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Form 8-K AMKOR TECHNOLOGY, INC. For: Oct 26

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October 26, 2015 4:14 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)
October 26, 2015
AMKOR TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
 
 
 
 
 
DELAWARE
 
000-29472
 
23-1722724
 
 
 
 
 
(State or Other Jurisdiction of Incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)

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

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

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





Item 2.02. Results of Operations and Financial Condition.

Attached hereto as Exhibit 99.1 and incorporated by reference herein is financial information for Amkor Technology, Inc. for the three and nine months ended September 30, 2015, and forward-looking statements relating to the fourth quarter and full year 2015 as presented in a press release dated October 26, 2015. The information in this Form 8-K and the exhibit attached hereto is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.
99.1
 
Text of Press Release dated October 26, 2015, 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: October 26, 2015




EXHIBIT INDEX:

Exhibit
 
Description
99.1
 
Text of Press Release dated October 26, 2015, which is furnished (not filed) herewith.





News Release

Amkor Technology Reports Financial Results for the Third Quarter 2015

Third Quarter Highlights
•
Net sales $734 million
•
Gross margin 17.2%
•
Net income $28 million
•
Earnings per diluted share $0.12

TEMPE, Ariz. - October 26, 2015 - Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of semiconductor packaging and test services, today announced financial results for the third quarter ended September 30, 2015.

"Third quarter revenues were at the higher end of our expectations and roughly flat to Q2,” said Steve Kelley, Amkor's president and chief executive officer. “Third quarter profit exceeded expectations, largely due to favorable exchange rates and a richer mix of assembly and test services."
 
 
GAAP Results
 
Q3 2015
 
Q2 2015
 
Q3 2014
 
($ in millions, except per share data)
Net sales
$734
 
$737
 
$813
Gross margin
17.2%
 
15.6%
 
18.8%
Net income*
$28
 
$10
 
$47
Earnings per diluted share*
$0.12
 
$0.04
 
$0.20

*Second quarter 2015 results include a $9 million ($0.04 per diluted share) charge for the early extinguishment of debt related to the redemption of all $345 million aggregate principal amount of Amkor's outstanding 7.375% Senior Notes due 2018.

Cash and cash equivalents were $430 million, and total debt was $1.4 billion, at September 30, 2015.

Business Outlook

“In response to the generally soft end market demand for electronic devices, we expect customers to cautiously manage inventories through the fourth quarter of 2015,” said Kelley. “We are tightly controlling capital expenditures and working capital in line with the demand environment. Accordingly, we are reducing our estimate of full year 2015 capital expenditures from around $550 million to around $525 million, including around $150 million of spending for our new K5 facility."

Based upon currently available information, we have the following expectations for the fourth quarter 2015:
•
Net sales of $660 million to $710 million, down 3% to 10% from the prior quarter
•
Gross margin of 13% to 17%
•
Net loss of $4 million to net income of $12 million, or ($0.02) to $0.05 per share





Conference Call Information

Amkor will conduct a conference call on Monday, October 26, 2015, 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 58799565). 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

Amkor is a leading provider of semiconductor packaging and test services to semiconductor companies and electronics OEMs. More information about Amkor is available from the company's filings with the Securities and Exchange Commission and at Amkor's website: 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

 
Q3 2015
 
 
Q2 2015
 
 
Q3 2014
 
Net Sales Data:
 
 
 
 
 
 
 
 
Net sales (in millions):
 
 
 
 
 
 
 
 
Advanced products*
$
365

 
 
$
362

 
 
$
411

 
Mainstream products**
369

 
 
375

 
 
402

 
Total net sales
$
734

 
 
$
737

 
 
$
813

 
 
 
 
 
 
 
 
 
 
Packaging services
85

%
 
85

%
 
86

%
Test services
15

%
 
15

%
 
14

%
 
 
 
 
 
 
 
 
 
Net sales from top ten customers
61

%
 
62

%
 
60

%
 
 
 
 
 
 
 
 
 
Packaged units (in millions):
 
 
 
 
 
 
 
 
Advanced products*
1,305

 
 
1,275

 
 
1,012

 
Mainstream products**
2,750

 
 
2,703

 
 
3,545

 
Total packaged units
4,055

 
 
3,978

 
 
4,557

 
 
 
 
 
 
 
 
 
 
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)
55

%
 
56

%
 
56

%
Automotive, industrial and other (infotainment, safety, performance, comfort)
13

