Amkor Technology's Management Presents At Citi Technology Conference - Transcript

Amkor Technology, Inc. (AMKR)

Citi Technology Conference

September 06, 2012, 14:00 p.m. ET


Joanne Solomon - EVP and CFO

Bob Lanzone - SVP, Advanced Product Development

Greg Johnson - Head, Corporate Communications


Unidentified Analyst

It's a pleasure to have Amkor with us today. (Inaudible) semi cap equipment and also specialty semiconductor analyst and again welcome Amkor. Joanne Solomon, CFO will be presenting 20 minutes presentation we will also then have some Q&A and then turn it over for audience question. So, with that let's get started. Joanne.

Joanne Solomon

Thank you, Caris, and thank you everyone for joining us today. With me today I have Bob Lanzone, he is our Senior Vice President in Advanced Product Development and Greg Johnson, Head of Corporate Communications. So, as you are attending a question feel free to ask any technology based questions, Bob will do a great job.

To get started I have two slides that I will walk you through and three slides will be counted disclaimer slides to the extent that we have any forward-looking information I'd just caution you that there is with respect to forward-looking information we refer to our SEC filings and I'll follow to it with respect to guidance is our last time giving guidance is as of July 26 their comments relating to the guidance as of that date.

To give some highlights of the business for people who may not be out familiar with the story. Amkor is one of the leading outsource semiconductor packaging and cap providers. So, we are a contract manufacturer, our manufacturing facilities are in Asia base about 75% of our revenues come out of (inaudible). And we have manufacturing locations in Taiwan as well as China and Japan. The industry is dominated by poor principle outsource of semi and test providers, ASC, OSAT. ASC has largely been up, we are larger than they are with respect to flip chip, assembly and test and then going without chip pack, which is core to Amkor and where we sustained our competitive advantage over the last 40 years. Our focus is largely on the advanced package development. So, we tend to bring new packages to their and then benefit from the higher market share initially and that’s where we are seeing today and flip chip as more and more packages migrate out of wire bound into flip chip. And we are well positioned to capitalize on that trend and we have the leading market share in support of flip chip.

As a contract manufacturer, here we are tend to be driven a lot by who our customers are. So, we are well positioned with many of today's leading semiconductor company. Customers like Qualcomm, Texas Instrument, Toshiba, Altera, Xilinx all customers of ours and keep the ideas attraction and exceeding the R&D pipeline.

With respect to favorable OSAT trend, more and more companies are starting to outsource more and more what’s driving that is the as the OSAT fires are building scale we can do things that cheaper and more effectively and all from a technology perspective sometimes to become difficult for a semiconductor company to maintain the level of manufacturing capability for both to outsource instead.

To give you some highlights from a financial perspective, Amkor is on a trailing 12 month basis as of Q2, our revenues were 2.8 billion. Our EBITDA, high level of EBITDA $500 million on an unadjusted basis if you back off our litigation accrual to half and back in Q2 it would be at 533 and net income is 85 million adjusted and then 97 million on adjusted.

We as a company and from a financial policy standpoint we talk about a continuous focus on profitable growth and strong cash flow generation. So, that keeps a very balanced view with respect to how we deploy cash and being both cyclical and a seasonal industry it's important to keep our cost in line with the demand that we are seeing in that remains the priority of ours.

As a company we do have debt on our balance sheet it's about $1.4 billion. From a credit profile our debt-to-EBITDA is 2.7, there was some level of deterioration because our EBITDA was again impacted by the accrual for the litigation matter. Our return on invested capital remains above our weighted average cost of capital, it has gone back a bit, there was some level of compression with respect to our profitability. We were adversely impacted in 2010 and 2011 as a result of (inaudible) and we had some areas where we had some utilization challenges largely on the legacy side.

We remained well positioned for growth, we are investing in the right areas. We continue to invest in support of, well chip is well on the legacy side mean that some cost savings initiative. And [Bob here] simply takes the fair share of capital investment we had in the last year or so in support of Through Silicon Vias.

With those introductory remarks, I'd love to take any questions that you all may have.

Question-and-Answer Session

Unidentified Analyst

I'll start off and then we can go to the audience for questions as well. I think that you had mentioned part of the results of the 28 nanometer capacity as part of the result of that. You had guided a little bit softer for the third quarter, can you give us an update on what you are seeing in terms of trends since then and your expectations for how that might contribute to the growth profile in fourth quarter?

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