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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q



☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Quarterly Period Ended	March 31, 2020
or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to

Commission File Number 000-29472

AMKOR TECHNOLOGY, INC.

(Exact name of registrant as specified in its charter)



Delaware				23-1722724
(State of incorporation)				(I.R.S. Employer Identification Number)

2045 East Innovation Circle

Tempe, AZ 85284

(Address of principal executive offices and zip code)

(480) 821-5000

(Registrant’s telephone number, including area code)

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: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	☑	Accelerated filer	☐	Non-accelerated filer	☐	Smaller reporting company	☐	Emerging growth company	☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

The number of outstanding shares of the registrant’s Common Stock as of April 24, 2020 was 241,149,312.

QUARTERLY REPORT ON FORM 10-Q

For the Quarter Ended March 31, 2020

TABLE OF CONTENTS



		Page
PART I. Financial Information
Item 1.	Financial Statements (unaudited)	2
	Consolidated Statements of Income - Three Months Ended March 31, 2020 and 2019	2
	Consolidated Statements of Comprehensive Income - Three Months Ended March 31, 2020 and 2019	3
	Consolidated Balance Sheets - March 31, 2020 and December 31, 2019	4
	Consolidated Statements of Stockholders’ Equity — Three Months Ended March 31, 2020 and 2019	5
	Condensed Consolidated Statements of Cash Flows - Three Months Ended March 31, 2020 and 2019	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	27

PART II. Other Information
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 3.	Defaults Upon Senior Securities	45
Item 4.	Mine Safety Disclosures	45
Item 5.	Other Information	45
Item 6.	Exhibits	46
Signatures		47

This report contains forward-looking statements within the meaning of the federal securities laws, including but not limited to statements regarding (1) the amount, timing and focus of our expected capital investments in 2020 including expenditures in support of advanced packaging and test equipment, (2) our ability to fund our operating activities and financial requirements for the next twelve months, (3) the effect of changes in revenue levels and capacity utilization on our gross margin, (4) the impact of the novel coronavirus disease, or Covid-19, pandemic on our operations and financial results, (5) the focus of our research and development activities, (6) the anticipated impact of the Tax Cuts and Jobs Act (the “Tax Act”) and tax law changes in the jurisdictions in which we operate, (7) the grant and expiration of tax holidays in jurisdictions in which we operate and expectations regarding our effective tax rate and the availability of tax incentives, (8) the creation or release of valuation allowances related to taxes in the future, (9) our repurchase or repayment of outstanding debt, (10) payment of dividends, (11) compliance with our covenants, (12) expected contributions to foreign pension plans, (13) liability for unrecognized tax benefits and the potential impact of our unrecognized tax benefits on our effective tax rate, (14) expected timing of and charges related to restructuring activities, (15) the effect of foreign currency exchange rate exposure on our financial results, (16) the volatility of the trading price of our common stock, (17) changes to our internal controls related to integration of acquired operations and implementation of an enterprise resource planning system, (18) our efforts to enlarge our customer base in certain geographic areas and markets, (19) demand for advanced packages in mobile and automotive devices and our technology leadership and potential growth in this market, (20) projects to install and integrate new information technology systems or upgrade our existing systems and (21) other statements that are not historical facts. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” “intend” or the negative of these terms or other comparable terminology. Because such statements include risks and uncertainties, actual results may differ materially from those anticipated in such forward-looking statements as a result of various factors, including those set forth in the following report as well as in Part II, Item 1A of this Quarterly Report on Form 10-Q.

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Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

AMKOR TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)



	For the Three Months Ended March 31,
	2020			2019
	(In thousands, except per share data)
Net sales	$	1,152,616		$	894,964
Cost of sales	963,708			774,203
Gross profit	188,908			120,761
Selling, general and administrative	72,582			71,587
Research and development	32,253			35,754
Total operating expenses	104,835			107,341
Operating income	84,073			13,420
Interest expense	17,045			19,273
Other (income) expense, net	(2,315		)	(4,565		)
Total other expense, net	14,730			14,708
Income (loss) before taxes	69,343			(1,288		)
Income tax expense	4,846			21,380
Net income (loss)	64,497			(22,668		)
Net income attributable to non-controlling interests	(608		)	(211		)
Net income (loss) attributable to Amkor	$	63,889		$	(22,879	)

Net income (loss) attributable to Amkor per common share:
Basic	$	0.27		$	(0.10	)
Diluted	$	0.26		$	(0.10	)

Shares used in computing per common share amounts:
Basic	240,919			239,414
Diluted	241,333			239,414

The accompanying notes are an integral part of these statements.

