<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE FISCAL YEAR COMMISSION FILE
ENDED DECEMBER 31, 1998 NUMBER 000-29472
AMKOR TECHNOLOGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 23-1722724
(State of incorporation) (I.R.S. Employer Identification Number)
1345 ENTERPRISE DRIVE
WEST CHESTER, PA 19380
(610) 431-9600
(Address of principal executive offices and zip code)
Securities registered pursuant to Section 12(b) of the Act: None
Common Stock, $0.001 par value, traded on the Nasdaq National Market
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value
5 3/4% Convertible Subordinated Notes due 2003
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No __
---
Check if there is no disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. X
---
The aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the average bid and asked prices
of such stock, was approximately $397,010,688 as of March 16, 1999.
The number of shares outstanding of each of issuer's classes of common
equity, as of March 16, 1999, was 117,860,000 shares of Common Stock, $0.001 par
value.
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TABLE OF CONTENTS
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PAGE
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<S> <C>
PART III................................................................................1
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS; COMPLIANCE WITH SECTION 16(A) OF THE
EXCHANGE ACT...............................................................1
ITEM 11. EXECUTIVE COMPENSATION.....................................................3
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.............6
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............................8
</TABLE>
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS; COMPLIANCE WITH SECTION 16(A) OF THE
EXCHANGE ACT.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the names and the ages as of February 1,
1999 of our directors and executive officers:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
James J. Kim.............................. 63 Chief Executive Officer and Chairman
John N. Boruch............................ 56 President and Director
Frank J. Marcucci......................... 63 Executive Vice President
and Chief Financial Officer
Eric R. Larson............................ 43 Executive Vice President, Wafer Fab
Michael D. O'Brien........................ 66 Executive Vice President, Operations
Winston J. Churchill(1)................... 58 Director
Robert E. Denham(2)....................... 53 Director
Thomas D. George(1)....................... 58 Director
Gregory K. Hinckley(2).................... 52 Director
John B. Neff.............................. 67 Director
</TABLE>
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(1) Member of Compensation Committee.
(2) Member of Audit Committee.
JAMES J. KIM. James Kim has served as our Chief Executive Officer and
Chairman since September 1997. Mr. Kim founded our predecessor in 1968 and
served as its Chairman from 1970 to April 1988. He has also served as the
Chairman of Anam group of companies and a director of ASI since 1992. Mr. Kim is
a director of CFM Technologies, Inc. Mr. Kim is Chairman of The Electronics
Boutique, Inc., an electronics retail chain.
JOHN N. BORUCH. John Boruch has served as our President and a director
since September 1997 and our Chief Operating Officer since February 1999. Mr.
Boruch has served as President of Amkor Electronics, Inc., our predecessor, from
February 1992 through April 1998. From 1991 to 1992, he served as our
predecessor's Corporate Vice President in charge of Sales. Mr. Boruch joined us
in 1984. Mr. Boruch earned a B.A. in Economics from Cornell University.
FRANK J. MARCUCCI. Frank Marcucci has served as our Chief Financial
Officer since September 1997 and as Executive Vice President since February
1999. Mr. Marcucci served as the Chief Financial Officer of our predecessor from
1980 through April 1998. Mr. Marcucci is a certified public accountant. Mr.
Marcucci earned a B.S. in Business Administration from Duquesne University and
an M.B.A. from the University of Pittsburgh.
ERIC R. LARSON. Eric Larson served as Vice President of our wafer
fabrication business from September 1997 to February 1998 and has served as
Executive Vice President, Wafer Fab since February 1999. Mr. Larson served as
President of the wafer fabrication division of our predecessor from December
1996 to April 1998. From 1979 to 1996, he worked for Hewlett-Packard Company in
various management capacities, most recently as Worldwide Marketing Manager for
disk products. In addition, Mr. Larson was the worldwide Manager for Sales and
Marketing of the IC (integrated circuit) Business Division of Hewlett-Packard
Company from July 1985 to May 1993. Mr. Larson earned a B.A. in Political
Science from Colorado State University and an M.B.A. from the University of
Denver.
MICHAEL D. O'BRIEN. Michael O'Brien served as our Vice President of
Packaging and Testing Operations from September 1997 to February 1999 and has
served as Executive Vice President, Operations since February 1999. Mr. O'Brien
served as Corporate Vice President of our predecessor from 1990 through April
1998. Mr. O'Brien joined our predecessor in 1988. Mr. O'Brien earned a B.S. in
Engineering from Texas A&M University.