%
 
12

%
 
11

%
Consumer (televisions, set top boxes, gaming, portable media, digital cameras)
12

%
 
12

%
 
13

%
Networking (servers, routers, switches)
12

%
 
11

%
 
11

%
Computing (PCs, hard disk drives, printers, peripherals, servers)
8

%
 
9

%
 
9

%
Total
100

%
 
100

%
 
100

%
 
 
 
 
 
 
 
 
 
Gross Margin Data:
 
 
 
 
 
 
 
 
Net sales
100.0

%
 
100.0

%
 
100.0

%
Cost of sales:
 
 
 
 
 
 
 
 
Materials
36.8

%
 
37.2

%
 
37.5

%
Labor
14.9

%
 
15.7

%
 
14.1

%
Other manufacturing
31.1

%
 
31.5

%
 
29.6

%
Gross margin
17.2

%
 
15.6

%
 
18.8

%
 
 
 
 
 
 
 
 
 
Earnings per Share Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to Amkor common stockholders - basic and diluted
$
28

 
 
$
10

 
 
$
47

 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding - basic
237

 
 
237

 
 
236

 
Effect of dilutive securities:
 
 
 
 
 
 
 
 
Stock options and restricted share awards
—

 
 
—

 
 
1

 
Weighted average shares outstanding - diluted
237

 
 
237

 
 
237

 
 
 
 
 
 
 
 
 
 
Net income attributable to Amkor per common share:
 
 
 
 
 
 
 
 
Basic
$
0.12

 
 
$
0.04

 
 
$
0.20

 
Diluted
$
0.12

 
 
$
0.04

 
 
$
0.20

 

*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.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

 
For the Three Months Ended
September 30,
 
For the Nine Months Ended
September 30,
 
2015
 
2014
 
2015
 
2014
 
(In thousands, except per share data)
Net sales
$
734,362

 
$
812,824

 
$
2,213,959

 
$
2,276,327

Cost of sales
607,762

 
659,607

 
1,837,314

 
1,843,576

Gross profit
126,600

 
153,217

 
376,645

 
432,751

Selling, general and administrative
54,232

 
61,600

 
173,609

 
191,698

Research and development
21,073

 
16,437

 
59,119

 
59,561

Total operating expenses
75,305

 
78,037

 
232,728

 
251,259

Operating income
51,295

 
75,180

 
143,917

 
181,492

Interest expense
17,695

 
23,780

 
64,317

 
70,039

Interest expense, related party
1,243

 
1,243

 
3,727

 
3,727

Other (income) expense, net
(11,576
)
 
(9,626
)
 
(4,784
)
 
(15,289
)
Total other expense, net
7,362

 
15,397

 
63,260

 
58,477

Income before taxes and equity in earnings of unconsolidated affiliate
43,933

 
59,783

 
80,657

 
123,015

Income tax expense
16,568

 
14,985

 
27,198

 
32,425

Income before equity in earnings of unconsolidated affiliate
27,365

 
44,798

 
53,459

 
90,590

Equity in earnings of J-Devices
1,656

 
3,372

 
15,460

 
29,169

Net income
29,021

 
48,170

 
68,919

 
119,759

Net income attributable to noncontrolling interests
(847
)
 
(1,073
)
 
(2,386
)
 
(2,508
)
Net income attributable to Amkor
$
28,174

 
$
47,097

 
$
66,533

 
$
117,251

 
 
 
 
 
 
 
 
Net income attributable to Amkor per common share:
 
 
 
 
 
 
 
Basic
$
0.12

 
$
0.20

 
$
0.28

 
$
0.51

Diluted
$
0.12

 
$
0.20

 
$
0.28

 
$
0.50

 
 
 
 
 
 
 
 
Shares used in computing per common share amounts:
 
 
 
 
 
 
 
Basic
236,888

 
236,337

 
236,813

 
228,733

Diluted
236,974

 
237,509

 
237,168

 
236,672


Net income for the nine months ended September 30, 2014 includes a net gain of $18 million ($0.08 per diluted share) related to the sale of Amkor's Japanese subsidiary to J-Devices, its joint venture in Japan. In connection with the sale, Amkor recognized $9 million principally from the realization of accumulated foreign currency translation gains (reflected in Other (income) expense, net) and an additional $9 million from its equity interest in the gain realized by J-Devices on the transaction (reflected in Equity in earnings of J-Devices).