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AMKOR TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)



	For the Three Months Ended March 31,
	2020			2019
	(In thousands)
Net income (loss)	$	64,497		$	(22,668	)
Other comprehensive income (loss), net of tax:
Adjustments to net unrealized gains (losses) on available-for-sale debt investments	108			—
Adjustments to unrealized components of defined benefit pension plans	11			(132		)
Foreign currency translation	475			(2,224		)
Total other comprehensive income (loss)	594			(2,356		)
Comprehensive income (loss)	65,091			(25,024		)
Comprehensive income attributable to non-controlling interests	(608		)	(211		)
Comprehensive income (loss) attributable to Amkor	$	64,483		$	(25,235	)

The accompanying notes are an integral part of these statements.

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AMKOR TECHNOLOGY, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)



	March 31, 2020			December 31, 2019
	(In thousands, except per share data)
ASSETS
Current assets:
Cash and cash equivalents	$	941,447		$	894,948
Restricted cash	610			610
Short-term investments (amortized cost of $58,139 in 2020)	58,263			6,348
Accounts receivable, net of allowances	880,629			850,753
Inventories	238,201			220,602
Other current assets	34,553			28,272
Total current assets	2,153,703			2,001,533
Property, plant and equipment, net	2,367,746			2,404,850
Operating lease right of use assets	147,985			148,549
Goodwill	26,235			25,976
Restricted cash	3,267			2,974
Other assets	112,701			111,733
Total assets	$	4,811,637		$	4,695,615
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt	$	141,521		$	144,479
Trade accounts payable	562,633			571,054
Capital expenditures payable	107,131			77,044
Accrued expenses	236,464			267,226
Total current liabilities	1,047,749			1,059,803
Long-term debt	1,371,501			1,305,755
Pension and severance obligations	178,084			176,971
Long-term operating lease liabilities	89,733			91,107
Other non-current liabilities	65,945			71,740
Total liabilities	2,753,012			2,705,376
Commitments and contingencies (Note 14)
Stockholders’ equity:
Preferred stock, $0.001 par value, 10,000 shares authorized, designated Series A, none issued	—			—
Common stock, $0.001 par value, 500,000 shares authorized; 287,093 and 286,877 shares issued; and 241,016 and 240,805 shares outstanding in 2020 and 2019, respectively	287			287
Additional paid-in capital	1,931,088			1,927,739
Retained earnings	297,966			234,077
Accumulated other comprehensive income (loss)	19,709			19,115
Treasury stock, at cost, 46,077 and 46,072 shares, in 2020 and 2019, respectively	(217,533		)	(217,479		)
Total Amkor stockholders’ equity	2,031,517			1,963,739
Non-controlling interests in subsidiaries	27,108			26,500
Total equity	2,058,625			1,990,239
Total liabilities and equity	$	4,811,637		$	4,695,615

The accompanying notes are an integral part of these statements.

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AMKOR TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)



				Additional Paid- In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)								Total Amkor Stockholders’ Equity			Noncontrolling Interest in Subsidiaries		Total Equity
	Common Stock											Treasury Stock
	Shares	Par Value										Shares		Cost
	(In thousands)
Balance at December 31, 2019	286,877	$	287	$	1,927,739	$	234,077		$	19,115		(46,072	)	$	(217,479	)	$	1,963,739		$	26,500	$	1,990,239
Net income (loss)	—	—		—		63,889			—			—		—			63,889			608		64,497
Other comprehensive income (loss)	—	—		—		—			594			—		—			594			—		594
Treasury stock acquired through surrender of shares for tax withholding	—	—		—		—			—			(5	)	(54		)	(54		)	—		(54		)
Issuance of stock through share-based compensation plans	216	—		1,519		—			—			—		—			1,519			—		1,519
Share-based compensation	—	—		1,830		—			—			—		—			1,830			—		1,830
Balance at March 31, 2020	287,093	$	287	$	1,931,088	$	297,966		$	19,709		(46,077	)	$	(217,533	)	$	2,031,517		$	27,108	$	2,058,625

Balance at December 31, 2018	285,352	$	285	$	1,909,425	$	113,189		$	23,812		(45,967	)	$	(216,171	)	$	1,830,540		$	25,360	$	1,855,900
Net income (loss)	—	—		—		(22,879		)	—			—		—			(22,879		)	211		(22,668		)
Other comprehensive income (loss)	—	—		—		—			(2,356		)	—		—			(2,356		)			(2,356		)
Treasury stock acquired through surrender of shares for tax withholding	—	—		—		—			—			(5	)	(48		)	(48		)	—		(48		)
Issuance of stock through share-based compensation plans	78	—		286		—			—			—		—			286			—		286
Share-based compensation	—	—		1,468		—			—			—		—			1,468			—		1,468
Balance, March 31, 2019	285,430	$	285	$	1,911,179	$	90,310		$	21,456		(45,972	)	$	(216,219	)	$	1,807,011		$	25,571	$	1,832,582

The accompanying notes are an integral part of these statements.

