equipment from 4 years to 7 years for depreciation purposes.

This schedule is in line with practice used by other companies in our industry.