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WINSTON J. CHURCHILL. Winston Churchill has been a director of our
company since July 1998. Mr. Churchill is a managing general partner of SCP
Private Equity Partners, L.P., a private equity fund sponsored by Safeguard
Scientifics, Inc. He is also chairman of Churchill Investment Partners, Inc. and
CIP Capital Management, Inc. From 1984 to 1989, Mr. Churchill was a general
partner and a managing partner of a private investment firm. From 1967 to 1983,
he practiced law at the Philadelphia law firm of Saul, Ewing, Remick & Saul
where he served as Chairman of the Banking and Financial Institutions
Department, Chairman of the Finance Committee and a member of the Executive
Committee. Mr. Churchill is chairman of the board of Central Sprinkler
Corporation and a member of the board of Griffin Land & Nurseries, Inc. From
1989 to 1993, he served as Chairman of the Finance Committee of the Pennsylvania
Public School Employees' Retirement System. Mr. Churchill is also a member of
the Executive Committee of the Council of Institutional Investors.
ROBERT E. DENHAM. Robert Denham has been a director of our company since
July 1998. He is a partner in the law firm of Munger, Tolles & Olson, LLP,
having rejoined that firm in 1998 after serving as the Chairman and Chief
Executive Officer of Salomon Inc., an investment bank, from June 1992 to
December 1997. Mr. Denham joined Salomon Inc. in August 1991 as General Counsel
of Salomon Inc. and its subsidiary, Salomon Brothers. Prior to joining Salomon
Inc., Mr. Denham worked for twenty years at the law firm of Munger, Tolles &
Olson, LLP. Mr. Denham is a director of U.S. Trust Corporation. Mr. Denham
served as a U.S. Representative to the APEC Business Advisory Council, after
being appointed to that position by President Clinton.
THOMAS D. GEORGE. Thomas George has been a director of our company since
November 1997. Mr. George was Executive Vice President, and President and
General Manager, Semiconductor Products Sector ("SPS") of Motorola, Inc., from
April 1993 to May 1997. Prior to that, he held several positions with Motorola,
Inc., including Executive Vice President and Assistant General Manager, SPS,
from November 1992 to April 1993 and Senior Vice President and Assistant General
Manager, SPS, from July 1986 to November 1992. Mr. George is currently retired.
GREGORY K. HINCKLEY. Gregory Hinckley has been a director of our company
since November 1997. Mr. Hinckley has served as Executive Vice President, Chief
Operating Officer and Chief Financial Officer of Mentor Graphics Corporation, a
software company, since January 1997. From November 1995 until January 1997, he
held the position of Senior Vice President with VLSI Technology, Inc., a
manufacturer of complex integrated circuits. From August 1992 until December
1996, Mr. Hinckley held the position of Vice President, Finance and Chief
Financial Officer with VLSI Technology, Inc. From December 1991 until August
1992, he was an independent consultant. Mr. Hinckley is also a director of OEC
Medical Systems, Inc., a manufacturer of medical imaging equipment.
JOHN B. NEFF. John Neff has been a director of our company since January
1999. Mr. Neff was portfolio manager for Windsor Fund and Gemini II mutual fund
from 1964 until his retirement in 1995. He was also Senior Vice President and
Managing Partner of Wellington Management, one of the largest investment
management firms in the United States. From 1996 to 1998, Mr. Neff was a
director with Chrysler Corporation. He is a trustee and member of the executive
committee at the University of Pennsylvania and a trustee and chairman of the
Investment Committee of Case Western Reserve University. He is also a member of
the board of Governors of the Association for Investment Management and
Research.
BOARD MEETINGS AND COMMITTEES
The Company's Board meets approximately five times a year in regularly
scheduled meetings, but will meet more often if necessary. The Board held five
meetings and acted by unanimous written consent on 6 occasions during 1998 and
all of the directors attended at least 75% of the Board meetings and Committee
meetings of which they were members.
The full Board considers all major decisions of the Company. However, the
Board has established the following two standing committees, each of which is
chaired by an outside director:
COMPENSATION COMMITTEE
The Compensation Committee is presently comprised of Messrs. George and
Churchill. The Compensation Committee: (1) reviews and approves annual salaries,
bonuses, and grants of stock options pursuant to our 1998 Stock Plan and (2)
reviews and approves the terms and conditions of all employee benefit plans or
changes to these plans. During 1998, the Committee did not meet apart from
regular meetings with the entire Board.