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AMKOR TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



	For the Three Months Ended March 31,
	2020			2019
	(In thousands)
Cash flows from operating activities:
Net income (loss)	$	64,497		$	(22,668	)
Depreciation and amortization	123,657			135,835
Other operating activities and non-cash items	8,287			15,928
Changes in assets and liabilities	(99,852		)	(77,038		)
Net cash provided by operating activities	96,589			52,057
Cash flows from investing activities:
Payments for property, plant and equipment	(55,888		)	(203,216		)
Proceeds from sale of property, plant and equipment	1,887			180
Proceeds from insurance recovery for property, plant and equipment	—			1,538
Payments for short-term investments	(55,754		)	—
Other investing activities	5,163			(569		)
Net cash used in investing activities	(104,592		)	(202,067		)
Cash flows from financing activities:
Proceeds from revolving credit facilities	201,000			—
Proceeds from short-term debt	14,086			29,781
Payments of short-term debt	(9,409		)	(10,588		)
Proceeds from issuance of long-term debt	24,000			572,375
Payments of long-term debt	(172,336		)	(63,636		)
Payments of finance lease obligations	(2,355		)	(1,376		)
Other financing activities	109			(2,848		)
Net cash provided by financing activities	55,095			523,708
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash	(300		)	(829		)
Net increase in cash, cash equivalents and restricted cash	46,792			372,869
Cash, cash equivalents and restricted cash, beginning of period	898,532			688,051
Cash, cash equivalents and restricted cash, end of period	$	945,324		$	1,060,920
Non-cash investing and financing activities:
Property, plant and equipment included in capital expenditures payable	$	107,344		$	124,547

The accompanying notes are an integral part of these statements.

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AMKOR TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Interim Financial Statements

Basis of Presentation. The Consolidated Financial Statements and related disclosures as of March 31, 2020, and for the three months ended March 31, 2020 and 2019, are unaudited, pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). The December 31, 2019 Consolidated Balance Sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S.”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. In our opinion, these financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for the fair statement of the results for the interim periods. These financial statements should be read in conjunction with the financial statements included in our Annual Report for the year ended December 31, 2019, filed on Form 10-K with the SEC on February 19, 2020. The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the full year. Unless the context otherwise requires, all references to “Amkor,” “we,” “us,” “our” or the “company” are to Amkor Technology, Inc. and our subsidiaries. Certain prior year amounts have been reclassified to conform to current year presentation.

Use of Estimates. The Consolidated Financial Statements have been prepared in conformity with U.S. GAAP, using management’s best estimates and judgments where appropriate. These estimates and judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for certain revenues and expenses during the reporting period. Actual results could differ materially from these estimates and judgments, including the impact of Covid-19 and any worsening of the global business and economic environment.

Goodwill. The balance of goodwill in our Consolidated Balance Sheets reflects adjustments for foreign currency translation.

Unbilled Receivables. Total unbilled receivables as of March 31, 2020 and December 31, 2019 were $131.3 million and $125.4 million, respectively.

2. Net Sales by Product Group and End Market

Net sales by product group consist of the following:



	For the Three Months Ended March 31,
	2020		2019
	(In thousands)
Advanced products (1)	$	705,158	$	422,446
Mainstream products (2)	447,458		472,518
Total net sales	$	1,152,616	$	894,964


(1)	Advanced products include flip chip and wafer-level processing and related test services.


(2)	Mainstream products include wirebond packaging and related test services.

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AMKOR TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Net sales by end market consist of the following:



	For the Three Months Ended March 31,
	2020		2019
Communications (handheld devices, smartphones, tablets)	38	%	38	%
Consumer (connected home, set-top boxes, televisions, visual imaging, wearables)	24	%	14	%
Automotive, industrial and other (driver assist, infotainment, performance, safety)	23	%	28	%
Computing (datacenter, infrastructure, PC/laptop, storage)	15	%	20	%
Total net sales	100	%	100	%

3. Other Income and Expense

Other income and expense consists of the following:



	For the Three Months Ended March 31,
	2020			2019
	(In thousands)
Interest income	$	(2,258	)	$	(2,064	)
Foreign currency (gain) loss, net	(229		)	(2,013		)
Loss on debt retirement	428			—
Other	(256		)	(488		)
Other (income) expense, net	$	(2,315	)	$	(4,565	)

4. Income Taxes

Income tax expense of $4.8 million for the three months ended March 31, 2020 reflects income taxes, foreign withholding taxes and minimum taxes.

