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Form 8-K AMKOR TECHNOLOGY INC For: Feb 06

February 9, 2015 4:09 PM EST



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)
February�9, 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
(Registrants telephone number, including area code)

1900 SOUTH PRICE ROAD
CHANDLER, AZ 85286
(Former address of principal executive offices, including zip 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 and year ended December 31, 2014, and forward-looking statements relating to the first quarter and full year 2015 as presented in a press release dated February�9, 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 February 9, 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: February�9, 2015






EXHIBIT INDEX:

Exhibit
Description
99.1
Text of Press Release dated February 9, 2015, which is furnished (not filed) herewith.



News Release



Amkor Technology Reports Financial Results for the Fourth Quarter and Full Year 2014

Record 2014 Sales $3.13 Billion
GAAP EPS $0.55, Non-GAAP EPS $0.88


TEMPE, Ariz. - February 9, 2015 - Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of semiconductor packaging and test services, today announced financial results for the fourth quarter and full year ended December 31, 2014.

We delivered a strong finish to the year with fourth quarter operating results well above the high end of our guidance," said Steve Kelley, Amkor's president and chief executive officer. "Driven by notable strength in mobile communications using our advanced packaging and test technologies, we saw record sales for the quarter and full year, and a substantial improvement in profitability. And over the last two years, net sales have grown 13% to more than $3.13 billion and our non-GAAP earnings per share have nearly doubled. These results demonstrate that our strategic initiatives are gaining traction, and we anticipate another year of sales and earnings growth in 2015."

GAAP Results
Q4 2014
Q3 2014
Q4 2013
2014
2013
($ in millions, except per share amounts)

Net sales
$853
$813
$755
$3,129
$2,956
Gross margin
14.1%
18.8%
19.9%
17.7%
18.4%
Net income
$13
$47
$41
$130
$109
Earnings per diluted share
$0.06
$0.20
$0.18
$0.55
$0.50

Non-GAAP Results
Q4 2014
Q3 2014
Q4 2013
2014
2013
($ in millions, except per share amounts)

Net sales
$853
$813
$755
$3,129
$2,956
Gross margin
22.9%
18.8%
19.9%
20.1%
18.8%
Net income
$90
$47
$41
$208
$119
Earnings per diluted share
$0.38
$0.20
$0.18
$0.88
$0.54

The gross margin, net income and earnings per diluted share information presented above under Non-GAAP Results excludes charges relating to the settlement of our litigation with Tessera and are non-GAAP measures. The charges are $89 million ($78 million, net of tax) in 2014 and $11 million ($10 million, net of tax) in 2013. The reconciliation to the comparable GAAP measures is included below under "Selected Operating Data."

Cash and cash equivalents were $450 million, and total debt was $1.5 billion, at December 31, 2014.





Business Outlook

"We expect that first quarter 2015 revenues will be up 6% year-on-year and down 13% sequentially," said Kelley. "We also expect full year 2015 capital expenditures of around $600 million, including around $150 million of spending for our new K5 factory and R&D center in Incheon, Korea."

Based upon currently available information, we have the following expectations for the first quarter 2015:
"
Net sales of $715 million to $765�million, down 10% to 16% from the prior quarter
"
Gross margin of 16% to 19%
"
Net income of $10 million to $34�million, or $0.04 to $0.14 per diluted share

Conference Call Information

Amkor will conduct a conference call on Monday, February 9, 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 68501790). 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

Q4 2014
Q3 2014
Q4 2013
2014
2013
Net Sales Data:
Net sales (in millions):
Advanced products*
$
462

$
411

$
346

$
1,553

$
1,451

Mainstream products**
391

402

409

1,576

1,505

Total net sales
$
853

$
813

$
755

$
3,129

$
2,956

Packaging services
85

%
86

%
85

%
85

%
86

%
Test services
15

%
14

%
15

%
15

%
14

%
Net sales from top ten customers
64

%
60

%
63

%
61

%
63

%
Packaged units (in millions):
Advanced products*
1,174

1,012

816

3,776

2,845

Mainstream products**
3,001

3,545

3,261

13,112

10,060

Total packaged units
4,175

4,557

4,077

16,888

12,905

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)
60

%
56

%
55

%
56

%
56

%
Consumer (television, set top boxes, gaming, portable media, digital cameras)
11

%
13

%
14

%
13

%
15

%
Automotive, industrial and other (infotainment, safety, performance, comfort)
10

%
11

%
11

%
11

%
10

%
Networking (servers, routers, switches)
10

%
11

%
11

%
11

%
10

%
Computing (PCs, hard disk drive, printers, peripherals, servers)

