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Form 8-K AMKOR TECHNOLOGY, INC. For: Apr 27

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April 27, 2016 4:19 PM EDT


 

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)
April 27, 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 months ended March 31, 2016, and forward-looking statements relating to the second quarter 2016 as presented in a press release dated April 27, 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 April 27, 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/ Joanne Solomon
 
 
 
Joanne Solomon
 
 
 
Executive Vice President and Chief Financial Officer
 
 
Date: April 27, 2016




EXHIBIT INDEX:

Exhibit
 
Description
99.1
 
Text of Press Release dated April 27, 2016, which is furnished (not filed) herewith.





News Release

Amkor Technology Reports Financial Results for the First Quarter 2016

First Quarter Highlights
•
Net sales $869 million
•
Gross margin 14.1%
•
Net income and earnings per diluted share at breakeven
•
Includes consolidation of J-Devices' operating results for the first time
•
Automotive revenues of $220 million in Q1, up 7% sequentially and 6% year-over-year on a combined basis with J-Devices

TEMPE, Ariz. - April 27, 2016 - Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of semiconductor packaging and test services, today announced financial results for the first quarter ended March 31, 2016.

"First quarter results were above the high end of our guidance,” said Steve Kelley, Amkor's president and chief executive officer. “We benefited from better than expected performance in Japan and in the high-end Android smartphone market. In addition, our strategic initiatives continued to build momentum with automotive sales of $220 million in the quarter, up 7% sequentially and 6% year-over-year on a combined basis with J-Devices. Our Greater China revenues were also up 21% sequentially. However, overall demand was still relatively low on a historical basis, which led to breakeven financial performance in the quarter."

GAAP Results
Q1 2016
Q4 2015
Q1 2015
 
($ in millions, except per share data)
Net sales
$869
$671
$743
Gross margin
14.1%
15.3%
18.2%
Net income (loss)
($1)
($10)
$29
Earnings per diluted share
$—
($0.04)
$0.12

Non-GAAP Results*
Q1 2016
Q4 2015
Q1 2015
 
($ in millions, except per share data)
Net sales
$869
$671
$743
Gross margin
14.1%
15.3%
18.2%
Net income (loss)
($1)
$4
$29
Earnings per diluted share
$—
$0.02
$0.12
EBITDA
$155
$131
$184
Adjusted EBITDA
$155
$145
$184

* Fourth quarter 2015 net income and earnings per diluted share exclude a gain of $16 million related to our previous investments in J-Devices and a non-cash loss of $30 million relating to the release of a foreign currency translation adjustment account, for a net loss of $14 million. The reconciliation to the comparable GAAP measures is included below under "Selected Operating Data."





In December 2015, Amkor increased its ownership in J-Devices Corporation from 66% to 100%. As a result, the accounting for J-Devices changed from the equity method to the consolidation method effective at the time of acquisition. J-Devices' operating results were consolidated with Amkor for the first time beginning in the first quarter of 2016.

“Our first quarter revenues were up 30% sequentially with the consolidation of $217 million of sales from J-Devices,” said Joanne Solomon, Amkor’s executive vice president and chief financial officer. “J-Devices also contributed $0.04 to our earnings per share in the quarter."

Cash and cash equivalents were $413 million, and total debt was $1.5 billion, at March 31, 2016.

Business Outlook

"Looking ahead, we see improved demand across most end markets in Q2," said Kelley. “Unfortunately, we do not expect to realize meaningful revenue growth in Q2 due to temporary disruptions stemming from the recent earthquakes in Japan. Our Kumamoto factory was damaged in the earthquakes and is operating on a limited basis today. Repair work is being expedited, and we expect to ramp to full operational capacity over the next 11 weeks. We now expect Q2 revenues of around $875 million, which reflect roughly $35 million in lower sales due to the impact of the earthquakes. We also expect to incur incremental costs of around $20 million in Q2 for damaged inventory and repairs to buildings and equipment. Taking into account insurance payments anticipated later this year, we expect the net impact on our full year 2016 results to be modest.

Second quarter 2016 outlook (unless otherwise noted):
•
Net sales of $850 million to $900 million, down 2% to up 4% from the prior quarter
•
Gross margin of 10% to 13%
•
Net loss of $11 million to $33 million, or ($0.04) to ($0.14) per share
•
Full year 2016 capital expenditures of around $650 million, unchanged from our previous forecast





Conference Call Information

Amkor will conduct a conference call on Wednesday, April 27, 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 89394810). 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.
Joanne Solomon
Executive Vice President & Chief Financial Officer
480-786-7878

Greg Johnson
Senior Director, Finance and Investor Relations
480-786-7594





AMKOR TECHNOLOGY, INC.
Selected Operating Data

 
Q1 2016
 
Q4 2015
 
Q1 2015
Net Sales Data:
 
 
 