ASC 740 generally requires we provide for income taxes during interim periods based on the estimated annual effective tax rate (“AETR”) for the full year. For the three months ended March 31, 2020, we have excluded a jurisdiction from the AETR calculation and used a discrete method to calculate the income tax provision for that jurisdiction. We believe inclusion of this jurisdiction in the AETR calculation is impractical at this time given that normal deviations in the projected pre-tax net income (loss) would result in a disproportionate and unreliable annual effective tax rate under the AETR method.

We monitor on an ongoing basis our ability to utilize our deferred tax assets and whether there is a need for a related valuation allowance. In evaluating our ability to recover our deferred tax assets in the jurisdictions from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies and results of recent operations.

We maintain a valuation allowance on certain U.S. and foreign deferred tax assets. Such valuation allowances are released as the related tax benefits are realized or when sufficient evidence exists to conclude that it is more likely than not that the deferred tax assets will be realized.

Unrecognized tax benefits represent reserves for potential tax deficiencies or reductions in tax benefits that could result from federal, state or foreign tax audits. Gross unrecognized tax benefits decreased from $26.2 million at December 31, 2019 to $23.1 million as of March 31, 2020, primarily due to the lapse of statutes of limitations in foreign jurisdictions. All of our unrecognized tax benefits would reduce our effective tax rate if recognized. Our unrecognized tax benefits are subject to change for effective settlement of examinations, changes in the recognition threshold of tax positions, the expiration of statutes of limitations and other factors.

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AMKOR TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

We have tax returns that are open to examination in various jurisdictions for tax years 2012-2019. The open years contain matters that could be subject to differing interpretations of applicable tax laws and regulations related to the amount and/or timing of income, deductions and tax credits. There can be no assurance that the outcome of the examinations will be favorable. In certain circumstances where we elect to appeal the results of an examination, we may be required to make tax assessment payments to proceed with the administrative appeal process.

5. Earnings Per Share

Basic earnings per share (“EPS”) is computed by dividing net income attributable to Amkor common stockholders by the weighted-average number of common shares outstanding during the period. The weighted-average number of common shares outstanding is reduced for treasury stock.

Diluted EPS is computed based on the weighted-average number of common shares outstanding plus the effect of dilutive potential common shares outstanding during the period. Dilutive potential common shares include outstanding stock options and unvested restricted shares.

The following table summarizes the computation of basic and diluted EPS:



	For the Three Months Ended March 31,
	2020		2019
	(In thousands, except per share data)
Net income (loss) attributable to Amkor common stockholders	$	63,889	$	(22,879	)

Weighted-average number of common shares outstanding - basic	240,919		239,414
Effect of dilutive securities:
Stock options and restricted share awards	414		—
Weighted-average number of common shares outstanding - diluted	241,333		239,414
Net income (loss) attributable to Amkor per common share:
Basic	$	0.27	$	(0.10	)
Diluted	0.26		(0.10		)

The following table summarizes the potential shares of common stock that were excluded from diluted EPS because the effect of including these potential shares was anti-dilutive:



	For the Three Months Ended March 31,
	2020	2019
	(In thousands)
Stock options and restricted share awards	4,321	7,123

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AMKOR TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

6. Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss), net of tax, consist of the following:



	Unrealized Gains (Losses) on Available-for-Sale Debt Investments		Defined Benefit Pension (1)			Foreign Currency Translation		Total
			(In thousands)
Accumulated other comprehensive income (loss) at December 31, 2019	$	—	$	(4,820	)	$	23,935	$	19,115
Other comprehensive income (loss) before reclassifications	108		—			475		583
Amounts reclassified from accumulated other comprehensive income (loss)	—		11			—		11
Other comprehensive income (loss)	108		11			475		594
Accumulated other comprehensive income (loss) at March 31, 2020	$	108	$	(4,809	)	$	24,410	$	19,709



	Defined Benefit Pension (1)			Foreign Currency Translation			Total
	(In thousands)
Accumulated other comprehensive income (loss) at December 31, 2018	$	2,659		$	21,153		$	23,812
Other comprehensive income (loss) before reclassifications	—			(2,224		)	$	(2,224	)
Amounts reclassified from accumulated other comprehensive income (loss)	(132		)	—			$	(132	)
Other comprehensive income (loss)	(132		)	(2,224		)	(2,356		)
Accumulated other comprehensive income (loss) at March 31, 2019	$	2,527		$	18,929		$	21,456


(1)	Amounts reclassified out of accumulated other comprehensive income (loss) are included as a component of net periodic pension cost (Note 12) or other (income) expense, net.