THE AUDIT COMMITTEE
The Audit Committee is comprised of Messrs. Denham and Hinckley. The Audit
Committee: (1) recommends to the Board of Directors the annual appointment of
our independent auditors, (2) discusses and reviews in advance the scope and the
fees of the annual audit, (3) reviews the results of the audit without
independent auditors, (4) reviews and approves non-audit services of the
independent auditors, (5) reviews compliance with our existing major accounting
and financial reporting policies, (6) reviews the adequacy of our financial
organization and (7) reviews management's procedures and policies relating to
the adequacy of our internal accounting controls and compliance with applicable
laws relating to accounting practices. The Committee did not meet apart from
regular meetings with the entire Board during 1998.
The Board currently has no nominating committee or committee performing a
similar function.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and Directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership on Form 3 and changes in ownership on Form 4 or 5 with the Securities
and Exchange Commission (the "SEC") and the National Association of Securities
Dealers, Inc. Such officers, Directors and ten-percent stockholders are also
required by SEC rules to furnish the Company with copies of all forms that they
file pursuant to Section 16(a). Based solely on its review of the copies of such
forms received by it, or written representations from certain reporting persons
that no other reports were required for such persons, the Company believes that
all Section 16(a) filing requirements applicable to its officers, Directors and
ten-percent stockholders were complied with in a timely fashion.
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ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation. The following table sets forth compensation earned
during 1998 and 1997 by our Chief Executive Officer and the four other most
highly-compensated executive officers whose total salary and bonus during such
years exceeded $100,000 (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION
COMPENSATION ---------------------
-------------------- SECURITIES ALL OTHER
NAME YEAR SALARY BONUS(1) UNDERLYING OPTIONS(2) COMPENSATION(3)
---- ---- -------- -------- --------------------- ---------------
<S> <C> <C> <C> <C> <C>
James J. Kim..................................... 1998 $779,000 $500,000 -- $ 12,000(4)
Chief Executive Officer and Chairman 1997 $500,000 $500,000 -- $ 15,195(5)
John N. Boruch................................... 1998 $500,000 $446,200 447,735 $170,000(6)
Chief Operating Officer and President 1997 $400,000 $413,800 -- $ 18,000(7)
Frank J. Marcucci................................ 1998 $265,400 $291,840 157,735 $ 12,000(8)
Executive Vice President and Chief Financial
Officer 1997 $245,000 $273,765 -- $251,000(9)
Eric R. Larson................................... 1998 $250,300 $148,000 90,000 $ 6,000
Executive Vice President, Wafer Fab 1997 $220,000 $100,000 -- --
Michael D. O'Brien............................... 1998 $259,400 $173,285 119,028 $ 6,000
Executive Vice President, Operations 1997 $240,000 $173,280 -- $ 6,000
</TABLE>
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(1) Bonus amounts includes amounts earned in the year indicated but that
were approved by our Board of Directors and paid in the following year.
(2) At the time of our initial public offering on April 30, 1998, Messrs.
Boruch, Marcucci, Larson and O'Brien received option grants of 400,000
shares, 110,000 shares, 90,000 shares and 90,000 shares, respectively,
of common stock under our 1998 Stock Plan, in each case with an exercise
price per share equal to $11.00 per share, the initial public offering
price per share. On November 9, 1998, under the 1998 Stock Plan, Messrs.
Boruch and Marcucci received a subsequent option grant of 47,735 shares
of our common stock, and Mr. O'Brien received a subsequent option grant
of 29,028 shares of our common stock.
(3) All other compensation includes amounts paid to each executive's 401(k)
plan.
(4) All other compensation for Mr. Kim in 1998 includes a $6,000 premium
paid by us for a term life insurance policy, of which Mr. Kim's children
are the beneficiaries.
(5) All other compensation for Mr. Kim in 1997 includes an aggregate of
$3,195 in inputed loan interest and a $6,000 premium paid by us for a
term life insurance policy, of which Mr. Kim's children are the
beneficiaries.
(6) All other compensation for Mr. Boruch in 1998 includes: (1) an aggregate
of $160,000 for a life insurance premium paid by us together with a
bonus paid to Mr. Boruch to cover the income taxes owned by him as a
result of the payment of this insurance premium and (2) a $4,000 premium
paid by us for a term life insurance policy, of which Mr. Boruch's
daughters are the beneficiaries.
(7) All other compensation for Mr. Boruch in 1997 includes: (1) a $4,000
premium paid by us for a term life insurance policy, of which Mr.
Boruch's daughters are the beneficiaries and (2) $8,000 as inputed loan
interest.
(8) All other compensation for Mr. Marcucci in 1998 includes a $6,000
premium paid by us for a term life insurance policy, of which Mr.
Marcucci's wife is the beneficiary.
