AMKOR TECHNOLOGY, INC. - Quarter Report: 2020 March (Form 10-Q)

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

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

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(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.

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(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.

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

(1)

The cash equivalent money market funds (Level 1) at December 31, 2019 have been corrected to include $286.7 million of cash equivalents that were excluded in previously reported amounts. There was no change to total cash and cash equivalents reported on our consolidated balance sheet. We determined this was immaterial to the prior period but have presented the balance as revised for comparability.

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

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(1)

In October 2019, we renewed our revolving credit facility agreement with availability of $30.0 million. Interest is payable monthly in arrears (2.97% as of March 31, 2020). In March 2020, we borrowed $15.0 million with the principal due in September 2020. As of March 31, 2020, $15.0 million was available to be drawn. In April 2020, we borrowed the remaining $15.0 million with the principal due in October 2020.

(2)

In May 2015, we entered into a term loan agreement pursuant to which we may borrow up to $150.0 million for capital expenditures. Principal is payable at maturity in June 2020. Interest is payable quarterly in arrears, at a fund floating rate plus 1.60%. During the three months ended March 31, 2020, we repaid the full $24.0 million outstanding on this term loan using the proceeds from our term loan due December 2028.

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(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.

(6)

In July 2018, our subsidiary, Amkor Technology Singapore Holding Pte, Ltd., entered into a $250.0 million senior secured revolving credit facility, which is guaranteed by Amkor Technology, Inc. The availability for our revolving credit facility is based on the amount of eligible accounts receivable. Principal is payable at maturity. Interest is payable monthly at LIBOR plus 1.25% to 1.75% (2.85% as of March 31, 2020). As of March 31, 2020, $100.0 million was available to be drawn.

(7)

In December 2019, we entered into a $56.0 million revolving credit facility. Interest is payable monthly at TAIFX plus the applicable bank rate (3.41% as of March 31, 2020). In December 2019, we borrowed $20.0 million with the principal payable at maturity of the facility in December 2024. In the first quarter of 2020, we borrowed the remaining $36.0 million. In April 2020, we repaid $36.0 million of the revolving credit facility and immediately borrowed $36.0 million under the same agreement at a lower interest rate, with the principal payable in December 2024, based on incurring a certain level of qualified eligible transactions.

(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%.

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•	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.

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(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.

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(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.

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•	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;

•	our ability to achieve our major growth objectives, including transitioning second-wave customers to advanced packages and increasing our share of the automotive market;

•	changes in our capacity and capacity utilization rates;

•	changes in average selling prices which can occur quickly due to the absence of long-term agreements on price;

•	changes in the mix of the semiconductor packaging and test services that we sell;

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•	fluctuations in our manufacturing yields;

•	the development, transition and ramp to high volume manufacture of more advanced silicon nodes and evolving wafer, packaging and test technologies may cause production delays, lower manufacturing yields and supply constraints for new wafers and other materials;

•	absence of backlog, the short-term nature of our customers’ commitments, double bookings by customers and deterioration in customer forecasts and the impact of these factors, including the possible delay, rescheduling and cancellation of large orders, or the timing and volume of orders relative to our production capacity;

•	changes in costs, quality, availability and delivery times of raw materials, components and equipment;

•	changes in labor costs to perform our services;

•	wage inflation and fluctuations in commodity prices, including gold, copper and other precious metals;

•	the timing of expenditures in anticipation of future orders;

•	changes in effective tax rates;

•	the availability and cost of financing;

•	leverage and debt covenants;

•	intellectual property transactions and disputes;

•	warranty and product liability claims and the impact of quality excursions and customer disputes and returns;

•	costs associated with legal claims, indemnification obligations, judgments and settlements;

•	political instability and government shutdowns, civil disturbances or international events, such as the United Kingdom’s departure from the European Union;

•	environmental or natural disasters such as earthquakes, typhoons and volcanic eruptions;

•	pandemics or other illnesses that may impact our labor force, operations, liquidity, supply chain and end-user demand for products which incorporate semiconductors, such as the Covid-19 pandemic;

•	costs of acquisitions and divestitures and difficulties integrating acquisitions;

•	our ability to attract and retain qualified personnel to support our global operations;

•	fluctuations in interest rates and currency exchange rates, including the potential impact of the phase-out of LIBOR on our variable rate debt;

•	our ability to penetrate new end markets or expand our business in existing end markets;

•	dependence on key customers or concentration of customers in certain end markets, such as mobile communications and automotive; and

•	restructuring charges, asset write-offs and impairments.

