Document


 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
October 31, 2016
AMKOR TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
 
 
 
 
 
DELAWARE
 
000-29472
 
23-1722724
 
 
 
 
 
(State or Other Jurisdiction of Incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)

2045 EAST INNOVATION CIRCLE
TEMPE, AZ 85284
(Address of principal executive offices, including zip code)

(480) 821-5000
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 






Item 2.02. Results of Operations and Financial Condition.

Attached hereto as Exhibit 99.1 and incorporated by reference herein is financial information for Amkor Technology, Inc. for the three and nine months ended September 30, 2016, and forward-looking statements relating to the fourth quarter and full year 2016 as presented in a press release dated October 31, 2016. The information in this Form 8-K and the exhibit attached hereto is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.
99.1
 
Text of Press Release dated October 31, 2016, which is furnished (not filed) herewith.






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
AMKOR TECHNOLOGY, INC.

 
 
By:
/s/ Megan Faust
 
 
 
Megan Faust
 
 
 
Corporate Vice President and Chief Financial Officer
 
 
Date: October 31, 2016





EXHIBIT INDEX:

Exhibit
 
Description
99.1
 
Text of Press Release dated October 31, 2016, which is furnished (not filed) herewith.


Exhibit



https://cdn.kscope.io/ff44a39a9641f8e1c8d092d09915cbf0-amkorlogo_01a02a12.jpg
News Release

Amkor Technology Reports Financial Results for the Third Quarter 2016

Third Quarter Highlights
Net sales $1.09 billion, 18.4% sequential growth
Gross margin 19.7%
Net income $60 million, earnings per diluted share $0.25 and EBITDA $248 million
Notable strength in mobile communications across multiple tiers
Solid sales growth in Automotive, Greater China and advanced SiP

TEMPE, Ariz. - October 31, 2016 - Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of semiconductor packaging and test services, today announced financial results for the third quarter ended September 30, 2016.

"Third quarter results were at the high end of our guidance," said Steve Kelley, Amkor's president and chief executive officer. "We saw notable strength in smartphones across multiple tiers. Sales in Automotive, Greater China and advanced SiP were all up sequentially reflecting the continued success of our strategic initiatives in these key areas. Our 18% sequential growth in sales generated substantial cash and profits for the quarter.”

Results
Q3 2016
Q2 2016
Q3 2015
 
($ in millions, except per share data)
Net sales
$1,086
$917
$734
Gross margin
19.7%
14.3%
17.2%
Net income (loss)
$60
$5
$28
Earnings per diluted share
$0.25
$0.02
$0.12
EBITDA*
$248
$168
$187

*EBITDA is a non-GAAP measure. The reconciliation to the comparable GAAP measure is included below under "Selected Operating Data."

Business Outlook

"Demand is solid in nearly all end markets," said Kelley. "We expect Q4 revenue to be around $1.03 billion. For 2016, we expect total revenue of about $3.9 billion, a $1 billion increase over 2015.”

Fourth quarter and full year 2016 outlook:

Fourth quarter
Net sales of $990 million to $1.07 billion, down 1% to 9% from the prior quarter
Gross margin of 19% to 23%
Net income of $46 million to $82 million, or $0.19 to $0.34 per share

Full year
Net sales of approximately $3.9 billion, up from $2.9 billion in 2015
Gross margin of approximately 17.5%, up from 16.6% in 2015
Net income of approximately $130 million, or around $0.55 per share, up from $0.22 in 2015
Capital expenditures of approximately $650 million, unchanged from our previous forecast






Our Q4 and full year guidance includes the anticipated receipt of approximately $30 million of insurance payments related to the Japan earthquakes.






Conference Call Information

Amkor will conduct a conference call on Monday, October 31, 2016, 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 94698432). 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 Technology, Inc.

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 operating base includes more than 8 million square feet of floor space, with production facilities, product development centers, and sales and support offices located in key electronics manufacturing regions in Asia, Europe and the U.S. For more information, visit www.amkor.com.







Contacts:

Amkor Technology, Inc.
Megan Faust
Corporate Vice President & Chief Financial Officer
480-786-7707
megan.faust@amkor.com

Greg Johnson
Vice President, Finance and Investor Relations
480-786-7594
greg.johnson@amkor.com






AMKOR TECHNOLOGY, INC.
Selected Operating Data

 
Q3 2016
 
Q2 2016
 
Q3 2015*
Net Sales Data:
 
 
 
 
 
Net sales (in millions):
 
 
 
 
 
Advanced products**
$
480

 
$
394

 
$
365

Mainstream products***
606

 
523

 
369

Total net sales
$
1,086

 
$
917

 
$
734

 
 
 
 
 
 
Packaging services
82
%
 
83
%
 
85
%
Test services
18
%
 
17
%
 
15
%
 
 
 
 
 