7. Investments

We classify our short-term investments in fixed income securities as available-for-sale debt investments, except for one foreign government security classified as held-to-maturity. The held-to-maturity debt security matured in the first quarter ended March 31, 2020. All of our available-for-sale debt investments as of March 31, 2020 will be available to fund current operations and are recorded at fair value (Note 13). Unrealized gains and losses on our available-for-sale debt investments are included as a separate component of accumulated other comprehensive income (loss), net of tax. Realized gains and losses on our available-for-sale debt investments and declines in value judged to be an impairment are included in other (income) expense, net. The cost of short-term investments matured or sold is based on the average cost method.

In determining if and when a decline in value below the adjusted cost of our available-for-sale debt investments is an impairment, we evaluate on an ongoing basis the market conditions, trends of earnings, financial condition, credit ratings, any underlying collateral and other key measures for our short-term investments. An impairment is considered if (i) we have the intent to sell the security, (ii) it is more likely than not that we will be required to sell the security before recovery of the entire amortized cost basis or (iii) we do not expect to recover the entire amortized cost basis of the security. If impairment is considered on condition (i) or (ii) above, the entire difference between the amortized cost and the fair value

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AMKOR TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

of the debt security is recognized in earnings. If an impairment is considered based on condition (iii), the amount representing credit losses will be recognized in earnings and as an allowance for credit losses, and the amount relating to all other factors will be recognized in other comprehensive income.

The following table summarizes our cash equivalents and available-for-sale debt investments:



	March 31, 2020
										Fair Value Level
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses (1)			Total Fair Value		Level 1		Level 2
	(In thousands)
Cash equivalents	$	351,965	$	16	$	(11	)	$	351,970	$	314,676	$	37,294
Short-term investments:
Asset-backed securities	6,064		19		(5		)	6,078		—		6,078
Commercial paper	1,986		—		—			1,986		—		1,986
Corporate bonds	25,297		111		(42		)	25,366		—		25,366
Municipal bonds	2,762		7		—			2,769		—		2,769
U.S. government agency bonds	7,482		12		(1		)	7,493		—		7,493
U.S. government bonds	13,991		23		—			14,014		14,014		—
Variable rate demand notes	557		—		—			557		—		557
Total (2) (3)	$	410,104	$	188	$	(59	)	$	410,233	$	328,690	$	81,543


(1)	All unrealized losses have been in a continuous loss position for less than 12 months. We do not intend to sell the investments in an unrealized loss position, and it is not more likely than not that we will be required to sell these investments before recovery of their amortized cost bases.


(2)	We have available-for-sale debt investments of $6.1 million with contractual maturities from 1 year to 5 years. Expected maturities can differ from contractual maturities because the issuers may have the right to call or prepay obligations without call or prepayment penalties, and we view our available-for-sale debt investments as available for current operations.


(3)	In April 2020, we increased our available-for-sale debt investments by $130.0 million.

The following table summarizes our debt investments as of December 31, 2019:



	December 31, 2019
	(In thousands)
Cash equivalent money market funds (Level 1) (1)	$	384,474
Short-term investment government bond (Level 2) (2)	6,348

(1)

The cash equivalent money market funds (Level 1) at December 31, 2019 have been corrected to include $286.7 million of cash equivalents that were excluded in previously reported amounts. There was no change to total cash and cash equivalents reported on our consolidated balance sheet. We determined this was immaterial to the prior period but have presented the balance as revised for comparability.


(2)	The fair market value of the security is $6.3 million. The carrying value of the security represents the amortized cost.

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AMKOR TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

8. Factoring of Accounts Receivable

For certain accounts receivable, we use non-recourse factoring arrangements with third-party financial institutions to manage our working capital and cash flows. Under this program, we sell receivables to a financial institution for cash at a discount to the face amount. As part of the factoring arrangements, we perform certain collection and administrative functions for the receivables sold. For the three months ended March 31, 2020 and 2019, we sold receivables totaling $170.5 million and $155.7 million, net of discounts and fees of $1.0 million and $1.2 million, respectively.