 
 
Net sales (in millions):
 
 
 
 
 
Advanced products*
$
356

 
$
333

 
$
373

Mainstream products**
513

 
338

 
370

Total net sales
$
869

 
$
671

 
$
743

 
 
 
 
 
 
Packaging services
82
%
 
85
%
 
85
%
Test services
18
%
 
15
%
 
15
%
 
 
 
 
 
 
Net sales from top ten customers
67
%
 
64
%
 
60
%
 
 
 
 
 
 
Packaged units (in millions):
 
 
 
 
 
Advanced products*
941

 
1,196

 
1,188

Mainstream products**
3,048

 
2,492

 
2,671

Total packaged units
3,989

 
3,688

 
3,859

 
 
 
 
 
 
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)
42
%
 
54
%
 
57
%
Automotive, industrial and other (infotainment, safety, performance, comfort)
25
%
 
15
%
 
11
%
Consumer (televisions, set top boxes, gaming, portable media, digital cameras)
16
%
 
12
%
 
12
%
Networking (servers, routers, switches)
10
%
 
11
%
 
11
%
Computing (PCs, hard disk drives, printers, peripherals, servers)
7
%
 
8
%
 
9
%
Total
100
%
 
100
%
 
100
%
 
 
 
 
 
 
Gross Margin Data:
 
 
 
 
 
Net sales
100.0
%
 
100.0
%
 
100.0
%
Cost of sales:
 
 
 
 
 
Materials
37.5
%
 
35.8
%
 
36.7
%
Labor
16.2
%
 
15.8
%
 
14.2
%
Other manufacturing
32.2
%
 
33.1
%
 
30.9
%
Gross margin
14.1
%
 
15.3
%
 
18.2
%

*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 non-GAAP net income and non-GAAP earnings per diluted share. We present these non-GAAP amounts to demonstrate the impact of the consolidation of J-Devices. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). These measures have limitations, and should be considered in addition to, and not as a substitute for, or superior to, net income and earnings per diluted share prepared in accordance with U.S. GAAP. Below is the reconciliation of non-GAAP net income and non-GAAP earnings per diluted share to U.S. GAAP net income and earnings per diluted share.

Non-GAAP Financial Measures Reconciliation:
 
 
 
 
 
 
Q1 2016
 
Q4 2015
 
Q1 2015
 
(in millions, except per share amounts)
Net income (loss) attributable to Amkor
$
(1
)
 
$
(10
)
 
$
29

Plus: Net loss on acquisition of J-Devices, net of tax
—

 
14

 
—

Non-GAAP net income (loss)
$
(1
)
 
$
4

 
$
29

 
 
 
 
 
 
Earnings per diluted share
$
—

 
$
(0.04
)
 
$
0.12

Plus: Net loss on acquisition of J-Devices per diluted share, net of tax
—

 
0.06

 
—

Non-GAAP earnings per diluted share
$
—

 
$
0.02

 
$
0.12


In the press release above we provide EBITDA and Adjusted EBITDA, which are 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 and Adjusted EBITDA to be relevant and useful information to our investors because they provide additional information in assessing our financial operating results. Our management uses EBITDA and Adjusted EBITDA in evaluating our operating performance, our ability to service debt and our ability to fund capital expenditures. However, EBITDA and Adjusted EBITDA have certain limitations in that they do 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 and Adjusted 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 and Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. Below is our reconciliation of EBITDA and Adjusted EBITDA to U.S. GAAP net income.
Non-GAAP Financial Measures Reconciliation:
 
 
 
 
 
 
Q1 2016
 
Q4 2015
 
Q1 2015
 
(in millions)
EBITDA Data:
 
 
 
 
 
Net income (loss) attributable to Amkor
$
(1
)
 
$
(10
)
 
$
29

Plus: Interest expense
17

 
18

 
25

Plus: Income tax expense
2

 
1

 
6

Plus: Depreciation & amortization
137

 
122

 
124

EBITDA
$
155

 
$
131

 
$
184

 
 
 
 
 
 
Plus: Net loss on acquisition of J-Devices
—

 
14

 
—

Adjusted EBITDA
$
155

 
$
145

 
$
184















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

 
For the Three Months Ended
March 31,
 
2016
 
2015
 
(In thousands, except per share data)
Net sales
$
868,682

 
$
742,875

Cost of sales
745,798

 
607,928

Gross profit
122,884

 
134,947

Selling, general and administrative
73,635

 
62,942

Research and development
27,155

 
18,026

Total operating expenses
100,790

 
80,968

Operating income
22,094

 
53,979

Interest expense
16,192

 
23,777

Interest expense, related party
1,242

 
1,242

Other (income) expense, net
3,192

 
(498
)
Total other expense, net
20,626

 
24,521

Income before taxes and equity in earnings of unconsolidated affiliate
1,468

 
29,458

Income tax expense
1,873

 
5,999

Income (loss) before equity in earnings of unconsolidated affiliate
(405
)
 
