Amkor Technology(AMKR) - 2022 Q4 - Annual Report

Revenue and Sales Performance - Net sales increased by $953.3 million (15.5$7,091.6 million in 2022 compared to $6,138.3 million in 2021, driven by higher sales of advanced products across all end markets[208] - Sales in the communications end market represented 61$7.091 billion, a 15.5% increase from $6.138 billion in 2021[291] - Direct sales to the two largest customers accounted for 20.6$1.329 billion, up 8.5% from $1.225 billion in 2021[291] - Operating income in 2022 grew 17.5$897.186 million compared to $763.433 million in 2021[291] - Net income attributable to Amkor for 2022 was$765.823 million, a 19.1% increase from $642.995 million in 2021[291] - Basic earnings per share for 2022 were$3.13, up from $2.64 in 2021[291] - Net income for 2022 was$767.04 million, an increase from $645.61 million in 2021 and$340.50 million in 2020[294] - Comprehensive income attributable to Amkor for 2022 was $762.54 million, compared to$635.70 million in 2021 and $346.29 million in 2020[294] - Net income attributable to Amkor common stockholders increased from$643.0 million in 2021 to $765.8 million in 2022[390] - Basic earnings per share increased from$2.64 in 2021 to $3.13 in 2022, while diluted earnings per share increased from$2.62 to $3.11[390] Capital Expenditures and Investments - Capital expenditures totaled$908.3 million (12.8% of net sales) in 2022, primarily focused on investments in advanced packaging and test equipment and a new manufacturing facility in Bac Ninh, Vietnam[209] - The Bac Ninh facility in Vietnam is expected to begin production in the fourth quarter of 2023, providing a cost-competitive high-volume manufacturing location with supply chain diversification[202] - Capital expenditures totaled $908.3 million in 2022, representing approximately 12.8$800 million in capital expenditures for 2023[241][242] - Payments for property, plant, and equipment in 2022 were $908,294, up from$779,779 in 2021[247] - Payments for property, plant and equipment in 2022 were $908,294 thousand, a 16.5$779,779 thousand in 2021[303] Cash Flow and Liquidity - Net cash provided by operating activities was $1,098.8 million in 2022, a decrease from$1,121.3 million in 2021, primarily due to changes in working capital and advanced payments[209] - The company paid total quarterly cash dividends of $55.1 million in 2022, with a 50$0.075 per share[210] - The company held $1.24 billion in cash and cash equivalents and short-term investments as of December 31, 2022, with$1.09 billion held offshore by foreign subsidiaries[229] - Operating cash flow decreased by $22.5 million to$1.10 billion in 2022 compared to $1.12 billion in 2021, primarily due to changes in working capital and advanced payments[244] - The company paid$55.1 million in total quarterly cash dividends in 2022 and anticipates continuing quarterly dividend payments in the future[239] - Free cash flow for 2022 was $193,610, a decrease from$344,777 in 2021, calculated as net cash from operating activities minus payments for property, plant, and equipment plus proceeds from asset sales[247] - Net cash provided by operating activities in 2022 was $1,098,756, slightly lower than$1,121,295 in 2021[247] - Cash flow used in investing activities increased by $63.3 million in 2022 compared to 2021, primarily due to higher payments for property, plant, and equipment and foreign exchange forward contracts[245] - Cash, cash equivalents and restricted cash at the end of 2022 were$962,406 thousand, a 15.7% increase from $831,521 thousand at the end of 2021[303] - Proceeds from issuance of long-term debt in 2022 were$366,386 thousand, a 3.6% increase from $353,587 thousand in 2021[303] - Cash paid for income taxes in 2022 was$97,333 thousand, a 305.3% increase from $24,011 thousand in 2021[305] Debt and Interest - Interest expense increased to$58.6 million in 2022, up 13.7% from $51.5 million in 2021, driven by higher finance lease obligations, increased average outstanding debt, and rising interest rates[221] - Interest income rose to$12.8 million in 2022, a significant increase from $1.1 million in 2021, primarily due to higher interest rates on available-for-sale debt investments[222] - The company had$1.23 billion in total debt as of December 31, 2022, with $143.8 million payable within 12 