Document


 

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 12, 2018
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))
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

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.  o
 





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, 2017, and forward-looking statements relating to the first quarter and full year 2018 as presented in a press release dated February 12, 2018. 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 12, 2018, 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/ Megan Faust  
 
 
 
Megan Faust
 
 
 
Corporate Vice President and Chief Financial Officer 
 
 

Date: February 12, 2018






EXHIBIT INDEX:

Exhibit
 
Description
99.1
 


Exhibit

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12044122&doc=3
News Release

Amkor Technology Reports Financial Results for the Fourth Quarter and Full Year 2017

Fourth Quarter 2017 Highlights:
Record sales $1.15 billion, 12% year-on-year growth
Gross margin 19.6%

Full Year 2017 Highlights:
Record sales $4.2 billion, 8% year-on-year growth
Net income $261 million, earnings per diluted share $1.09
EBITDA $971 million, net cash provided by operating activities $618 million and free cash flow $209 million
Gross margin 18.1%

TEMPE, Ariz. - February 12, 2018 - 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, 2017.

“Fourth quarter results were above the high end of our guidance, with sales up 12% year-over-year and 1% sequentially," said Steve Kelley, Amkor’s president and chief executive officer. “For full year 2017, we delivered record sales of $4.2 billion, an increase of nearly $300 million, or 8%, over 2016. Strong demand across all of our end markets, particularly mobile communications, combined with solid execution on our strategic initiatives in automotive, Greater China and advanced System-in-Package (SiP), produced another good year of profitable growth for Amkor.”

“Record fourth quarter sales drove gross margin well above the high end of guidance,” said Megan Faust, Amkor’s corporate vice president and chief financial officer. “Our results also benefitted from the completion of our Japan factory consolidation in the quarter. Our CapEx discipline and prudent asset management generated 209 million dollars of free cash flow in 2017, our third consecutive year of free cash flow growth."

Results
Q4 2017
Q3 2017
Q4 2016
2017
2016
 
($ in millions, except per share amounts)
Net sales
$1,148
$1,135
$1,022
$4,186
$3,894
Gross margin
19.6%
19.1%
22.2%
18.1%
17.9%
Net income attributable to Amkor1
$101
$54
$100
$261
$164
Earnings per diluted share1
$0.42
$0.23
$0.42
$1.09
$0.69
EBITDA1,2
$256
$243
$281
$971
$855
Net cash provided by operating activities
$204
$214
$238
$618
$729
Free cash flow1,2
$76
$74
$117
$209
$140

1) Q4 2017 net income includes an estimated one-time net tax benefit of $42 million, or $0.17 per diluted share, primarily due to the reversal of a valuation allowance on certain U.S. deferred tax assets as a result of the enactment of U.S. tax reform. In Q4 2016, we received approximately $26 million of insurance proceeds related to the second quarter 2016 Japan earthquakes which contributed 250 basis points to gross margin and $0.08 to earnings per diluted share. Full year 2017 net income also includes an after-tax gain of $82 million, or $0.34 per diluted share, from the sale of our K1 factory in Korea.

2) EBITDA and free cash flow are non-GAAP measures. The reconciliations to the comparable GAAP measures are included below under "Selected Operating Data."

Cash and cash equivalents were $600 million, and total debt was $1.4 billion, at December 31, 2017.





Business Outlook

“We expect first quarter 2018 revenues to be around $1.02 billion, up 12% year-on-year," said Kelley.

First quarter 2018 outlook:
Net sales of $0.98 billion to $1.06 billion, up 7% to 16% from the first quarter 2017
Gross margin of 14% to 16%
Net loss of $5 million to net income of $25 million, or ($0.02) to $0.11 per diluted share
Full year 2018 capital expenditures of around $600 million

Conference Call Information

Amkor will conduct a conference call on Monday, February 12, 2018, 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 4297967). 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 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 operational base includes production facilities, product development centers and sales and support offices located in key electronics manufacturing regions in Asia, Europe and the USA. For more information visit www.amkor.com.


Contacts:

Amkor Technology, Inc.