9

%
9

%
9

%
9

%
9

%
Total
100

%
100

%
100

%
100

%
100

%
Gross Margin Data:
Net sales
100.0

%
100.0

%
100.0

%
100.0

%
100.0

%
Cost of sales:
Materials
36.0

%
37.5

%
37.2

%
36.8

%
40.0

%
Labor
13.2

%
14.1

%
14.6

%
14.0

%
14.4

%
Other manufacturing
27.9

%
29.6

%
28.3

%
29.1

%
26.8

%
Litigation settlement
8.8

%


%


%
2.4

%
0.4

%
Gross margin
14.1

%
18.8

%
19.9

%
17.7

%
18.4

%
Earnings per Share Data:
Net income available to Amkor common stockholders - basic

$
13

$
47

$
41

$
130

$
109

Adjustment for dilutive securities on net income:
Interest on 6.0% convertible notes due 2014, net of tax




1

1

9

Net income attributable to Amkor - diluted
$
13

$
47

$
42

$
131

$
118

Weighted average shares outstanding - basic
237

236

216

231

187

Effect of dilutive securities:
Stock options and unvested restricted shares


1



1



6.0% convertible notes due 2014




19

5

48

Weighted average shares outstanding - diluted
237

237

235

237

235

Net income attributable to Amkor per common share:

Basic
$
0.06

$
0.20

$
0.19

$
0.56

$
0.58

Diluted
$
0.06

$
0.20

$
0.18

$
0.55

$
0.50


*Advanced products include flip chip and wafer-level processing and related test services
**Mainstream products include wirebond packaging and related test services and since August 1, 2013, include the results of our newly acquired power discrete business in Malaysia which has a high volume of units relative to revenue.




AMKOR TECHNOLOGY, INC.
Selected Operating Data

In the press release above we provide non-GAAP gross margin, non-GAAP net income, and non-GAAP earnings per diluted share for the years ended December 31, 2014 and 2013, respectively. We also provide non-GAAP gross margin, non-GAAP net income and non-GAAP earnings per diluted share for the quarter ended December 31, 2014. We present these non-GAAP amounts to demonstrate the impact of the charges we recognized related to the settlement of our litigation with Tessera. Generally, a non-GAAP financial measure is a numerical measure of a companys 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, including that they exclude the charges for the settlement payments, which are amounts that the company will ultimately have to pay in cash, and should be considered in addition to, and not as a substitute for, or superior to, gross margin, net income and earnings per diluted share prepared in accordance with U.S. GAAP. Below is the reconciliation of non-GAAP gross margin, non-GAAP net income and non-GAAP earnings per diluted share to U.S. GAAP gross margin, net income and earnings per diluted share.
Non-GAAP Financial Measures Reconciliation:
Q4 2014
2014
2013
Gross margin
14.1

%
17.7

%
18.4

%
Plus: Litigation settlement charges divided by net sales
8.8

%
2.4

%
0.4

%
Non-GAAP gross margin
22.9

%
20.1

%
18.8

%
Net income (In millions)
$
13

$
130

$
109

Plus: Litigation settlement charges, net of tax (In millions)
77

78

10

Non-GAAP net income (In millions)
$
90

$
208

$
119

Earnings per diluted share
$
0.06

$
0.55

$
0.50

Plus: Litigation settlement charges per diluted share
0.32

0.33

0.04

Non-GAAP earnings per diluted share
$
0.38

$
0.88

$
0.54






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

For the Three Months Ended
December 31,
For the Year Ended
December 31,
2014
2013
2014
2013
(In thousands, except per share data)
Net sales
$
853,113

$
754,875

$
3,129,440

$
2,956,450

Cost of sales
733,042

604,702

2,576,618

2,411,937

Gross profit
120,071

150,173

552,822

544,513

Selling, general and administrative
62,800

58,255

254,498

247,779

Research and development
17,303

17,364

76,864

64,625

Total operating expenses
80,103

75,619

331,362

312,404

Operating income
39,968

74,554

221,460

232,109

Interest expense
34,917

24,818

104,956

96,739

Interest expense, related party
1,242

1,242

4,969

9,169

Other (income) expense, net
(9,254
)
(4,112
)
(24,543
)
2,214

Total other expense, net
26,905

21,948

85,382

108,122

Income before taxes and equity in earnings of unconsolidated affiliate
13,063

52,606

136,078

123,987

Income tax expense
1,420

16,685

33,845

22,646

Income before equity in earnings of unconsolidated affiliate
11,643

35,921

102,233

101,341

Equity in earnings of J-Devices
2,485

5,637

31,654

10,316

Net income
14,128


41,558

133,887

111,657

Net income attributable to noncontrolling interests
(993
)
(720
)
(3,501
)
(2,361
)
Net income attributable to Amkor
$
13,135

