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Amkor Technology Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 2, 2012 04:29PM

Amkor Technology Inc. (AMKR) filed Quarterly Report for the period ended 2012-06-30. Amkor Technology, Inc. has a market cap of $872.8 million; its shares were traded at around $5.18 with a P/E ratio of 11 and P/S ratio of 0.3.



Highlight of Business Operations:

Our net sales decreased $1.1 million or 0.2% to $686.5 million for the three months ended June 30, 2012, from $687.6 million for the three months ended June 30, 2011. The decrease was driven by a decline of $1.7 million or 0.3% in packaging net sales as a result of weakness in the consumer, networking and auto and industrial end markets, partially offset by strength in the communications end market. The decrease in packaging net sales was partially offset by a $0.7 million or 0.9% increase in our test net sales. The increase in test net sales was the result of strength in the communications end market.

Gross margin for the three months ended June 30, 2012, decreased to 13.0% from 18.9% for the three months ended June 30, 2011. Our cost of sales for the three months ended June 30, 2012, included an estimated $30.0 million loss contingency accrual resulting from an interim order issued by the arbitration panel relating to our license agreement with Tessera, Inc. ("Tessera"). The $30.0 million royalty charge for Tessera reduced our gross margin by 4.4%. The decrease in gross margin was also due to increased depreciation expense as a result of our continued investment in property, plant and equipment as well as additional manufacturing overhead expenses. These costs were partially offset by favorable foreign currency exchange rate movements.

Our capital additions totaled $273.4 million or 20.4% of net sales for the six months ended June 30, 2012, compared to $202.0 million or 14.9% of net sales for the six months ended June 30, 2011. During the six months ended June 30, 2012, 44.2% of our capital additions were made in packaging, 30.8% in test and 25.0% for research and development and infrastructure projects.

Labor costs as a percentage of net sales decreased to 14.4% and 14.2% for the three and six months ended June 30, 2012, from 14.9% and 14.5% for the three and six months ended June 30, 2011. Labor costs as a percentage of sales, and in absolute dollars, decreased primarily due to favorable foreign currency exchange rate movements as substantially all of our manufacturing operations' workforce is paid in local currencies. In addition, we saw labor cost savings for the six months ended June 30, 2012, which were partially offset by a $5.5 million charge for the restructuring activities at our manufacturing operations in Japan.

Other manufacturing costs as a percentage of net sales increased to 29.4% and 27.3% for the three and six months ended June 30, 2012, from 23.4% and 23.7% for the three and six months ended June 30, 2011. The increase in other manufacturing costs as a percentage of sales, and in absolute dollars, was primarily attributable to the estimated $30.0 million loss contingency accrual resulting from an interim order issued by the arbitration panel relating to our license agreement with Tessera. Other manufacturing costs also increased as a result of increased depreciation expense due to our continued investments in property, plant and equipment as well as additional manufacturing overhead expenses.

Read the The complete Report



Stocks Discussed: AMKR,
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