Megan Faust
Corporate Vice President & Chief Financial Officer
480-786-7707
megan.faust@amkor.com

Greg Johnson
Vice President, Finance and Investor Relations
480-786-7594
greg.johnson@amkor.com





AMKOR TECHNOLOGY, INC.
Selected Operating Data

 
Q4 2017
 
Q3 2017
 
Q4 2016
 
2017
 
2016
Net Sales Data:
 
 
 
 
 
 
 
 
 
Net sales (in millions):
 
 
 
 
 
 
 
 
 
Advanced products1
$
581

 
$
554

 
$
451

 
$
1,950

 
$
1,680

Mainstream products2
567

 
581

 
571

 
2,236

 
2,214

Total net sales
$
1,148

 
$
1,135

 
$
1,022

 
$
4,186

 
$
3,894

 
 
 
 
 
 
 
 
 
 
Packaging services
82
%
 
82
%
 
83
%
 
82
%
 
82
%
Test services
18
%
 
18
%
 
17
%
 
18
%
 
18
%
 
 
 
 
 
 
 
 
 
 
Net sales from top ten customers
68
%
 
67
%
 
66
%
 
67
%
 
67
%
 
 
 
 
 
 
 
 
 
 
End Market Distribution Data (an approximation including representative devices and applications based on a sampling of our largest customers)3:
 
 
 
 
 
 
 
 
 
Communications (smartphones, tablets, handheld devices)
48
%
 
45
%
 
42
%
 
43
%
 
42
%
Automotive, industrial and other (driver assist, infotainment, safety, performance)
23
%
 
25
%
 
26
%
 
26
%
 
26
%
Computing (data center, PC/laptops, infrastructure, storage)
17
%
 
17
%
 
18
%
 
18
%
 
18
%
Consumer (television, set-top boxes, personal electronics)
12
%
 
13
%
 
14
%
 
13
%
 
14
%
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
37.5
%
 
37.1
%
 
36.6
%
 
36.4
%
 
37.2
%
Labor
14.5
%
 
15.2
%
 
14.5
%
 
15.6
%
 
15.3
%
Other manufacturing4
28.4
%
 
28.6
%
 
26.7
%
 
29.9
%
 
29.6
%
Gross margin
19.6
%
 
19.1
%
 
22.2
%
 
18.1
%
 
17.9
%

1) Advanced products include flip chip and wafer-level processing and related test services
2) Mainstream products include wirebond packaging and related test services
3) Based on our periodic evaluation of end markets, we aggregated our networking end market into our computing end market. All prior periods have been retrospectively recasted to conform with current year presentation.
4) Fourth quarter and full year 2016 results include approximately $26 million of insurance proceeds related to the second quarter 2016 Japan earthquakes

























AMKOR TECHNOLOGY, INC.
Selected Operating Data










In the press release above we provide EBITDA, which is 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 to be relevant and useful information to our investors because it provides additional information in assessing our financial operating results. Our management uses EBITDA in evaluating our operating performance, our ability to service debt and our ability to fund capital expenditures. However, EBITDA has certain limitations in that it does 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 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 may not be comparable to similarly titled measures reported by other companies. Below is our reconciliation of EBITDA to U.S. GAAP net income.
Non-GAAP Financial Measures Reconciliation:
 
 
 
 
 
 
 
 
 
 
Q4 2017
 
Q3 2017
 
Q4 2016
 
2017
 
2016
 
(in millions)
EBITDA Data:
 
 
 
 
 
 
 
 
 
Net income
$
102

 
$
56

 
$
101

 
$
265

 
$
167

Plus: Interest expense
20

 
20

 
22

 
85

 
85

Plus: Income tax expense (benefit)
(13
)
 