 
Net sales from top ten customers
68
%
 
67
%
 
61
%
 
 
 
 
 
 
End Market Distribution Data (an approximation including representative devices and applications based on a sampling of our largest customers):
 
 
 
 
 
Communications (smart phones, tablets, handheld devices, wireless LAN)
47
%
 
44
%
 
55
%
Automotive and industrial (infotainment, safety, performance, comfort)
24
%
 
25
%
 
13
%
Consumer (televisions, set top boxes, gaming, portable media, digital cameras)
14
%
 
14
%
 
12
%
Networking (servers, routers, switches)
9
%
 
11
%
 
12
%
Computing (PCs, hard disk drives, printers, peripherals, servers)
6
%
 
6
%
 
8
%
Total
100
%
 
100
%
 
100
%
 
 
 
 
 
 
Gross Margin Data:
 
 
 
 
 
Net sales
100.0
%
 
100.0
%
 
100.0
%
Cost of sales:
 
 
 
 
 
Materials
37.2
%
 
37.7
%
 
36.8
%
Labor
14.6
%
 
16.0
%
 
14.9
%
Other manufacturing
28.5
%
 
32.0
%
 
31.1
%
Gross margin
19.7
%
 
14.3
%
 
17.2
%

*The data for 2015 does not include the results from J-Devices
**Advanced products include flip chip and wafer-level processing and related test services
***Mainstream products include wirebond packaging and related test services































AMKOR TECHNOLOGY, INC.
Selected Operating Data

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 Measure Reconciliation:
 
 
 
 
 
 
Q3 2016
 
Q2 2016
 
Q3 2015
 
(in millions)
EBITDA Data:
 
 
 
 
 
Net income attributable to Amkor
$
60

 
$
5

 
$
28

Plus: Interest expense
23

 
22

 
19

Plus: Income tax expense
24

 
3

 
17

Plus: Depreciation & amortization
141

 
138

 
123

EBITDA
$
248

 
$
168

 
$
187






AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

 
For the Three Months Ended September 30,
 
For the Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
 
(In thousands, except per share data)
Net sales
$
1,086,014

 
$
734,362

 
$
2,872,022

 
$
2,213,959

Cost of sales
872,214

 
607,762

 
2,403,732

 
1,837,314

Gross profit
213,800

 
126,600

 
468,290

 
376,645

Selling, general and administrative
72,363

 
54,232

 
216,894

 
173,609

Research and development
26,822

 
21,073

 
84,145

 
59,119

Total operating expenses
99,185

 
75,305

 
301,039

 
232,728

Operating income
114,615

 
51,295

 
167,251

 
143,917

Interest expense
21,488

 
17,695

 
58,496

 
64,317

Interest expense, related party
1,243

 
1,243

 
3,727

 
3,727

Other (income) expense, net
6,657

 
(11,576
)
 
9,607

 
(4,784
)
Total other expense, net
29,388

 
7,362

 
71,830

 
63,260

Income before taxes and equity in earnings of unconsolidated affiliate
85,227

 
43,933

 
95,421

 
80,657

Income tax expense
24,086

 
16,568

 
29,319

 
27,198

Income before equity in earnings of unconsolidated affiliate
61,141

 
27,365

 
66,102

 
53,459

Equity in earnings of J-Devices

 
1,217

 

 
10,587

Net income
61,141

 
28,582

 
66,102

 
64,046

Net income attributable to non-controlling interests
(1,052
)
 
(847
)
 
(2,175
)
 
(2,386
)
Net income attributable to Amkor
$
60,089

 
$
27,735

 
$
63,927

 
$
61,660

 
 
 
 
 
 
 
 
Net income attributable to Amkor per common share:
 
 
 
 
 
 
 
Basic
$
0.25

 
$
0.12

 
$
0.27

 
$
0.26

Diluted
$
0.25

 
$
0.12

 
$
0.27

 
$
0.26

 
 
 
 
 
 
 
 
Shares used in computing per common share amounts:
 
 
 
 
 
 
 
Basic
237,353

 
236,888

 
237,157

 
236,813

Diluted
238,192

 
236,974

 
237,586

 
237,168








AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)


 
September 30,
2016
 
December 31,
2015
 
(In thousands)
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
549,836

 
$
523,172

Restricted cash
2,000

 
2,000

Accounts receivable, net of allowances
630,984

 
526,143

Inventories
272,589

 
238,205

Other current assets
31,637

 
27,960

Total current assets
1,487,046

 
1,317,480

Property, plant and equipment, net
2,619,469

 
2,579,017

Goodwill
27,908

 
23,409

Restricted cash
4,209

 
2,176

Other assets
102,482

 
104,346

Total assets
$
4,241,114

 
$
4,026,428

 
 
 
 
LIABILITIES AND EQUITY
Current liabilities:
 
 
 