months and interest payment obligations of$219.6 million over the remaining term[233] - Total debt maturities for 2023 are $143.813 million, with fixed rate debt accounting for$133.771 million and variable rate debt for $10.042 million[270] - The average interest rate for fixed rate debt in 2023 is 1.3$89.9 million in 2022, up from $69.5 million in 2021, with an effective tax rate of 10.5$89.89 million, compared to $69.459 million in 2021[291] - The company recorded net deferred tax assets of$78.2 million and unrecognized tax benefits of $33.3 million as of December 31, 2022[284] - Deferred tax assets decreased from$285.9 million in 2021 to $277.9 million in 2022, with a valuation allowance of$101.9 million in 2022 compared to $122.4 million in 2021[376] - Net deferred tax assets increased from$72.6 million in 2021 to $78.2 million in 2022[376] - U.S. federal NOLs decreased from$21.4 million in 2021 to $13.0 million in 2022, with expiration dates between 2023-2024[380] - Foreign NOLs increased significantly from$155.3 million in 2021 to $240.7 million in 2022, with expiration dates between 2024-2036[380] - U.S. foreign tax credits decreased from$57.2 million in 2021 to $54.1 million in 2022, with expiration dates between 2026-2032[381] - Unrecognized tax benefits decreased by$4.0 million from $37.3 million in 2021 to$33.3 million in 2022, primarily due to settlements and the lapse of statutes of limitations[385] Research and Development - Research and development expenses decreased by $16.6 million (10.0$91.6 million remaining available for repurchases as of December 31, 2022[240] - Total stockholders' equity grew from $1.99 billion in 2019 to$3.70 billion in 2022[300] - Retained earnings increased from $234.1 million in 2019 to$1.87 billion in 2022[300] - Cash dividends declared per common share increased from $0.04 in 2020 to$0.225 in 2022[300] - Share-based compensation expenses were $8.0 million in 2020,$11.0 million in 2021, and $13.6 million in 2022[300] - Treasury stock cost decreased from$217.5 million in 2019 to $219.2 million in 2022[300] - Accumulated other comprehensive income (loss) fluctuated from$19.1 million in 2019 to $16.7 million in 2022[300] - Noncontrolling subsidiaries' interest in total equity increased from$26.5 million in 2019 to $30.9 million in 2022[300] Foreign Exchange and Hedging - Foreign currency appreciation of 10$133 million in 2022[264] - Approximately 90% of net sales in 2022 were denominated in U.S. dollars, with the remaining primarily in Japanese yen[264] - 55% of cost of sales and operating expenses in 2022 were denominated in U.S. dollars, with the rest in Asian currencies[264] - Foreign exchange rate translation resulted in a loss of $10.7 million in 2022, recognized in other comprehensive income[265] - The company uses natural hedging techniques and forward contracts to mitigate foreign currency risk[262] - A 10$11 million in 2022[263] Assets and Liabilities - Total assets increased to $6.82 billion in 2022 from$6.04 billion in 2021[297] - Current assets rose to $3.30 billion in 2022, up from$2.86 billion in 2021[297] - Cash and cash equivalents grew to $959.07 million in 2022 from$826.74 million in 2021[297] - Accounts receivable increased to $1.37 billion in 2022 from$1.26 billion in 2021[297] - Inventories rose to $629.58 million in 2022, up from$484.96 million in 2021[297] - Total liabilities were $3.12 billion in 2022, slightly up from$3.07 billion in 2021[297] - Retained earnings increased to $1.87 billion in 2022 from$1.16 billion in 2021[297] - Total equity grew to $3.70 billion in 2022 from$2.97 billion in 2021[297] - The combined book value of assets and liabilities associated with Philippine realty corporations was $17.2 million and$0.1 million, respectively, as of December 31, 2022[311] - Unbilled receivables as of December 31, 2022, were $301.7 million, up from$224.7 million in 2021[341] - Contract liabilities as of December 31, 2022, were $170.6 million, with$81.5 million classified as short-term[343] Share-Based Compensation - Share-based compensation for 2022 was $13.6 million, with deferred income tax benefits of$1.7 million[348] - The 2021 Equity Incentive Plan has 21.9 million shares available for grant as of December 31, 2022[351] - Stock options are generally granted with an exercise price equal to the market