19

 
19

 
39

 
48

Plus: Depreciation & amortization
147

 
148

 
139

 
582

 
555

EBITDA
$
256

 
$
243

 
$
281

 
$
971

 
$
855


In the press release above we refer to free cash flow, which is not defined by U.S. GAAP. We define free cash flow as net cash provided by operating activities less payments for property, plant and equipment, plus proceeds from the sale of and insurance recovery for property, plant and equipment, if applicable. We believe free cash flow to be relevant and useful information to our investors because it provides them with additional information in assessing our liquidity, capital resources and financial operating results. Our management uses free cash flow in evaluating our liquidity, our ability to service debt and our ability to fund capital expenditures. However, free cash flow has certain limitations, including that it does not represent the residual cash flow available for discretionary expenditures since other, non-discretionary expenditures, such as mandatory debt service, are not deducted from the measure. The amount of mandatory versus discretionary expenditures can vary significantly between periods. This measure should be considered in addition to, and not as a substitute for, or superior to, other measures of liquidity or financial performance prepared in accordance with U.S. GAAP, such as net cash provided by operating activities. Furthermore, our definition of free cash flow may not be comparable to similarly titled measures reported by other companies. Below is our reconciliation of free cash flow to U.S. GAAP net cash provided by operating activities.
Non-GAAP Financial Measures Reconciliation:
 
 
 
 
 
 
 
 
 
 
Q4 2017
 
Q3 2017
 
Q4 2016
 
2017
 
2016
 
(in millions)
Free Cash Flow Data:
 
 
 
 
 
 
 
 
 
Net cash provided by operating activities
$
204

 
$
214

 
$
238

 
$
618

 
$
729

Less: Purchases of property, plant and equipment
(137
)
 
(142
)
 
(168
)
 
(551
)
 
(650
)
Plus: Proceeds from sale of and insurance recovery for property, plant and equipment

9

 
2

 
47

 
142

 
61

Free cash flow
$
76

 
$
74

 
$
117

 
$
209

 
$
140






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

 
For the Three Months Ended
December 31,
 
For the Year Ended
December 31,
 
2017
 
2016
 
2017
 
2016
 
(In thousands, except per share data)
Net sales
$
1,148,423

 
$
1,021,613

 
$
4,186,497

 
$
3,893,635

Cost of sales
922,929

 
794,426

 
3,429,224

 
3,198,158

Gross profit
225,494

 
227,187

 
757,273

 
695,477

Selling, general and administrative
77,410

 
67,437

 
297,455

 
284,331

Research and development
37,956

 
33,061

 
166,614

 
117,206

Gain on sale of real estate

 

 
(108,109
)
 

Total operating expenses
115,366

 
100,498

 
355,960

 
401,537

Operating income
110,128

 
126,689

 
401,313

 
293,940

Interest expense
20,106

 
21,172

 
83,839

 
79,668

Interest expense, related party

 
1,242

 
1,715

 
4,969

Other (income) expense, net
861

 
(15,461
)
 
11,889

 
(5,854
)
Total other expense, net
20,967

 
6,953

 
97,443

 
78,783

Income before taxes
89,161

 
119,736

 
303,870

 
215,157

Income tax expense (benefit)
(12,782
)
 
18,534

 
38,982

 
47,853

Net income
101,943

 
101,202

 
264,888

 
167,304

Net income attributable to noncontrolling interests
(1,173
)
 
(939
)
 
(4,182
)
 
(3,114
)
Net income attributable to Amkor
$
100,770

 
$
100,263

 
$
260,706

 
$
164,190

 
 
 
 
 
 
 
 
Net income attributable to Amkor per common share:
 
 
 
 
 
 
 
Basic
$
0.42

 
$
0.42

 
$
1.09

 
$
0.69

Diluted
$
0.42

 
$
0.42

 
$
1.09

 
$
0.69

Shares used in computing per common share amounts:
 
 
 
 
 
 
 
Basic
239,128

 
238,190

 
238,937

 
237,416

Diluted
239,814

 
239,187

 
239,651

 
238,034





AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)

 
December 31,
 
2017
 
2016
 
(In thousands)
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
596,364

 
$
549,518

Restricted cash
2,000

 
2,000

Accounts receivable, net of allowances
692,287

 
563,107

Inventories
326,492

 
267,990

Other current assets
33,727

 
27,081

Total current assets
1,650,870

 
1,409,696

Property, plant and equipment, net
2,695,065

 
2,564,648

Goodwill
25,036

 
24,122

Restricted cash
4,487

 
3,977

Other assets
146,051

 
89,643

Total assets
$
4,521,509

 
$
4,092,086

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Short-term borrowings and current portion of long-term debt
$
123,848