9. Property, Plant and Equipment

Property, plant and equipment consist of the following:



	March 31, 2020			December 31, 2019
	(In thousands)
Land	$	220,076		$	219,785
Buildings and improvements	1,575,352			1,571,653
Machinery and equipment	5,335,424			5,303,729
Finance lease assets	34,401			34,158
Software and computer equipment	222,459			220,264
Furniture, fixtures and other equipment	19,844			19,740
Construction in progress	24,618			12,593
Total property, plant and equipment	7,432,174			7,381,922
Accumulated depreciation and amortization	(5,064,428		)	(4,977,072		)
Total property, plant and equipment, net	$	2,367,746		$	2,404,850

The following table summarizes our depreciation expense:



	For the Three Months Ended March 31,
	2020		2019
	(In thousands)
Depreciation expense	$	123,501	$	135,493

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AMKOR TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

10. Accrued Expenses

Accrued expenses consist of the following:



	March 31, 2020		December 31, 2019
	(In thousands)
Payroll and benefits	$	90,561	$	115,693
Short-term operating lease liabilities	42,082		40,972
Income taxes payable	18,587		11,661
Deferred revenue and customer advances	13,881		16,177
Accrued severance plan obligations	11,192		13,408
Short-term finance lease liabilities	9,168		9,121
Accrued interest	3,629		11,638
Other accrued expenses	47,364		48,556
Total accrued expenses	$	236,464	$	267,226

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AMKOR TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

11. Debt

Following is a summary of short-term borrowings and long-term debt:



	March 31, 2020			December 31, 2019
	(In thousands)
Debt of Amkor Technology, Inc.:
Senior notes:
6.625% Senior notes, due September 2027	$	525,000		$	525,000
Debt of subsidiaries:
Amkor Technology Korea, Inc. (8):
$30 million revolving credit facility, LIBOR plus the applicable bank rate (1)	15,000			—
Term loan, fund floating rate plus 1.60%, due June 2020 (2)	—			24,000
Term loan, applicable bank rate plus 2.03%, due July 2022	40,000			40,000
Term loan, applicable bank rate plus 2.03%, due September 2022 (3)	60,000			60,000
Term loan, LIBOR plus 2.56%, due December 2023 (4)	80,000			200,000
Term loan, applicable bank rate plus 1.98%, due December 2028 (2)	90,000			66,000
Amkor Technology Japan, Inc.:
Short-term term loans, variable rate (5)	12,005			7,071
Term loan, fixed rate at 0.86%, due June 2022	20,923			23,018
Term loan, fixed rate at 0.60%, due July 2022	4,649			5,064
Term loan, fixed rate at 1.30%, due July 2023	169,239			179,541
Term loan, fixed rate at 1.35%, due December 2024 (4)	251,767			262,407
Amkor Assembly & Test (Shanghai) Co., Ltd.:
Term loan, LIBOR plus 1.60%, due March 2022	29,000			29,000
Term loan, LIBOR Plus 1.40%, due March 2022	19,250			19,250
Other:
$250 million senior secured revolving credit facility, LIBOR plus 1.25%-1.75%, due July 2023 (Singapore) (6)	150,000			—
Revolving credit facility, TAIFX plus the applicable bank rate, due December 2024 (Taiwan) (7)	56,000			20,000
	1,522,833			1,460,351
Less: Unamortized discount and deferred debt costs, net	(9,811		)	(10,117		)
Less: Short-term borrowings and current portion of long-term debt	(141,521		)	(144,479		)
Long-term debt	$	1,371,501		$	1,305,755

(1)

In October 2019, we renewed our revolving credit facility agreement with availability of $30.0 million. Interest is payable monthly in arrears (2.97% as of March 31, 2020). In March 2020, we borrowed $15.0 million with the principal due in September 2020. As of March 31, 2020, $15.0 million was available to be drawn. In April 2020, we borrowed the remaining $15.0 million with the principal due in October 2020.

(2)

In May 2015, we entered into a term loan agreement pursuant to which we may borrow up to $150.0 million for capital expenditures. Principal is payable at maturity in June 2020. Interest is payable quarterly in arrears, at a fund floating rate plus 1.60%. During the three months ended March 31, 2020, we repaid the full $24.0 million outstanding on this term loan using the proceeds from our term loan due December 2028.

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AMKOR TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)


(3)	In July 2019, we entered into a $140.0 million term loan due September 2022. Principal is payable at maturity and interest is payable quarterly in arrears (3.59% as of March 31, 2020). As of March 31, 2020, $80.0 million was available to be drawn. In April 2020, we borrowed an additional $40.0 million.