(9) All other compensation for Mr. Marcucci in 1997 includes: (1) an
aggregate of $239,000 paid by us for a life insurance premium and a
bonus to cover the income taxes owed by Mr. Marcucci as a result of the
payment of this insurance premium and (2) a $6,000 premium paid by us
for a term life insurance policy, of which Mr. Marcucci's wife is the
beneficiary.
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OPTION GRANTS IN FISCAL 1998
The following table provides information concerning each grant of
options to purchase our common stock made during 1998 to the Named Executive
Officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
-------------------------------------------------- MINUS EXERCISE PRICE AT
NUMBER OF % OF TOTAL EXERCISE ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS PRICE STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO PER SHARE FOR OPTION TERM(a)
OPTIONS EMPLOYEES IN ($/SH) EXPIRATION ---------------------------
NAME GRANTED(#) FISCAL YEAR (b) DATE 5% 10%
---- ---------- ------------ --------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
James J. Kim................. -- -- -- -- -- --
Chief Executive Officer and
Chairman
John N. Boruch............... 400,000 10.6% $11.00 4/30/08 $2,767,136 $7,012,467
Chief Operating Officer and 47,735 1.3% 5.66 11/09/08 169,915 430,598
President
Frank J. Marcucci............ 110,000 3.0% 11.00 4/30/08 760,963 1,928,428
Executive Vice President
and 47,735 1.3% 5.66 11/09/08 169,915 430,598
Chief Financial Officer
Eric R. Larson............... 90,000 2.4% 11.00 4/30/08 622,606 1,577,805
Executive Vice President,
Wafer Fab
Michael D. O'Brien........... 90,000 2.4% 11.00 4/30/08 622,606 1,577,805
Executive Vice President, 29,028 0.8% 5.66 11/09/08 103,326 261,849
Operations
</TABLE>
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(a) Potential realizable value is based on the assumption that: (1) our
common stock will appreciate at the compound annual rate shown from the
date of grant until the expiration of the 10-year option term and (2)
that the option is exercised at the exercise price and sold on the last
day of its term at the appreciated price. We assume stock appreciation
of 5% and 10% pursuant to rules promulgated by the Securities and
Exchange Commission, and these percentages do not reflect our estimate
of future stock price growth.
(b) All options shown granted in fiscal 1998 become exercisable as to 25% of
the share subject to the option exercisable starting one year after the
date of grant and an additional 1/48 of such shares subject to the
option becoming exercisable each month thereafter. Under our 1998 Stock
Plan, the Board of Directors or a committee appointed by the Board of
Directors has the power to reduce the exercise price of any option to
the then current fair market price if the fair market value of the
common stock covered by such option shall have declined since the date
of the option was granted.
OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES.
During 1998, none of the named executive officers exercised any of their
stock options. The following table shows the number of shares covered by both
exercisable and non-exercisable stock options held by the named executive
officers as of December 31, 1998. Also reported are the values for
"in-the-money" options which represent the positive spread between the exercise
price of any such existing stock options and the year-end price of our common
stock.
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<TABLE>
<CAPTION>
NUMBER OF SECURITIES DOLLAR VALUE OF
UNDERLYING UNEXERCISED UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1998 DECEMBER 31, 1998(a)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
James J. Kim..................................... -- -- $-- $ --
Chief Executive Officer and Chairman
John N. Boruch................................... -- 447,735 -- 245,978
Chief Operating Officer and President
Frank J. Marcucci................................ -- 157,735 -- 245,978
Executive Vice President and Chief Financial
Officer
Eric R. Larson................................... -- 90,000 -- --
Executive Vice President, Wafer Fab
Michael D. O'Brien............................... -- 119,028 -- 149,581
Executive Vice President, Operations
</TABLE>
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(a) The value of unexercised options equals $10.813, the value of our common
stock as of December 31, 1998 as reported by the Nasdaq Stock Market,
minus the exercise price of such option.
DIRECTOR COMPENSATION
We do not compensate directors who are also employees or officers of our
company for their services as directors. Non-employee directors, however, are
eligible to receive: (1) an annual retainer of $15,000, (2) $1,000 per meeting
of the Board of Directors that they attend, (3) $1,000 per meeting of a
committee of the Board of Directors that they attend and (4) $500 per
non-regularly scheduled telephonic meeting of the Board of Directors in which
they participate. We also reimburse non-employee directors for travel and
related expenses incurred by them in attending board and committee meetings.