Short-term borrowings and current portion of long-term debt
$
30,834

 
$
76,770

Trade accounts payable
517,745

 
434,222

Capital expenditures payable
179,768

 
242,980

Accrued expenses
346,613

 
264,212

Total current liabilities
1,074,960

 
1,018,184

Long-term debt
1,473,214

 
1,435,269

Long-term debt, related party
75,000

 
75,000

Pension and severance obligations
191,615

 
167,197

Other non-current liabilities
86,265

 
113,242

Total liabilities
2,901,054

 
2,808,892

 
 
 
 
Stockholders’ equity:
 
 
 
Preferred stock

 

Common stock
283

 
283

Additional paid-in capital
1,888,641

 
1,883,592

Accumulated deficit
(403,820
)
 
(467,747
)
Accumulated other comprehensive income (loss)
50,148

 
(2,084
)
Treasury stock
(214,204
)
 
(213,758
)
Total Amkor stockholders’ equity
1,321,048

 
1,200,286

Non-controlling interests in subsidiaries
19,012

 
17,250

Total equity
1,340,060

 
1,217,536

Total liabilities and equity
$
4,241,114

 
$
4,026,428





AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 
For the Nine Months Ended September 30,
 
2016
 
2015
 
(In thousands)
Cash flows from operating activities:
 
 
 
Net income
$
66,102

 
$
64,046

Depreciation and amortization
416,517

 
371,968

Loss on debt retirement

 
9,560

Other operating activities and non-cash items
(4,382
)
 
(9,879
)
Changes in assets and liabilities
13,379

 
(5,299
)
Net cash provided by operating activities
491,616

 
430,396

 
 
 
 
Cash flows from investing activities:
 
 
 
Payments for property, plant and equipment
(481,670
)
 
(352,644
)
Proceeds from sale of property, plant and equipment
13,687

 
5,212

Cash received on sale of subsidiary to J-Devices, net

 
8,355

Investment in J-Devices

 
(12,908
)
Other investing activities
(2,176
)
 
(869
)
Net cash used in investing activities
(470,159
)
 
(352,854
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Borrowings under revolving credit facilities
115,000

 
180,000

Payments under revolving credit facilities
(155,000
)
 
(100,000
)
Borrowings under short-term debt
27,594

 

Payments of short-term debt
(36,211
)
 

Proceeds from issuance of long-term debt
45,000

 
360,000

Payments of long-term debt
(12,955
)
 
(530,000
)
Payments for debt issuance costs
(156
)
 

Payments for the retirement of debt

 
(7,030
)
Payments for capital lease obligations
(1,691
)
 

Proceeds from the issuance of stock through share-based compensation plans
2,600

 
657

Payments of tax withholding for restricted shares
(446
)
 
(548
)
Payments of subsidiary dividends to non-controlling interests
(413
)
 
(123
)
Net cash used in financing activities
(16,678
)
 
(97,044
)
 
 
 
 
Effect of exchange rate fluctuations on cash and cash equivalents
21,885

 

 
 
 
 
Net increase (decrease) in cash and cash equivalents
26,664

 
(19,502
)
Cash and cash equivalents, beginning of period
523,172

 
449,946

Cash and cash equivalents, end of period
$
549,836

 
$
430,444

 





Revision to Previously Reported Financial Information

In the second quarter of 2016, we identified an error in the provision for income taxes in the financial statements for J-Devices for the periods beginning in 2012 through the fourth quarter of 2015.  We believe that the error is not material to Amkor for the periods impacted and have elected to revise our previously issued consolidated financial statements. Periods presented herein are based on the revised financial results.  Please refer to the supplementary slides posted on our Investor Relations website for revised historical financial information.





















































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, without limitation, statements regarding the success of our initiatives in key areas, demand in end markets and the possible receipt of insurance payments related to the earthquakes in Japan, and all of the other 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:
there can be no assurance that the actual costs and financial impact from the earthquakes in Japan will be consistent with our current expectations, for example due to delays or shortfalls in insurance payments;
there can be no assurance that we will achieve our major growth objectives, including transitioning second wave customers to advanced packages, expanding our sales to customers in Greater China and increasing our share of the automotive market;
there can be no assurance regarding when our new K5 facility 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;
the highly unpredictable nature and cyclicality 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 and the impact of changes in our market share and prices for our services with 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 interpretation thereof, 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, particularly the recent slowdown in China;





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;
economic effects of terrorist attacks, political instability, military conflict and natural disasters such as the earthquakes in Japan;
competition, competitive pricing and declines in average selling prices;
fluctuations in manufacturing yields;
dependence on international operations and sales and exchange rate fluctuations;
dependence on raw material and equipment suppliers and changes in raw material and precious metal costs, including any disruptions in the supply chain resulting from the earthquakes in Japan;
dependence on key personnel;
enforcement of and compliance with intellectual property rights;
environmental and other governmental regulations; 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, 2015 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.