(4)	In January 2020, we used proceeds from our term loan due December 2024 to repay $120.0 million of our term loan due December 2023.


(5)	We entered into various short-term term loans which mature semiannually. Principal and interest are payable in monthly installments. Interest as of March 31, 2020 is at TIBOR plus 0.10% to 0.20% (weighted average of 0.21% as of March 31, 2020). As of March 31, 2020, $6.5 million was available to be drawn.

(6)

In July 2018, our subsidiary, Amkor Technology Singapore Holding Pte, Ltd., entered into a $250.0 million senior secured revolving credit facility, which is guaranteed by Amkor Technology, Inc. The availability for our revolving credit facility is based on the amount of eligible accounts receivable. Principal is payable at maturity. Interest is payable monthly at LIBOR plus 1.25% to 1.75% (2.85% as of March 31, 2020). As of March 31, 2020, $100.0 million was available to be drawn.

(7)

In December 2019, we entered into a $56.0 million revolving credit facility. Interest is payable monthly at TAIFX plus the applicable bank rate (3.41% as of March 31, 2020). In December 2019, we borrowed $20.0 million with the principal payable at maturity of the facility in December 2024. In the first quarter of 2020, we borrowed the remaining $36.0 million. In April 2020, we repaid $36.0 million of the revolving credit facility and immediately borrowed $36.0 million under the same agreement at a lower interest rate, with the principal payable in December 2024, based on incurring a certain level of qualified eligible transactions.


(8)	In April 2020, we entered into a term loan agreement pursuant to which we may borrow up to KRW ₩150.0 billion (approximately US $123 million). Principal is payable at maturity and the variable interest is payable monthly. We immediately borrowed $123.0 million at an interest rate of 2.87%.

Certain of our foreign debt is collateralized by the land, buildings, equipment and accounts receivable in the respective locations. The carrying value of all collateral exceeds the carrying amount of the collateralized debt.

The debt of Amkor Technology, Inc. is structurally subordinated in right of payment to all existing and future debt and other liabilities of our subsidiaries. From time to time, Amkor Technology, Inc. and Amkor Technology Singapore Holding Pte, Ltd. guarantee certain debt of our subsidiaries. The agreements governing our indebtedness contain affirmative and negative covenants which restrict our ability to pay dividends and could restrict our operations. We have never paid a dividend to our stockholders, and we do not have any present plans for doing so. We were in compliance with all debt covenants at March 31, 2020.

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AMKOR TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

12. Pension Plans

Foreign Defined Benefit Pension Plans

Our subsidiaries in Japan, Korea, Malaysia, the Philippines and Taiwan sponsor defined benefit pension plans. Charges to expense are based upon actuarial analyses. The components of net periodic pension cost for these defined benefit pension plans are as follows:



	For the Three Months Ended March 31,
	2020			2019
	(In thousands)
Service cost	$	7,536		$	7,977
Interest cost	1,247			1,324
Expected return on plan assets	(1,374		)	(1,618		)
Recognized actuarial gain	14			(94		)
Net periodic pension cost	$	7,423		$	7,589

The components of net periodic pension cost other than the service cost component are included in other (income) expense, net in our Consolidated Statements of Income.

Defined Contribution Pension Plans

We sponsor defined contribution pension plans in Korea, Malaysia, Taiwan and the U.S. The following table summarizes our defined contribution expense:



	For the Three Months Ended March 31,
	2020		2019
	(In thousands)
Defined contribution expense	$	4,816	$	4,405

13. Fair Value Measurements

The accounting framework for determining fair value includes a hierarchy for ranking the quality and reliability of the information used to measure fair value, which enables the reader of the financial statements to assess the inputs used to develop those measurements. The fair value hierarchy consists of three tiers as follows: Level 1, defined as quoted market prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, model-based valuation techniques for which all significant assumptions are observable in the market or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and Level 3, defined as unobservable inputs that are not corroborated by market data.

The fair values of cash, accounts receivable, trade accounts payable, capital expenditures payable, and certain other current assets and accrued expenses approximate carrying values because of their short-term nature. The carrying value of certain other non-current assets and liabilities approximates fair value. Our assets and liabilities recorded at fair value on a recurring basis include restricted cash money market funds and short-term investments, including investments classified as cash equivalents. We also review goodwill for impairment annually during the fourth quarter of each year. Cash equivalent money market funds and restricted cash money market funds are invested in U.S. money market funds and various U.S. and foreign bank operating and time deposit accounts, which are due on demand or carry a maturity date of less than three months when purchased. No restrictions have been imposed on us regarding withdrawal of balances with respect to our cash equivalents as a result of liquidity or other credit market issues affecting the money market funds we invest in or the

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AMKOR TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

counterparty financial institutions holding our deposits. Short-term investments, including money market funds (Note 7), are valued as follows:


•	Level 1: using quoted market prices in active markets for identical assets.