 
$
35,192

Trade accounts payable
569,085

 
487,430

Capital expenditures payable
294,258

 
144,370

Accrued expenses
374,598

 
338,669

Total current liabilities
1,361,789

 
1,005,661

Long-term debt
1,240,581

 
1,364,638

Long-term debt, related party

 
75,000

Pension and severance obligations
182,216

 
166,701

Other non-current liabilities
46,144

 
76,682

Total liabilities
2,830,730

 
2,688,682

 
 
 
 
Amkor stockholders’ equity:
 
 
 
Preferred stock

 

Common stock
285

 
284

Additional paid-in capital
1,903,357

 
1,895,089

Accumulated deficit
(42,851
)
 
(303,557
)
Accumulated other comprehensive income (loss)
22,519

 
6,262

Treasury stock
(215,982
)
 
(214,490
)
Total Amkor stockholders’ equity
1,667,328

 
1,383,588

Noncontrolling interests in subsidiaries
23,451

 
19,816

Total equity
1,690,779

 
1,403,404

Total liabilities and equity
$
4,521,509

 
$
4,092,086





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


 
For the Year Ended
December 31,
 
2017
 
2016
 
(In thousands)
Cash flows from operating activities:
 
 
 
Net income
$
264,888

 
$
167,304

Depreciation and amortization
581,940

 
555,186

Gain on sale of real estate
(108,109
)
 

Proceeds from insurance recovery for property, plant and equipment

 
(15,166
)
Deferred income taxes
(42,998
)
 
(1,746
)
Other operating activities and non-cash items
424

 
8,902

Changes in assets and liabilities
(77,878
)
 
14,922

Net cash provided by operating activities
618,267

 
729,402

 
 
 
 
Cash flows from investing activities:
 
 
 
Payments for property, plant and equipment
(550,943
)
 
(650,038
)
Proceeds from sale of property, plant and equipment
141,530

 
45,635

Proceeds from insurance recovery for property, plant and equipment

 
15,166

Acquisition of business, net of cash acquired
(43,771
)
 

Other investing activities
(1,648
)
 
(190
)
Net cash used in investing activities
(454,832
)
 
(589,427
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Proceeds from revolving credit facilities
75,000

 
125,000

Payments of revolving credit facilities

 
(255,000
)
Proceeds from short-term debt
77,781

 
49,131

Payments of short-term debt
(70,236
)
 
(49,500
)
Proceeds from issuance of long-term debt
223,976

 
46,000

Payments of long-term debt
(405,269
)
 
(32,078
)
Payments of long-term debt, related party
(17,837
)
 

Payment of deferred consideration for purchase of facility
(3,890
)
 

Payments of capital lease obligations
(5,340
)
 
(2,543
)
Proceeds from issuance of stock through share-based compensation plans
3,124

 
8,247

Other financing activities
(2,195
)
 
(1,436
)
Net cash (used in) provided by financing activities
(124,886
)
 
(112,179
)
 
 
 
 
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash
8,807

 
351

 
 
 
 
Net increase in cash, cash equivalents and restricted cash
47,356

 
28,147

Cash, cash equivalents and restricted cash, beginning of period
555,495

 
527,348

Cash, cash equivalents and restricted cash, end of period
$
602,851

 
$
555,495





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 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:
the highly unpredictable nature, cyclicality, and rate of growth 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, the impact of changes in our market share and prices for our services with those customers and the business and financial condition of 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 or the interpretations thereof (including the impact of recent U.S. tax reform), changes in our organizational structure, changes in the jurisdictions in which our income is determined to be earned and taxed, the outcome of tax reviews, audits and 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;
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;
there can be no assurance regarding when our new K5 factory and research and development center 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;
economic effects of terrorist attacks, political instability, natural disasters and military conflict;
competition, competitive pricing and declines in average selling prices;
fluctuations in packaging and test manufacturing yields;
dependence on international operations and fluctuations in foreign currency exchange rates, particularly in Japan and Korea;




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, including regulatory efforts by foreign governments to support local competitors; 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, 2016 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.