23,459

Equity in earnings of J-Devices
—

 
6,238

Net income (loss)
(405
)
 
29,697

Net income attributable to noncontrolling interests
(470
)
 
(916
)
Net income (loss) attributable to Amkor
$
(875
)
 
$
28,781

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

 
$
0.12

Diluted
$
—

 
$
0.12

 
 
 
 
Shares used in computing per common share amounts:
 
 
 
Basic
237,025

 
236,708

Diluted
237,025

 
237,424







AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)


 
March 31,
2016
 
December 31,
2015
 
(In thousands)
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
413,465

 
$
523,172

Restricted cash
2,000

 
2,000

Accounts receivable, net of allowances
537,745

 
526,143

Inventories
237,000

 
238,205

Other current assets
29,363

 
27,960

Total current assets
1,219,573

 
1,317,480

Property, plant and equipment, net
2,616,227

 
2,579,017

Goodwill
20,840

 
19,443

Restricted cash
2,222

 
2,176

Other assets
100,292

 
104,346

Total assets
$
3,959,154

 
$
4,022,462

 
 
 
 
LIABILITIES AND EQUITY
Current liabilities:
 
 
 
Short-term borrowings and current portion of long-term debt
$
26,183

 
$
76,770

Trade accounts payable
407,698

 
434,222

Capital expenditures payable
199,944

 
242,980

Accrued expenses
306,285

 
264,212

Total current liabilities
940,110

 
1,018,184

Long-term debt
1,433,426

 
1,435,269

Long-term debt, related party
75,000

 
75,000

Pension and severance obligations
176,631

 
167,197

Other non-current liabilities
88,820

 
101,679

Total liabilities
2,713,987

 
2,797,329

 
 
 
 
Stockholders’ equity:
 
 
 
Preferred stock
—

 
—

Common stock
283

 
283

Additional paid-in capital
1,884,397

 
1,883,592

Accumulated deficit
(461,025
)
 
(460,150
)
Accumulated other comprehensive income (loss)
17,804

 
(2,084
)
Treasury stock
(213,877
)
 
(213,758
)
Total Amkor stockholders’ equity
1,227,582

 
1,207,883

Noncontrolling interests in subsidiaries
17,585

 
17,250

Total equity
1,245,167

 
1,225,133

Total liabilities and equity
$
3,959,154

 
$
4,022,462




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

 
For the Three Months Ended
March 31,
 
2016
 
2015
 
(In thousands)
Cash flows from operating activities:
 
 
 
Net income (loss)
$
(405
)
 
$
29,697

Depreciation and amortization
137,136

 
124,387

Other operating activities and non-cash items
(3,944
)
 
(9,525
)
Changes in assets and liabilities
5,311

 
20,465

Net cash provided by operating activities
138,098

 
165,024

 
 
 
 
Cash flows from investing activities:
 
 
 
Payments for property, plant and equipment
(198,788
)
 
(106,149
)
Proceeds from sale of property, plant and equipment
121

 
3,254

Investment in J-Devices
—

 
(12,908
)
Other investing activities
(472
)
 
(322
)
Net cash used in investing activities
(199,139
)
 
(116,125
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Borrowings under revolving credit facilities
—

 
30,000

Payments under revolving credit facilities
(40,000
)
 
—

Payments of short-term debt
(11,901
)
 
—

Payments of long-term debt
(4,204
)
 
(35,000
)
Payments for debt issuance costs
(156
)
 
—

Payments for capital lease obligations
(401
)
 
—

Proceeds from the issuance of stock through share-based compensation plans
—

 
574

Payments of tax withholding for restricted shares
(119
)
 
(230
)
Payments of subsidiary dividends to noncontrolling interests
(135
)
 
—

Net cash used in financing activities
(56,916
)
 
(4,656
)
 
 
 
 
Effect of exchange rate fluctuations on cash and cash equivalents
8,250

 
—

 
 
 
 
Net increase (decrease) in cash and cash equivalents
(109,707
)
 
44,243

Cash and cash equivalents, beginning of period
523,172

 
449,946

Cash and cash equivalents, end of period
$
413,465

 
$
494,189

 




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 impact and recovery from the recent 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 our recovery from the recent earthquakes in Japan will occur as quickly as expected, or that the actual costs and financial impact will be consistent with our current expectations, for example due to additional earthquakes, shortages in labor or supplies for repairs or operations, increased inventory or repair costs, shortages in customer materials, changes in customer preferences, demand or loadings, or delays or shortfalls in insurance payments;
•
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, the jurisdictions in which our income is determined to be earned and taxed, the outcome of tax audits and tax 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, military conflict and natural disasters such as the recent 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 recent 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.





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