•	Level 2: using quoted market prices for similar instruments or non-binding market prices that are corroborated by observable market data. We use inputs such as actual trade data, benchmark yields, broker/dealer quotes, and other similar data, which are obtained from quoted market prices, and independent pricing vendors to determine the fair value of these assets and liabilities.

Our derivative financial instruments are valued using quoted market prices for similar assets. Counterparties to these derivative contracts are highly rated financial institutions.

We also measure certain assets and liabilities, including property, plant and equipment and goodwill, at fair value on a nonrecurring basis.

We measure the fair value of our debt for disclosure purposes. The following table presents the fair value of financial instruments that are not recorded at fair value on a recurring basis:



	March 31, 2020				December 31, 2019
	Fair Value		Carrying Value		Fair Value		Carrying Value
	(In thousands)
Senior notes (Level 1)	$	488,701	$	519,355	$	576,875	$	519,211
Revolving credit facilities and term loans (Level 2)	980,901		993,667		940,756		931,023
Total debt	$	1,469,602	$	1,513,022	$	1,517,631	$	1,450,234

The estimated fair value of our senior notes is based primarily on quoted market prices reported on or near the respective balance sheet dates. The estimated fair value of our revolving credit facilities and term loans is calculated using a discounted cash flow analysis, which utilizes market-based assumptions including forward interest rates adjusted for credit risk.

14. Commitments and Contingencies

We generally warrant that our services will be performed in a professional and workmanlike manner and in compliance with our customers’ specifications. We accrue costs for known warranty issues. Historically, our warranty costs have been immaterial.

Legal Proceedings

We are involved in claims and legal proceedings and may become involved in other legal matters arising in the ordinary course of our business. We evaluate these claims and legal matters on a case-by-case basis to make a determination as to the impact, if any, on our business, liquidity, results of operations, financial condition or cash flows. Although the outcome of these matters is uncertain, we believe that the ultimate outcome of these claims and proceedings, individually and in the aggregate, will not have a material adverse impact to us. Our evaluation of the potential impact of these claims and legal proceedings on our business, liquidity, results of operations, financial condition or cash flows could change in the future.

In accordance with the accounting guidance for loss contingencies, including legal proceedings, lawsuits, pending claims and other legal matters, we accrue for a loss contingency when we conclude that the likelihood of a loss is probable and the amount of the loss can be reasonably estimated. We adjust our accruals from time to time as we receive additional information, but the loss we incur may be significantly greater than or less than the amount we have accrued. We disclose loss contingencies if we believe they are material and there is at least a reasonable possibility that a loss has been incurred. Attorney fees related to legal matters are expensed as incurred.

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AMKOR TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

15. Restructuring and Other Exit Activities

As part of our ongoing efforts to improve our manufacturing operations and manage costs, we regularly evaluate our staffing levels and facility requirements compared to business needs. The following table summarizes our exit activities associated with these efforts. “Charges” represents the initial charge related to the exit activity. “Cash Payments” consists of the utilization of “Charges.” “Non-cash Amounts” consists of translation adjustments.

Japan Consolidation Activities

During the three months ended March 31, 2020, we recorded restructuring charges of $1.9 million associated with our Japan footprint consolidation efforts. We recorded these charges to selling, general and administrative expenses within the Consolidated Statements of Income. All amounts accrued at March 31, 2020 are classified as current liabilities. We expect to complete our restructuring actions in the first half of fiscal 2021.



	Facility Costs (1)			Employee Separation Costs			Other Exit Costs (2)			Total
							(In thousands)
Accrual at December 31, 2019	$	2,196		$	271		$	174		$	2,641
Charges	1,310			30			579			1,919
Cash Payments	(2,482		)	(300		)	(660		)	(3,442		)
Non-cash Amounts	(12		)	(1		)	(2		)	(15		)
Accrual at March 31, 2020	$	1,012		$	—		$	91		$	1,103

Total cumulative charges incurred to date	$	5,809		$	2,740		$	1,325		$	9,874
Estimated additional charges to be incurred	$	11,000		$	5,000		$	3,000		$	19,000


(1)	Facility costs primarily consist of equipment relocation costs directly resulting from the restructuring actions.