Amkor Technology, Inc 10-Q for FY2020 Q1

Amkor Technology, Inc. (AMKR)

10-Q 2020-04-30 For: 2020-03-31

Added on April 10, 2026

About this 10-Q

Amkor Technology, Inc filed this 10-Q on April 30, 2020, covering the quarter ended March 31, 2020 (FY2020 Q1).

Headline figures

Quarter ended March 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.15B; up 28.8% from $894.96M a year earlier
Net income: $63.89M; compared with a net loss of $22.88M a year earlier
Diluted EPS: $0.26; compared with -$0.10 a year earlier

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☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Quarterly Period Ended	March 31, 2020
or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to



Delaware				23-1722724
(State of incorporation)				(I.R.S. Employer Identification Number)



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



Large accelerated filer	☑	Accelerated filer	☐	Non-accelerated filer	☐	Smaller reporting company	☐	Emerging growth company	☐



		Page
PART I. Financial Information
Item 1.	Financial Statements (unaudited)	2
	Consolidated Statements of Income - Three Months Ended March 31, 2020 and 2019	2
	Consolidated Statements of Comprehensive Income - Three Months Ended March 31, 2020 and 2019	3
	Consolidated Balance Sheets - March 31, 2020 and December 31, 2019	4
	Consolidated Statements of Stockholders’ Equity — Three Months Ended March 31, 2020 and 2019	5
	Condensed Consolidated Statements of Cash Flows - Three Months Ended March 31, 2020 and 2019	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	27

PART II. Other Information
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 3.	Defaults Upon Senior Securities	45
Item 4.	Mine Safety Disclosures	45
Item 5.	Other Information	45
Item 6.	Exhibits	46
Signatures		47



	For the Three Months Ended March 31,
	2020			2019
	(In thousands, except per share data)
Net sales	$	1,152,616		$	894,964
Cost of sales	963,708			774,203
Gross profit	188,908			120,761
Selling, general and administrative	72,582			71,587
Research and development	32,253			35,754
Total operating expenses	104,835			107,341
Operating income	84,073			13,420
Interest expense	17,045			19,273
Other (income) expense, net	(2,315		)	(4,565		)
Total other expense, net	14,730			14,708
Income (loss) before taxes	69,343			(1,288		)
Income tax expense	4,846			21,380
Net income (loss)	64,497			(22,668		)
Net income attributable to non-controlling interests	(608		)	(211		)
Net income (loss) attributable to Amkor	$	63,889		$	(22,879	)

Net income (loss) attributable to Amkor per common share:
Basic	$	0.27		$	(0.10	)
Diluted	$	0.26		$	(0.10	)

Shares used in computing per common share amounts:
Basic	240,919			239,414
Diluted	241,333			239,414



	March 31, 2020			December 31, 2019
	(In thousands, except per share data)
ASSETS
Current assets:
Cash and cash equivalents	$	941,447		$	894,948
Restricted cash	610			610
Short-term investments (amortized cost of $58,139 in 2020)	58,263			6,348
Accounts receivable, net of allowances	880,629			850,753
Inventories	238,201			220,602
Other current assets	34,553			28,272
Total current assets	2,153,703			2,001,533
Property, plant and equipment, net	2,367,746			2,404,850
Operating lease right of use assets	147,985			148,549
Goodwill	26,235			25,976
Restricted cash	3,267			2,974
Other assets	112,701			111,733
Total assets	$	4,811,637		$	4,695,615
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt	$	141,521		$	144,479
Trade accounts payable	562,633			571,054
Capital expenditures payable	107,131			77,044
Accrued expenses	236,464			267,226
Total current liabilities	1,047,749			1,059,803
Long-term debt	1,371,501			1,305,755
Pension and severance obligations	178,084			176,971
Long-term operating lease liabilities	89,733			91,107
Other non-current liabilities	65,945			71,740
Total liabilities	2,753,012			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; 287,093 and 286,877 shares issued; and 241,016 and 240,805 shares outstanding in 2020 and 2019, respectively	287			287
Additional paid-in capital	1,931,088			1,927,739
Retained earnings	297,966			234,077
Accumulated other comprehensive income (loss)	19,709			19,115
Treasury stock, at cost, 46,077 and 46,072 shares, in 2020 and 2019, respectively	(217,533		)	(217,479		)
Total Amkor stockholders’ equity	2,031,517			1,963,739
Non-controlling interests in subsidiaries	27,108			26,500
Total equity	2,058,625			1,990,239
Total liabilities and equity	$	4,811,637		$	4,695,615



				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 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)	—	—		—		63,889			—			—		—			63,889			608		64,497
Other comprehensive income (loss)	—	—		—		—			594			—		—			594			—		594
Treasury stock acquired through surrender of shares for tax withholding	—	—		—		—			—			(5	)	(54		)	(54		)	—		(54		)
Issuance of stock through share-based compensation plans	216	—		1,519		—			—			—		—			1,519			—		1,519
Share-based compensation	—	—		1,830		—			—			—		—			1,830			—		1,830
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

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)	—	—		—		(22,879		)	—			—		—			(22,879		)	211		(22,668		)
Other comprehensive income (loss)	—	—		—		—			(2,356		)	—		—			(2,356		)			(2,356		)
Treasury stock acquired through surrender of shares for tax withholding	—	—		—		—			—			(5	)	(48		)	(48		)	—		(48		)
Issuance of stock through share-based compensation plans	78	—		286		—			—			—		—			286			—		286
Share-based compensation	—	—		1,468		—			—			—		—			1,468			—		1,468
Balance, 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


(1)	Advanced products include flip chip and wafer-level processing and related test services.


