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)
July 29, 2019
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))
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol
Name of Each Exchange on Which Registered
Common Stock, $0.001 par value
AMKR
The NASDAQ Global Select Market
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o





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 six months ended June 30, 2019, and forward-looking statements relating to the third quarter and full year 2019 as presented in a press release dated July 29, 2019. 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.
Exhibit
 
Description
 






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: July 29, 2019


Exhibit





https://cdn.kscope.io/f6ee1a1d54c2124b8bdf2be9fa890f7d-amkorlogo_01a02a47.jpg
News Release



Amkor Technology Reports Financial Results for the Second Quarter 2019


Second Quarter Highlights
Second quarter net sales $895 million
Operating income $23 million
Net loss $9 million, earnings per diluted share ($0.04)
EBITDA $149 million


TEMPE, Ariz. - July 29, 2019 - Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of semiconductor packaging and test services, today announced financial results for the second quarter ended June 30, 2019.

"Second quarter profitability was at the high end of guidance, with revenue just above the midpoint," said Steve Kelley, Amkor's president and chief executive officer. "Strong factory performance and prudent cost management drove solid sequential improvement in operating income."

Results
 
Q2 2019
 
Q1 2019
 
Q2 2018
 
 
($ in millions, except per share data)
Net sales
 
$895
 
$895
 
$1,066
Gross margin
 
13.8%
 
13.5%
 
15.9%
Operating income
 
$23
 
$13
 
$54
Net income attributable to Amkor (1)
 
($9)
 
($23)
 
$33
Earnings per diluted share (1)
 
($0.04)
 
($0.10)
 
$0.14
EBITDA (2)
 
$149
 
$153
 
$208

(1) Q2 2019 net income includes an $8 million charge, or $0.03 per share, related to the early redemption of $525 million of senior notes due 2022. Q1 2019 net income includes a $15 million non-cash discrete income tax charge, or $0.06 per diluted share, to reduce the value of certain deferred tax assets.

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

"We are executing well in a challenging market environment," said Megan Faust, Amkor's corporate vice president and chief financial officer. "Our focus in 2019 remains on controlling Capex and other expenses, while investing in future growth opportunities."

At June 30, 2019, cash and cash equivalents were $551 million, and total debt was $1.3 billion.
 















Business Outlook

"In the third quarter, we expect revenues to increase about 15% sequentially, driven by gains in the mobile communications and consumer markets," said Kelley. "We are encouraged by the level of new product qualification activity for 5G, automotive and IoT applications."

Third quarter 2019 outlook (unless otherwise noted):

Net sales of $990 million to $1.07 billion
Gross margin of 12% to 16%
Net income of ($7) million to $41 million, or ($0.03) to $0.17 per diluted share
Full year 2019 capital expenditures of approximately $475 million








Conference Call Information

Amkor will conduct a conference call on Monday, July 29, 2019, 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 4127169). 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 operational base includes production facilities, product development centers, and sales and support offices located in key electronics manufacturing regions in Asia, Europe and the USA. For more information, visit www.amkor.com.









Contact:

Vincent Keenan
Vice President, Investor Relations
480-786-7594
vincent.keenan@amkor.com







AMKOR TECHNOLOGY, INC.
Selected Operating Data

 
Q2 2019
 
Q1 2019
 
Q2 2018
Net Sales Data:
 
 
 
 
 
Net sales (in millions):
 
 
 
 
 
Advanced products (1)
$
433

 
$
422

 
$
496

Mainstream products (2)
462

 
473

 
570

Total net sales
$
895

 
$
895

 
$
1,066

 


 
 
 
 
Packaging services
83
%
 
82
%
 
83
%
Test services
17
%
 
18
%
 
17
%
 
 
 
 
 
 
Net sales from top ten customers
62
%
 
66
%
 
65
%
 
 
 
 
 
 
End Market Data:
 
 
 
 
 
Communications (handheld devices, smartphones, tablets)
37
%
 
38
%
 
42
%
Automotive, industrial and other (driver assist, infotainment, performance, safety)
29
%
 
28
%
 
26
%
Computing (datacenter, infrastructure, PC/laptop, storage)
19
%
 
20
%
 
19
%
Consumer (connected home, set-top boxes, televisions, visual imaging, wearables)
15
%
 
