SEC Filing | Amkor Technology

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amkr-20200630

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

June 30, 2020

☐

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 July 24, 2020 was 241,369,553.

QUARTERLY REPORT ON FORM 10-Q

For the Quarter Ended June 30, 2020

TABLE OF CONTENTS

Page

PART I. Financial Information

Item 1.

Financial Statements (unaudited)

Consolidated Statements of Income - Three and Six Months Ended June 30, 2020 and 2019

Consolidated Statements of Comprehensive Income - Three and Six Months Ended June 30, 2020 and 2019

Consolidated Balance Sheets - June 30, 2020 and December 31, 2019

Consolidated Statements of Stockholders’ Equity — Three and Six Months Ended June 30, 2020 and 2019

Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2020 and 2019

Notes to Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

PART II. Other Information

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

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 June 30,						For the Six Months Ended June 30,
	2020		2019		2020		2019
	(In thousands, except per share data)
Net sales	$	1,172,909	$	895,305	$	2,325,525	$	1,790,269
Cost of sales	980,589		771,851		1,944,297		1,546,054
Gross profit	192,320		123,454		381,228		244,215
Selling, general and administrative	74,260		64,758		146,842		136,345
Research and development	31,536		36,186		63,789		71,940

Total operating expenses	105,796		100,944		210,631		208,285
Operating income	86,524		22,510		170,597		35,930
Interest expense	16,012		18,653		33,057		37,926

Other (income) expense, net	1,467		6,966		(848)		2,401
Total other expense, net	17,479		25,619		32,209		40,327
Income (loss) before taxes	69,045		(3,109)		138,388		(4,397)
Income tax expense	12,905		5,897		17,751		27,277
Net income (loss)	56,140		(9,006)		120,637		(31,674)
Net income attributable to non-controlling interests	(716)		(444)		(1,324)		(655)
Net income (loss) attributable to Amkor	$	55,424	$	(9,450)	$	119,313	$	(32,329)

Net income (loss) attributable to Amkor per common share:
Basic	$	0.23	$	(0.04)	$	0.50	$	(0.14)
Diluted	$	0.23	$	(0.04)	$	0.49	$	(0.14)

Shares used in computing per common share amounts:
Basic	241,098		239,508		241,009		239,461
Diluted	241,410		239,508		241,345		239,461

The accompanying notes are an integral part of these statements.

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Table of Contents

AMKOR TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2020		2019		2020		2019
	(In thousands)
Net income (loss)	$	56,140	$	(9,006)	$	120,637	$	(31,674)
Other comprehensive income (loss), net of tax:
Adjustments to net unrealized gains (losses) on available-for-sale debt investments	251		—		358		—
Adjustments to unrealized components of defined benefit pension plans	11		(57)		23		(189)
Foreign currency translation	(699)		5,918		(224)		3,694

Total other comprehensive income (loss)	(437)		5,861		157		3,505
Comprehensive income (loss)	55,703		(3,145)		120,794		(28,169)
Comprehensive income attributable to non-controlling interests	(716)		(444)		(1,324)		(655)
Comprehensive income (loss) attributable to Amkor	$	54,987	$	(3,589)	$	119,470	$	(28,824)

The accompanying notes are an integral part of these statements.

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Table of Contents

AMKOR TECHNOLOGY, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	June 30, 2020		December 31, 2019
	(In thousands, except per share data)
ASSETS
Current assets:
Cash and cash equivalents	$	783,228	$	894,948
Restricted cash	931		610
Short-term investments (amortized cost of $310,246 in 2020)	310,634		6,348
Accounts receivable, net of allowances	898,717		850,753
Inventories	306,902		220,602
Other current assets	41,383		28,272
Total current assets	2,341,795		2,001,533
Property, plant and equipment, net	2,471,977		2,404,850
Operating lease right of use assets	146,013		148,549
Goodwill	26,140		25,976
Restricted cash	3,027		2,974
Other assets	126,436		111,733
Total assets	$	5,115,388	$	4,695,615
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt	$	148,872	$	144,479
Trade accounts payable	583,341		571,054
Capital expenditures payable	259,344		77,044
Accrued expenses	291,278		267,226
Total current liabilities	1,282,835		1,059,803
Long-term debt	1,396,389		1,305,755
Pension and severance obligations	165,401		176,971
Long-term operating lease liabilities	87,204		91,107
Other non-current liabilities	66,631		71,740
Total liabilities	2,998,460		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; 287,319 and 286,877 shares issued; and 241,236 and 240,805 shares outstanding in 2020 and 2019, respectively	287		287
Additional paid-in capital	1,934,047		1,927,739
Retained earnings	353,390		234,077
Accumulated other comprehensive income (loss)	19,272		19,115
Treasury stock, at cost, 46,083 and 46,072 shares, in 2020 and 2019, respectively	(217,592)		(217,479)
Total Amkor stockholders’ equity	2,089,404		1,963,739
Non-controlling interests in subsidiaries	27,524		26,500
Total equity	2,116,928		1,990,239
Total liabilities and equity	$	5,115,388	$	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 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
Net income (loss)	—	—		—		55,424		—		—	—			55,424		716			56,140
Other comprehensive income (loss)	—	—		—		—		(437)		—	—			(437)		—			(437)