(2)	Mainstream products include wirebond packaging and related test services.



	Unrealized Gains (Losses) on Available-for-Sale Debt Investments		Defined Benefit Pension (1)			Foreign Currency Translation		Total
			(In thousands)
Accumulated other comprehensive income (loss) at December 31, 2019	$	—	$	(4,820	)	$	23,935	$	19,115
Other comprehensive income (loss) before reclassifications	108		—			475		583
Amounts reclassified from accumulated other comprehensive income (loss)	—		11			—		11
Other comprehensive income (loss)	108		11			475		594
Accumulated other comprehensive income (loss) at March 31, 2020	$	108	$	(4,809	)	$	24,410	$	19,709


(1)	Amounts reclassified out of accumulated other comprehensive income (loss) are included as a component of net periodic pension cost (Note 12) or other (income) expense, net.



	March 31, 2020
										Fair Value Level
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses (1)			Total Fair Value		Level 1		Level 2
	(In thousands)
Cash equivalents	$	351,965	$	16	$	(11	)	$	351,970	$	314,676	$	37,294
Short-term investments:
Asset-backed securities	6,064		19		(5		)	6,078		—		6,078
Commercial paper	1,986		—		—			1,986		—		1,986
Corporate bonds	25,297		111		(42		)	25,366		—		25,366
Municipal bonds	2,762		7		—			2,769		—		2,769
U.S. government agency bonds	7,482		12		(1		)	7,493		—		7,493
U.S. government bonds	13,991		23		—			14,014		14,014		—
Variable rate demand notes	557		—		—			557		—		557
Total (2) (3)	$	410,104	$	188	$	(59	)	$	410,233	$	328,690	$	81,543


(1)	All unrealized losses have been in a continuous loss position for less than 12 months. We do not intend to sell the investments in an unrealized loss position, and it is not more likely than not that we will be required to sell these investments before recovery of their amortized cost bases.


(2)	We have available-for-sale debt investments of $6.1 million with contractual maturities from 1 year to 5 years. Expected maturities can differ from contractual maturities because the issuers may have the right to call or prepay obligations without call or prepayment penalties, and we view our available-for-sale debt investments as available for current operations.



	For the Three Months Ended March 31,
	2020			2019
	(In thousands)
Cash flows from operating activities:
Net income (loss)	$	64,497		$	(22,668	)
Depreciation and amortization	123,657			135,835
Other operating activities and non-cash items	8,287			15,928
Changes in assets and liabilities	(99,852		)	(77,038		)
Net cash provided by operating activities	96,589			52,057
Cash flows from investing activities:
Payments for property, plant and equipment	(55,888		)	(203,216		)
Proceeds from sale of property, plant and equipment	1,887			180
Proceeds from insurance recovery for property, plant and equipment	—			1,538
Payments for short-term investments	(55,754		)	—
Other investing activities	5,163			(569		)
Net cash used in investing activities	(104,592		)	(202,067		)
Cash flows from financing activities:
Proceeds from revolving credit facilities	201,000			—
Proceeds from short-term debt	14,086			29,781
Payments of short-term debt	(9,409		)	(10,588		)
Proceeds from issuance of long-term debt	24,000			572,375
Payments of long-term debt	(172,336		)	(63,636		)
Payments of finance lease obligations	(2,355		)	(1,376		)
Other financing activities	109			(2,848		)
Net cash provided by financing activities	55,095			523,708
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash	(300		)	(829		)
Net increase in cash, cash equivalents and restricted cash	46,792			372,869
Cash, cash equivalents and restricted cash, beginning of period	898,532			688,051
Cash, cash equivalents and restricted cash, end of period	$	945,324		$	1,060,920
Non-cash investing and financing activities:
Property, plant and equipment included in capital expenditures payable	$	107,344		$	124,547



	For the Three Months Ended March 31,
	2020		2019
Communications (handheld devices, smartphones, tablets)	38	%	38	%
Consumer (connected home, set-top boxes, televisions, visual imaging, wearables)	24	%	14	%
Automotive, industrial and other (driver assist, infotainment, performance, safety)	23	%	28	%
Computing (datacenter, infrastructure, PC/laptop, storage)	15	%	20	%
Total net sales	100	%	100	%


(2)	The fair market value of the security is $6.3 million. The carrying value of the security represents the amortized cost.