price at the grant date and vest over one to four years[352] - The company used the Black-Scholes option pricing model to calculate the fair value of stock options, with expected volatilities based on historical stock performance and a risk-free interest rate based on the U.S. Treasury yield curve[353] - As of December 31, 2022, the company had 2,376 thousand stock options outstanding with a weighted-average exercise price of $10.54 per share and a remaining contractual term of 5.86 years[355] - The total intrinsic value of options exercised during fiscal year 2022 was$8.0 million, compared to $17.7 million in 2021 and$8.2 million in 2020[358] - The company had $1.2 million in unrecognized compensation expense from stock options as of December 31, 2022, expected to be recognized over 0.9 years[358] - Restricted shares granted to non-employee directors vest over one year, while other restricted shares vest ratably over three years, with 8.33$15.38 per share[360] - The company had $1.3 million in unrecognized compensation expense from restricted shares as of December 31, 2022, expected to be recognized over 0.6 years[360] - The company granted 531 thousand RSUs in 2022, with a weighted-average grant date fair value of$22.29 per share[364] - The company had $6.4 million in unrecognized compensation expense from RSUs and PSUs as of December 31, 2022, expected to be recognized over 1.6 years[364] Investments and Fair Value - Total cash equivalents for 2022 amounted to$195.53 million, with $108.42 million classified as Level 1 and$87.11 million as Level 2[394] - Short-term investments for 2022 totaled $279.27 million, with$24.05 million classified as Level 1 and $253.54 million as Level 2[394] - Total fair value of cash equivalents and short-term investments for 2022 was$473.12 million, with $132.47 million in Level 1 and$340.66 million in Level 2[394] - Total cash equivalents for 2021 amounted to $284.17 million, with$273.25 million classified as Level 1 and $10.92 million as Level 2[396] - Short-term investments for 2021 totaled$247.26 million, with $15.03 million classified as Level 1 and$231.80 million as Level 2[396] - Total fair value of cash equivalents and short-term investments for 2021 was $531.00 million, with$288.29 million in Level 1 and $242.71 million in Level 2[396] - The company sold cash equivalent investments for proceeds of$29.6 million in 2022, $12.8 million in 2021, and$27.1 million in 2020, with no realized gain or loss[397] Depreciation and Amortization - Depreciation and amortization expenses in 2022 were $612,702 thousand, an 8.7$563,582 thousand in 2021[303] Other Financial Metrics - The company's foreign subsidiaries had $615.0 million available for future borrowings under revolving credit facilities as of December 31, 2022[232] - The company's income before taxes for 2022 was$856.9 million, with $775.4 million coming from foreign sources and$81.5 million from the United States[368] - Net income for 2020 was $340.5 million, with$338.1 million attributable to Amkor stockholders and $2.4 million to noncontrolling interests[300] - Net income for 2021 increased to$645.6 million, with $643.0 million attributable to Amkor stockholders and$2.6 million to noncontrolling interests[300] - Net income for 2022 further increased to $767.0 million, with$765.8 million attributable to Amkor stockholders and $1.2 million to noncontrolling interests[300] - Net cash provided by operating activities in 2022 was$1,098,756 thousand, a decrease of 2.0% compared to $1,121,295 thousand in 2021[303] - Net income for 2022 was$767,042 thousand, an increase of 18.8% from $645,607 thousand in 2021[303] - Share-based compensation in 2022 was$13,562 thousand, a 23.6% increase from $10,970 thousand in 2021[303] - Cash and cash equivalents are primarily maintained in U.S. and foreign bank accounts, money market funds, and commercial paper[321] - Restricted cash includes short-term cash equivalents for collateralizing daily banking services and non-current collateral for foreign trade compliance[322] - Short-term investments in fixed income securities are classified as available-for-sale debt investments, recorded at fair value[323] - Inventories are stated at the lower of cost and net realizable value, with costs determined by standard cost or weighted moving average methods[325]