Net income for the nine months ended September 30, 2015 includes a $9 million ($0.04 per diluted share) charge for the early extinguishment of debt related to the redemption of all $345 million aggregate principal amount of Amkor's outstanding 7.375% Senior Notes due 2018.




AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)


 
September 30,
2015
 
December 31,
2014
 
(In thousands)
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
430,444

 
$
449,946

Restricted cash
2,000

 
2,681

Accounts receivable, net of allowances
410,256

 
469,683

Inventories
208,213

 
223,379

Other current assets
53,858

 
52,259

Total current assets
1,104,771

 
1,197,948

Property, plant and equipment, net
2,284,901

 
2,206,476

Investments
146,639

 
117,733

Restricted cash
2,163

 
2,123

Other assets
109,014

 
111,125

Total assets
$
3,647,488

 
$
3,635,405

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

 
$
5,000

Trade accounts payable
279,260

 
309,025

Capital expenditures payable
221,281

 
127,568

Accrued expenses
251,650

 
258,997

Total current liabilities
752,191

 
700,590

Long-term debt
1,365,376

 
1,450,824

Long-term debt, related party
75,000

 
75,000

Pension and severance obligations
149,952

 
152,673

Other non-current liabilities
101,564

 
125,382

Total liabilities
2,444,083

 
2,504,469

 
 
 
 
Amkor stockholders’ equity:
 
 
 
Preferred stock
—

 
—

Common stock
283

 
282

Additional paid-in capital
1,882,529

 
1,878,810

Accumulated deficit
(450,429
)
 
(516,962
)
Accumulated other comprehensive loss
(32,366
)
 
(32,867
)
Treasury stock
(213,576
)
 
(213,028
)
Total Amkor stockholders’ equity
1,186,441

 
1,116,235

Noncontrolling interests in subsidiaries
16,964

 
14,701

Total equity
1,203,405

 
1,130,936

Total liabilities and equity
$
3,647,488

 
$
3,635,405




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

 
For the Nine Months Ended
September 30,
 
2015
 
2014
 
(In thousands)
Cash flows from operating activities:
 
 
 
Net income
$
68,919

 
$
119,759

Depreciation and amortization
371,968

 
340,089

Loss on debt retirement
2,530

 
—

Gain on sale of subsidiary to J-Devices
—

 
(9,155
)
Other operating activities and non-cash items
(14,752
)
 
(27,811
)
Changes in assets and liabilities
(5,299
)
 
(17,214
)
Net cash provided by operating activities
423,366

 
405,668

 
 
 
 
Cash flows from investing activities:
 
 
 
Payments for property, plant and equipment
(352,644
)
 
(442,308
)
Proceeds from sale of property, plant and equipment
5,212

 
2,170

Cash received (transferred) on sale of subsidiary to J-Devices, net
8,355

 
(15,774
)
Investment in J-Devices
(12,908
)
 
—

Other investing activities
(869
)
 
(389
)
Net cash used in investing activities
(352,854
)
 
(456,301
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Borrowings under revolving credit facilities
180,000

 
—

Payments under revolving credit facilities
(100,000
)
 
—

Proceeds from issuance of long-term debt
360,000

 
80,000

Payments of long-term debt
(530,000
)
 
(140,000
)
Payment of deferred consideration for an acquisition
—

 
(18,763
)
Proceeds from the issuance of stock through share-based compensation plans
657

 
5,826

Payments of tax withholding for restricted shares
(548
)
 
(1,348
)
Payments of subsidiary dividends to noncontrolling interests
(123
)
 
—

Net cash used in financing activities
(90,014
)
 
(74,285
)
 
 
 
 
Effect of exchange rate fluctuations on cash and cash equivalents
—

 
68

 
 
 
 
Net decrease in cash and cash equivalents
(19,502
)
 
(124,850
)
Cash and cash equivalents, beginning of period
449,946

 
610,442

Cash and cash equivalents, end of period
$
430,444

 
$
485,592

 




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, 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:
•
there can be no assurance that our new factory and research and development center in Korea will be completed, 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;
•
the negative impact on economic growth resulting from the action or inaction of the U.S. government relating to federal income tax increases for individuals or corporations, the federal debt ceiling, the federal deficit and government spending restrictions or shutdowns;
•
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 additions;
•
the effects of an economic slowdown in China, the U.S. and other major economies worldwide;
•
disruptions in our business or deficiencies in our controls resulting from the integration of newly acquired operations 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, natural disasters and military conflict;
•
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;
•
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, 2014 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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