Acquisitions and Divestiture

12 Months Ended

Dec. 31, 2016

Business Combinations [Abstract]

Acquisitions and Divestiture

Acquisition and Divestiture

Step-acquisition of J-Devices

On December 30, 2015, through the exercise of additional options, we increased our ownership interest in J-Devices from 65.7% to 100% for a purchase price of $105.4 million. As a result, our accounting for J-Devices changed from the equity method to the consolidation method effective December 30, 2015. The operating results of J-Devices were consolidated beginning in 2016. The acquisition of the remaining interest expands our presence in Japan and our business worldwide by capitalizing on our leadership position in the automotive market. Since there were no material transactions from December 30, 2015 to December 31, 2015, and for the convenience of reporting the acquisition for accounting purposes, December 31, 2015 was designated as the acquisition date.

During the three months ended June 30, 2016, we updated the purchase price allocation of J-Devices for a previously unrecognized tax provision liability at J-Devices of $11.6 million. We also revised the loss from the release of accumulated foreign currency translation adjustments, the combined net loss and the pro forma information disclosed below. See Note 1 and Note 19 for additional information.

The following table presents the initial purchase price allocation and subsequent adjustments to the consideration transferred to acquire J-Devices and the amounts of identifiable assets acquired and liabilities assumed at the acquisition date:

	Initial Allocation			Adjustments			Revised Allocation
	(In thousands)
Fair value of consideration transferred:
Cash	$	105,391		$	—		$	105,391
Fair value of our previously held equity interest in J-Devices	167,684			(7,597		)	160,087
Total	$	273,075		$	(7,597	)	$	265,478
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash	$	127,968		$	—		$	127,968
Accounts receivable	180,177			—			180,177
Inventory	42,502			—			42,502
Other current assets	2,363			—			2,363
Property, plant and equipment	230,319			—			230,319
Other assets	9,268			—			9,268
Short-term borrowings and current portion of long-term debt	(36,770		)	—			(36,770		)
Other current liabilities	(251,405		)	—			(251,405		)
Long-term debt	(18,885		)	—			(18,885		)
Pension obligations	(22,250		)	—			(22,250		)
Other non-current liabilities	(9,655		)	(11,563		)	(21,218		)
Total identifiable net assets	253,632			(11,563		)	242,069
Goodwill	19,443			3,966			23,409
Total	$	273,075		$	(7,597	)	$	265,478

The goodwill is attributable to the workforce of J-Devices, as well as cost savings and synergies expected from combining the operations of J-Devices. It is not deductible for tax purposes.

As a result of obtaining control over J-Devices, our previously held equity interest of 65.7% was remeasured to fair value, resulting in a gain of $16.1 million. Additionally, our previously held equity interest in J-Devices' accumulated foreign currency translation adjustments was released upon consolidation of J-Devices, resulting in a loss of $29.6 million (Note 15). The combined net loss of $13.5 million was recognized in other (income) expense, net (Note 5) in our Consolidated Financial Statements.

The fair value of our previously held equity interest in J-Devices was estimated by applying an income approach using the discounted cash flow method. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 fair value measurement. Key assumptions include our estimates of J-Devices’ financial projections, a terminal value based on its expected long-term growth rate and a discount rate based on the weighted-average cost of capital of comparable companies.

The following unaudited pro forma consolidated results of operations have been prepared as if the acquisition of J-Devices had occurred on January 1, 2014. The pro forma results include adjustments related to alignment to our accounting policies, the effect of fair value adjustments on property, plant and equipment and the related income tax effect. We also eliminated inter-company activity between the parties in the consolidated results. The pro forma results include the activities that are nonrecurring and not representative of future activities, including the gain of $16.2 million from reversal of a deferred tax asset valuation allowance and the gain of $12.6 million from release of accumulated foreign currency translation adjustments associated with merging our subsidiary into J-Devices in 2014, offset by the loss on acquisition of J-Devices of $13.5 million in 2014.

This pro forma data is presented for informational purposes only and does not purport to be indicative of the results of future operations or of the results that would have occurred had the 2015 acquisition taken place on January 1, 2014. The pro forma information does not include any potential revenue enhancements, cost synergies or other operating efficiencies that could result from the acquisition.

	For the Year Ended December 31,
	2015		2014
	(unaudited)		(unaudited)
	(In thousands, except per share data)
Net sales	$	3,696,495	$	4,051,076
Net income	88,190		153,049
Net income attributable to Amkor	85,394		149,548
Basic earnings per share	0.36		0.65
Diluted earnings per share	0.36		0.63

Sale of Subsidiary to J-Devices

On June 30, 2014, we sold 100% of the shares of our wholly-owned subsidiary engaged in semiconductor packaging and test operations in Japan to J-Devices (our previously held equity method investee) for ¥1.1 billion. We received ¥0.1 billion ($1.0 million) in cash from J-Devices at closing and received the remaining ¥1.0 billion ($8.4 million) on June 30, 2015. We recognized a net gain on the sale of $9.2 million in our Consolidated Financial Statements in other (income) expense, net, which includes a gain of $12.6 million from the release of accumulated foreign currency translation adjustments associated with the entity (Note 15). J-Devices recognized a gain of $14.7 million on the transaction in its Consolidated Financial Statements as the fair value of the net assets acquired exceeded the purchase price. The gain recognized by J-Devices increased our equity in earnings of J-Devices by $8.8 million. The combined net gain we recognized was $18.0 million.