14
%
 
13
%
Total
100
%
 
100
%
 
100
%
 
 
 
 
 
 
Gross Margin Data:
 
 
 
 
 
Net sales
100.0
%
 
100.0
%
 
100.0
%
Cost of sales:
 
 
 
 
 
Materials
38.0
%
 
38.0
%
 
38.9
%
Labor
17.4
%
 
17.4
%
 
16.0
%
Other manufacturing
30.8
%
 
31.1
%
 
29.2
%
Gross margin
13.8
%
 
13.5
%
 
15.9
%


(1) Advanced products include flip chip and wafer-level processing and related test services
(2) Mainstream products include wirebond packaging and related test services





AMKOR TECHNOLOGY, INC.
Selected Operating Data

In this press release, 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:
 
 
 
 
 
 
Q2 2019
 
Q1 2019
 
Q2 2018
 
(in millions)
EBITDA Data:
 
 
 
 
 
Net income
$
(9
)
 
$
(23
)
 
$
33

Plus: Interest expense
19

 
19

 
21

Plus: Income tax expense
6

 
21

 
11

Plus: Depreciation & amortization
133

 
136

 
143

EBITDA
$
149

 
$
153

 
$
208










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

 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
 
(In thousands, except per share data)
Net sales
$
895,305

 
$
1,065,684

 
$
1,790,269

 
$
2,091,003

Cost of sales
771,851

 
895,967

 
1,546,054

 
1,763,515

Gross profit
123,454

 
169,717

 
244,215

 
327,488

Selling, general and administrative
64,758

 
74,700

 
136,345

 
155,423

Research and development
36,186

 
41,076

 
71,940

 
82,005

Total operating expenses
100,944

 
115,776

 
208,285

 
237,428

Operating income
22,510

 
53,941

 
35,930

 
90,060

Interest expense
18,653

 
21,127

 
37,926

 
41,138

Other (income) expense, net
6,966

 
(11,001
)
 
2,401

 
(7,569
)
Total other expense, net
25,619

 
10,126

 
40,327

 
33,569

Income (loss) before taxes
(3,109
)
 
43,815

 
(4,397
)
 
56,491

Income tax expense
5,897

 
10,631

 
27,277

 
13,112

Net income (loss)
(9,006
)
 
33,184

 
(31,674
)
 
43,379

Net income attributable to non-controlling interests
(444
)
 
(593
)
 
(655
)
 
(1,244
)
Net income (loss) attributable to Amkor
$
(9,450
)
 
$
32,591

 
$
(32,329
)
 
$
42,135

 
 
 
 
 
 
 
 
Net income (loss) attributable to Amkor per common share:
 
 
 
 
 
 
 
Basic
$
(0.04
)
 
$
0.14

 
$
(0.14
)
 
$
0.18

Diluted
$
(0.04
)
 
$
0.14

 
$
(0.14
)
 
$
0.18

 
 
 
 
 
 
 
 
Shares used in computing per common share amounts:
 
 
 
 
 
 
 
Basic
239,508

 
239,351

 
239,461

 
239,283

Diluted
239,508

 
239,804

 
239,461

 
239,805









AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)


 
June 30,
2019
 
December 31,
2018
 
(In thousands)
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
551,438

 
$
681,569

Restricted cash
2,590

 
2,589

Accounts receivable, net of allowances
702,466

 
724,456

Inventories
217,638

 
230,589

Other current assets
38,988

 
32,005

Total current assets
1,513,120

 
1,671,208

Property, plant and equipment, net
2,515,533

 
2,650,448

Operating lease right of use asset *
132,763

 

Goodwill
26,159

 
25,720

Restricted cash
2,878

 
3,893

Other assets
118,831

 
144,178

Total assets
$
4,309,284

 
$
4,495,447

LIABILITIES AND EQUITY
Current liabilities:
 
 
 
Short-term borrowings and current portion of long-term debt
$
198,230

 
$
114,579

Trade accounts payable
459,548

 
530,398

Capital expenditures payable
134,500

 
255,237

Accrued expenses
246,615

 
258,209

Total current liabilities
1,038,893

 
1,158,423

Long-term debt
1,109,945

 
1,217,732

Pension and severance obligations
174,897

 
184,321

Long-term operating lease liability *
80,049

 