	March 31, 2020			December 31, 2019
	(In thousands)
Land	$	220,076		$	219,785
Buildings and improvements	1,575,352			1,571,653
Machinery and equipment	5,335,424			5,303,729
Finance lease assets	34,401			34,158
Software and computer equipment	222,459			220,264
Furniture, fixtures and other equipment	19,844			19,740
Construction in progress	24,618			12,593
Total property, plant and equipment	7,432,174			7,381,922
Accumulated depreciation and amortization	(5,064,428		)	(4,977,072		)
Total property, plant and equipment, net	$	2,367,746		$	2,404,850


(3)	In April 2020, we increased our available-for-sale debt investments by $130.0 million.



	December 31, 2019
	(In thousands)
Cash equivalent money market funds (Level 1) (1)	$	384,474
Short-term investment government bond (Level 2) (2)	6,348


(3)	In July 2019, we entered into a $140.0 million term loan due September 2022. Principal is payable at maturity and interest is payable quarterly in arrears (3.59% as of March 31, 2020). As of March 31, 2020, $80.0 million was available to be drawn. In April 2020, we borrowed an additional $40.0 million.


(4)	In January 2020, we used proceeds from our term loan due December 2024 to repay $120.0 million of our term loan due December 2023.


(5)	We entered into various short-term term loans which mature semiannually. Principal and interest are payable in monthly installments. Interest as of March 31, 2020 is at TIBOR plus 0.10% to 0.20% (weighted average of 0.21% as of March 31, 2020). As of March 31, 2020, $6.5 million was available to be drawn.


(8)	In April 2020, we entered into a term loan agreement pursuant to which we may borrow up to KRW ₩150.0 billion (approximately US $123 million). Principal is payable at maturity and the variable interest is payable monthly. We immediately borrowed $123.0 million at an interest rate of 2.87%.


•	Level 1: using quoted market prices in active markets for identical assets.


•	Level 2: using quoted market prices for similar instruments or non-binding market prices that are corroborated by observable market data. We use inputs such as actual trade data, benchmark yields, broker/dealer quotes, and other similar data, which are obtained from quoted market prices, and independent pricing vendors to determine the fair value of these assets and liabilities.



	March 31, 2020				December 31, 2019
	Fair Value		Carrying Value		Fair Value		Carrying Value
	(In thousands)
Senior notes (Level 1)	$	488,701	$	519,355	$	576,875	$	519,211
Revolving credit facilities and term loans (Level 2)	980,901		993,667		940,756		931,023
Total debt	$	1,469,602	$	1,513,022	$	1,517,631	$	1,450,234



	Facility Costs (1)			Employee Separation Costs			Other Exit Costs (2)			Total
							(In thousands)
Accrual at December 31, 2019	$	2,196		$	271		$	174		$	2,641
Charges	1,310			30			579			1,919
Cash Payments	(2,482		)	(300		)	(660		)	(3,442		)
Non-cash Amounts	(12		)	(1		)	(2		)	(15		)
Accrual at March 31, 2020	$	1,012		$	—		$	91		$	1,103

Total cumulative charges incurred to date	$	5,809		$	2,740		$	1,325		$	9,874
Estimated additional charges to be incurred	$	11,000		$	5,000		$	3,000		$	19,000


(1)	Facility costs primarily consist of equipment relocation costs directly resulting from the restructuring actions.


(2)	Other exit costs primarily consist of employee relocation and training costs directly resulting from the restructuring actions.



			Payments Due for Year Ending March 31,
	Total		2020 - Remaining		2021		2022		2023		2024		Thereafter
	(In thousands)
Total debt	$	1,522,833	$	113,392	$	114,516	$	264,509	$	332,126	$	121,861	$	576,429
Scheduled interest payment obligations (1)	340,721		35,495		56,837		52,976		46,487		39,709		109,217
Purchase obligations (2)	237,804		225,871		3,488		3,150		1,983		1,251		2,061
Operating lease obligations (3)	146,956		36,097		40,032		24,231		12,043		9,986		24,567
Finance lease obligations (3)	23,516		7,533		9,076		2,130		971		965		2,841
Severance obligations (4)	120,837		8,394		9,946		9,074		8,263		7,512		77,648
Total contractual obligations	$	2,392,667	$	426,782	$	233,895	$	356,070	$	401,873	$	181,284	$	792,763


(1)	Represents interest payment obligations calculated using stated coupon rates for fixed rate debt and interest rates applicable at March 31, 2020, for variable rate debt.


(2)	Represents off-balance sheet purchase obligations for capital expenditures, long-term supply contracts and other contractual commitments outstanding at March 31, 2020.


(3)	Represents future minimum lease payments including interest payments.


(4)	Represents estimated benefit payments for our Korean subsidiary severance plan.


•	$68.2 million of foreign pension plan obligations, for which the timing and actual amount of impact on our future cash flow is uncertain.


•	$22.6 million net liability associated with unrecognized tax benefits. Due to the uncertainty regarding the amount and the timing of any future cash outflows associated with our unrecognized tax benefits, we are unable to reasonably estimate the amount and period of ultimate settlement, if any, with the various taxing authorities.


•	fluctuation in demand for semiconductors and conditions in the semiconductor industry generally, as well as by specific customers, such as inventory reductions by our customers impacting demand in key markets;