Treasury stock acquired through surrender of shares for tax withholding	—	—		—		—		—		(6)	(59)			(59)		—			(59)
Issuance of stock through share-based compensation plans	226	—		1,222		—		—		—	—			1,222		—			1,222
Share-based compensation	—	—		1,737		—		—		—	—			1,737		—			1,737
Subsidiary dividends to noncontrolling interests	—	—		—		—		—		—	—			—		(300)			(300)
Balance at June 30, 2020	287,319	$	287	$	1,934,047	$	353,390	$	19,272	(46,083)	$	(217,592)		$	2,089,404	$	27,524		$	2,116,928

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)	—	—		—		119,313		—		—	—			119,313		1,324			120,637
Other comprehensive income (loss)	—	—		—		—		157		—	—			157		—			157


Treasury stock acquired through surrender of shares for tax withholding	—	—		—		—		—		(11)	(113)			(113)		—			(113)
Issuance of stock through share-based compensation plans	442	—		2,741		—		—		—	—			2,741		—			2,741
Share-based compensation	—	—		3,567		—		—		—	—			3,567		—			3,567
Subsidiary dividends to noncontrolling interests	—	—		—		—		—		—	—			—		(300)			(300)
Balance at June 30, 2020	287,319	$	287	$	1,934,047	$	353,390	$	19,272	(46,083)	$	(217,592)		$	2,089,404	$	27,524		$	2,116,928

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 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
Net income (loss)	—	—		—		(9,450)		—		—	—			(9,450)		444			(9,006)
Other comprehensive income (loss)	—	—		—		—		5,861		—	—			5,861		—			5,861


Treasury stock acquired through surrender of shares for tax withholding	—	—		—		—		—		(6)	(35)			(35)		—			(35)
Issuance of stock through share-based compensation plans	80	—		150		—		—		—	—			150		—			150
Share-based compensation	—	—		1,774		—		—		—	—			1,774		—			1,774
Subsidiary dividends to noncontrolling interests	—	—		—		—		—		—	—			—		(150)			(150)
Balance at June 30, 2019	285,510	$	285	$	1,913,103	$	80,860	$	27,317	(45,978)	$	(216,254)		$	1,805,311	$	25,865		$	1,831,176

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)	—	—		—		(32,329)		—		—	—			(32,329)		655			(31,674)
Other comprehensive income (loss)	—	—		—		—		3,505		—	—			3,505		—			3,505


Treasury stock acquired through surrender of shares for tax withholding	—	—		—		—		—		(11)	(83)			(83)		—			(83)
Issuance of stock through share-based compensation plans	158	—		436		—		—		—	—			436		—			436
Share-based compensation	—	—		3,242		—		—		—	—			3,242		—			3,242
Subsidiary dividends to noncontrolling interests	—	—		—		—		—		—	—			—		(150)			(150)
Balance at June 30, 2019	285,510	$	285	$	1,913,103	$	80,860	$	27,317	(45,978)	$	(216,254)		$	1,805,311	$	25,865		$	1,831,176

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 Six Months Ended June 30,
	2020		2019
	(In thousands)
Cash flows from operating activities:
Net income (loss)	$	120,637	$	(31,674)
Depreciation and amortization	248,036		268,819


Other operating activities and non-cash items	10,151		33,112
Changes in assets and liabilities	(136,422)		(101,329)
Net cash provided by operating activities	242,402		168,928
Cash flows from investing activities:
Payments for property, plant and equipment	(134,340)		(273,672)
Proceeds from sale of property, plant and equipment	2,389		8,247
Proceeds from insurance recovery for property, plant and equipment	—		1,538


Proceeds from sale of short-term investments	8,593		—
Proceeds from maturities of short-term investments	13,072		6,469
Payments for short-term investments	(325,632)		(5,935)
Other investing activities	805		2,330
Net cash used in investing activities	(435,113)		(261,023)
Cash flows from financing activities:
Proceeds from revolving credit facilities	282,000