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•	health and safety concerns, including widespread outbreak of infectious diseases, such as Covid-19;

•	changes in consumer demand resulting from deteriorating conditions in local economies;

•	laws, rules, regulations and policies imposed by U.S. or foreign governments in areas such as data privacy, cybersecurity, antitrust and competition, tax, currency and banking, labor, environmental;

•	restrictive trade barriers considered or adopted by U.S. and foreign governments applicable to the semiconductor supply chain, including laws, rules, regulations and policies in areas such as national security, licensing requirements for exports, tariffs, customs and duties;

•	laws, rules, regulations and policies within China and other countries that may favor domestic companies over non-domestic companies, including customer- or government-supported efforts to promote the development and growth of local competitors;

•	the payment of dividends and other payments by non-U.S. subsidiaries may be subject to prohibitions, limitations or taxes in local jurisdictions;

•	fluctuations in currency exchange rates, particularly the dollar/yen exchange rate for our operations in Japan;

•	political and social conditions, and the potential for civil unrest, terrorism or other hostilities;

•	disruptions or delays in shipments caused by customs brokers or government agencies;

•	difficulties in attracting and retaining qualified personnel and managing foreign operations, including foreign labor disruptions;

•	difficulty in enforcing contractual rights and protecting our intellectual property rights;

•	potentially adverse tax consequences resulting from tax laws in the U.S. and in foreign jurisdictions in which we operate; and

•	local business and cultural factors that differ from our normal standards and practices, including business practices that we are prohibited from engaging in by the Foreign Corrupt Practices Act and other anti-corruption laws and regulations.

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•	our future financial condition, results of operations and cash flows;

•	general market conditions for financing;

•	volatility in fixed income, credit and equity markets; and

•	economic, political and other global conditions.

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•	make it more difficult for us to satisfy our obligations with respect to our indebtedness, including our obligations under our indentures to purchase notes tendered as a result of a change in control of Amkor;

•	increase our vulnerability to general adverse economic and industry conditions;

•	limit our ability to fund future working capital, capital expenditures, research and development and other business opportunities, including joint ventures and acquisitions;

•	require us to dedicate a substantial portion of our cash flow from operations to service payments of interest and principal on our debt, thereby reducing the availability of our cash flow to fund future working capital, capital expenditures, research and development expenditures and other general corporate requirements;

•	increase the volatility of the price of our common stock;

•	limit our flexibility to react to changes in our business and the industry in which we operate;

•	place us at a competitive disadvantage to any of our competitors that have less debt;

•	limit, along with the financial and other covenants in our indebtedness, our ability to borrow additional funds;

•	limit our ability to refinance our existing indebtedness, particularly during periods of adverse credit market conditions when refinancing indebtedness may not be available under interest rates and other terms acceptable to us or at all; and

•	increase our cost of borrowing.

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•	delays in the design and implementation of the system;

•	costs may exceed our plans and expectations; and

•	disruptions resulting from the implementation, integration or cybersecurity breach of the systems may impact our ability to process transactions and delay shipments to customers, impact our results of operations or financial condition or harm our control environment.

•	increasing the scope, geographic diversity and complexity of our operations;

•	conforming an acquired company’s standards, practices, systems and controls with our operations;

•	increasing complexity from combining recent acquisitions of an acquired business;

•	unexpected losses of key employees or customers of an acquired business;

•	difficulties in the assimilation of acquired operations, technologies or products; and

•	diversion of management and other resources from other parts of our operations and adverse effects on existing business relationships with customers.

•	incur costs associated with personnel reductions and voluntary retirement programs;

•	record restructuring charges to cover costs associated with facility consolidations and related cost reduction initiatives;

•	use a significant portion of our available cash;

•	incur substantial debt;

•	issue equity securities, which may dilute the ownership of current stockholders;

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•	incur or assume known or unknown contingent liabilities; and

•	incur large, immediate accounting write offs and face antitrust or other regulatory inquiries or actions.

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•	discontinue the use of certain processes or cease to provide the services at issue, which could curtail our business;

•	pay substantial damages;

•	develop non-infringing technologies, which may not be feasible; or

•	acquire licenses to such technology, which may not be available on commercially reasonable terms or at all.

•	contaminants in the manufacturing environment;

•	human error;

•	equipment malfunction;

•	changing processes to address environmental requirements;

•	defective raw materials; or

•	defective plating services.

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(a)	Represents shares of common stock surrendered to us to satisfy tax withholding obligations associated with the vesting of restricted shares issued to employees.

(b)

Our Board of Directors previously authorized the repurchase of up to $300.0 million of our common stock, $150.0 million was approved in August 2011 and $150.0 million was approved in February 2012, exclusive of any fees, commissions or other expenses. For the three months ended March 31, 2020, we made no common stock purchases, and at March 31, 2020, approximately $91.6 million was available pursuant to the stock repurchase program.

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