$
40,838

$
130,386

$
109,296

Net income attributable to Amkor per common share:
Basic
$
0.06

$
0.19

$
0.56

$
0.58

Diluted
$
0.06

$
0.18

$
0.55

$
0.50

Shares used in computing per common share amounts:
Basic
236,578

216,598

230,710

187,032

Diluted
236,937

235,297

236,731

235,330






AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)

December 31,
2014
2013
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents
$
449,946

$
610,442

Restricted cash
2,681

2,681

Accounts receivable, net of allowances
469,683

385,542

Inventories
223,379

200,423

Other current assets
52,259

33,328

Total current assets
1,197,948

1,232,416

Property, plant and equipment, net
2,206,476

2,006,553

Investments
117,733

105,214

Restricted cash
2,123

2,234

Other assets
111,125

80,881

Total assets
$
3,635,405

$
3,427,298

LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt
$
5,000

$
61,350

Trade accounts payable
309,025

260,534

Capital expenditures payable
127,568

104,800

Accrued expenses
258,997

264,252

Total current liabilities
700,590

690,936

Long-term debt
1,450,824

1,516,390

Long-term debt, related party
75,000

75,000

Pension and severance obligations
152,673

165,073

Other non-current liabilities
125,382

14,959

Total liabilities
2,504,469

2,462,358

Amkor stockholders equity:
Preferred stock




Common stock
282

262

Additional paid-in capital
1,878,810

1,812,530

Accumulated deficit
(516,962
)
(647,348
)
Accumulated other comprehensive loss
(32,867
)
(255
)
Treasury stock
(213,028
)
(211,449
)
Total Amkor stockholders equity
1,116,235

953,740

Noncontrolling interests in subsidiaries
14,701

11,200

Total equity
1,130,936

964,940

Total liabilities and equity
$
3,635,405

$
3,427,298





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


For the Year Ended
December 31,
2014
2013
(In thousands)
Cash flows from operating activities:
Net income
$
133,887

$
111,657

Depreciation and amortization
464,706

410,346

Loss on debt retirement


11,619

Gain on sale of subsidiary to J-Devices
(9,155
)


Other operating activities and non-cash items
(40,762
)
(15,978
)
Changes in assets and liabilities
65,233

39,892

Net cash provided by operating activities
613,909

557,536

Cash flows from investing activities:
Payments for property, plant and equipment
(681,120
)
(566,256
)
Proceeds from sale of property, plant and equipment
2,815

27,209

Acquisition of business, net of cash acquired


(41,865
)
Cash transferred on sale of subsidiary to J-Devices, net of proceeds
(15,774
)


Payments from J-Devices


8,843

Investment in J-Devices


(67,372
)
Other investing activities
(399
)
(1,053
)
Net cash used in investing activities
(694,478
)
(640,494
)
Cash flows from financing activities:
Borrowings under revolving credit facilities


5,000

Payments under revolving credit facilities


(5,000
)
Proceeds from issuance of long-term debt
80,000

375,000

Payments of long-term debt
(145,000
)
(80,000
)
Payments for debt issuance costs
(903
)
(3,216
)
Payments for retirement of debt


(11,619
)
Payment of deferred consideration for an acquisition
(18,763
)


Proceeds from issuance of stock through share-based compensation plans
6,250

446

Payments of tax withholding for restricted shares
(1,579
)
(466
)
Net cash (used in) provided by financing activities
(79,995
)
280,145

Effect of exchange rate fluctuations on cash and cash equivalents
68

207

Net (decrease) increase in cash and cash equivalents
(160,496
)
197,394

Cash and cash equivalents, beginning of period
610,442

413,048

Cash and cash equivalents, end of period
$
449,946

$
610,442






Note to unaudited consolidated financial statements:

In January 2015, Amkor entered into a settlement agreement with Tessera to resolve their outstanding litigation. Under the terms of the settlement, Amkor agreed to pay Tessera a total of $155 million in equal quarterly installments of $9.6875 million over the next four years in exchange for a mutual release and dismissal of all claims relating to their pending litigation and arbitration proceedings. As a result of the settlement, Amkor recorded the net present value of the settlement obligation ($137 million), less the previously accrued expense ($50 million), as a charge allocated between cost of sales ($75 million) and interest expense ($12 million). The remaining amount of the gross settlement charge ($18 million) will be accreted through interest expense over the four year term of the arrangement to reflect the impact of the time value of money due to the long term nature of the obligation and related payment terms. The settlement liability has been recorded in accrued expenses (current) and other long-term liabilities (non-current) for the present value of payments due within one year and those due in excess of one year, respectively.





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 our strategic initiatives, our 2015 sales and earnings growth and all of the statements made under "Business Outlook" above. These forward-looking statements involve a number of risks, uncertainties, assumptions and other factors that could affect future results and cause actual results and events to differ materially from historical and expected results and those expressed or implied in the forward-looking statements, including, but not limited to, the following:
"
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;
"
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, 2013 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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