Other non-current liabilities
74,324

 
79,071

Total liabilities
2,478,108

 
2,639,547

 
 
 
 
Stockholders’ equity:
 
 
 
Preferred stock

 

Common stock
285

 
285

Additional paid-in capital
1,913,103

 
1,909,425

Retained earnings
80,860

 
113,189

Accumulated other comprehensive income (loss)
27,317

 
23,812

Treasury stock
(216,254
)
 
(216,171
)
Total Amkor stockholders’ equity
1,805,311

 
1,830,540

Non-controlling interests in subsidiaries
25,865

 
25,360

Total equity
1,831,176

 
1,855,900

Total liabilities and equity
$
4,309,284

 
$
4,495,447


*Effective January 1, 2019, we adopted Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842). Upon adoption, we recorded a right-of-use asset and lease liability on our balance sheet. Prior period financial statements were not required to be adjusted for the effects of this new standard.




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

 
For the Six Months Ended June 30,
 
2019
 
2018
 
(In thousands)
Cash flows from operating activities:
 
 
 
Net income (loss)
$
(31,674
)
 
$
43,379

Depreciation and amortization
268,819

 
285,515

Other operating activities and non-cash items
33,112

 
(3,239
)
Changes in assets and liabilities
(101,329
)
 
(119,276
)
Net cash provided by operating activities
168,928

 
206,379

Cash flows from investing activities:
 
 
 
Payments for property, plant and equipment
(273,672
)
 
(389,568
)
Proceeds from sale of property, plant and equipment
8,247

 
603

Proceeds from insurance recovery for property, plant and equipment
1,538

 

Other investing activities
2,864

 
2,647

Net cash used in investing activities
(261,023
)
 
(386,318
)
Cash flows from financing activities:
 
 
 
Proceeds from revolving credit facilities
85,000

 

Payments of revolving credit facilities
(5,000
)
 

Proceeds from short-term debt
29,781

 
7,264

Payments of short-term debt
(25,548
)
 
(31,546
)
Proceeds from issuance of long-term debt
614,375

 
64,000

Payments of long-term debt
(732,178
)
 
(77,015
)
Payments of finance lease obligations
(2,746
)
 
(1,689
)
Other financing activities
(3,865
)
 
492

Net cash used in financing activities
(40,181
)
 
(38,494
)
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash
1,131

 
1,347

Net decrease in cash, cash equivalents and restricted cash
(131,145
)
 
(217,086
)
Cash, cash equivalents and restricted cash, beginning of period
688,051

 
602,851

Cash, cash equivalents and restricted cash, end of period
$
556,906

 
$
385,765

 







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 statements regarding our focus on capital expenditures and cost controls and investments in growth opportunities, and all of the 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:
the highly unpredictable nature, cyclicality, and rate of growth 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;
laws, rules, regulations and policies imposed by the U.S. or foreign governments in areas such as tariffs, customs, duties and other restrictive trade barriers, national security, data privacy and cybersecurity, antitrust and competition, tax, currency and banking, privacy, labor, environmental, health and safety, and in particular the recent increase in protectionist measures considered or adopted by the U.S. and foreign governments;
laws, rules, regulations and policies within China and other countries that may favor domestic companies over non-domestic companies, including customer or government supported efforts to promote the development and growth of local competitors;
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, the impact of changes in our market share and prices for our services with those customers and the business and financial condition of those customers;
the performance of our business, interest rate fluctuations and other 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 interpretations thereof (including the impact of recent U.S. tax reform), 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, including the potential impact of the phase-out of LIBOR on our variable interest rate debt;
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;







disruptions in our business or deficiencies in our controls resulting from the integration of 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;
there can be no assurance regarding when our new K5 factory and research and development center in Korea will be fully utilized, or that the actual scope, costs, timeline or benefits of the project will be consistent with our expectations;
economic effects of terrorist attacks, political instability, natural disasters and military conflict;
competition, competitive pricing and declines in average selling prices;
fluctuations in packaging and test manufacturing yields;
dependence on international operations and sales and fluctuations in foreign currency exchange rates, particularly in Japan and Korea;
dependence on raw material and equipment suppliers and changes in raw material and precious metal costs;
dependence on key personnel;
enforcement of and compliance with intellectual property rights; 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, 2018 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.