1998 DIRECTOR OPTION PLAN: Our Board of Directors adopted the 1998 Director
Option Plan (the "Director Plan") in January 1998. Our stockholders subsequently
approved the Director Plan in April 1998. The Director Plan became effective
immediately prior to our initial public offering on April 30, 1998.
Under the Director Plan, (1) each non-employee director who was a
non-employee director on the date of our initial public offering received an
initial grant of options to purchase 15,000 shares of our common stock, (2) each
individual who became a non-employee director after our initial public offering
received an initial grant of options to purchase 15,000 shares of our common
stock on the date that he or she became a non-employee director and (3) each
individual who becomes a non-employee director after April 30, 1998 will receive
an initial grant of options to purchase 15,000 shares of our common stock on the
date that he or she becomes a non-employee director. In addition to this initial
grant, we will subsequently grant each non-employee director who has served on
the Board of Directors for at least six months an option to purchase 5,000
shares of our common stock each time he or she is re-elected to serve as a
director of our company by our stockholders. The option grants under the
Director Plan are automatic and nondiscretionary.
We reserved a total of 300,000 shares of our common stock for issuance
under the Director Plan. The exercise price of the initial grant of 15,000
options to our non-employee directors who were serving as directors on the date
of our initial public offering was 94% of the $11.00 price per share of the
shares of our common stock sold in our initial public offering. The exercise
price of each option under the Director Plan issued after our initial public
offering was, and will continue to be, 100% of the fair market value of our
common stock on the grant date. The term of each option issued under the
Director Plan is ten years.
Each option granted to a non-employee director vests as to 33 1/3% of the
optioned stock one year after the date of grant and as to an additional 33 1/3%
of the optioned stock on each anniversary of the date of grant, provided that
the optionee continues to serve as a non-employee director. Therefore, three
years after the grant of an option, a non-employee director may exercise 100% of
the stock optioned under that option grant.
If all or substantially all of our assets are sold to another entity or we
merge with or into another corporation, that acquiring entity or corporation may
either assume all outstanding options under the Director Plan or may substitute
equivalent options. Following an assumption or substitutes, if the director is
terminated other than upon a voluntary resignation, any assumed or substituted
options will vest and become exercisable in full. If the acquiring entity does
not either assume all of the outstanding options under the Director Plan or
substitute an equivalent option, each option issued under the Director Plan will
immediately vest and become exercisable in full. The Director Plan will
terminate in January 2008 unless sooner terminated by the Board of Directors.
COMPENSATION COMMITTEE INTERLOCKS
The Compensation Committee currently consists of Messrs. George and
Churchill. No member of the Compensation Committee was an officer or employee of
ours or any of our subsidiaries during fiscal 1998. None of our executive
officers has served on the board of directors or on the compensation committee
on any other entity, any of whose officers served either on our Board of
Directors or on our Compensation Committee.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of our outstanding common stock as of April 1, 1999 by:
- each person or entity who is known by us to own beneficially 5%
or more of our outstanding common stock;
- each of our directors;
- each of the Named Executive Officers; and
- all of our directors and executive officers.
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<PAGE> 9
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(a)
-----------------------
NAME AND ADDRESS NUMBER PERCENT
---------------- ------ -------
<S> <C> <C>
James J. and Agnes C. Kim(b)(c)............................. 32,275,000 27.4%
1345 Enterprise Drive
West Chester, PA 19380
David D. Kim Trust of December 31, 1987(c)(d)............... 13,750,001 11.7
1500 E. Lancaster Avenue
Paoli, PA 19301
John T. Kim Trust of December 31, 1987(c)(d)................ 13,750,001 11.7
1500 E. Lancaster Avenue
Paoli, PA 19301
Susan Y. Kim Trust of December 31, 1987(c)(d)(e)............ 13,750,001 11.7
1500 E. Lancaster Avenue
Paoli, PA 19301
J. & W. Seligman & Co. Incorporated(f)...................... 9,662,800 8.2
100 Park Avenue
New York, New York 10017
Winston J. Churchill........................................ 10,000 *
Robert E. Denham............................................ 5,000 *
Thomas D. George............................................ 10,000 *
Gregory K. Hinckley......................................... 1,000 *
John B. Neff................................................ -- --
John N. Boruch(g)........................................... 113,333 *
Eric R. Larson(h)........................................... 26,375 *
Frank J. Marcucci(i)........................................ 32,792 *
Michael D. O'Brien(j)....................................... 57,375 *
All directors and executive officers as a group (10
persons)(k)............................................... 32,530,875 27.6
</TABLE>
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* Represents less than 1%
(a) The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended. The information is not necessarily indicative of beneficial
ownership for any other purpose. Under this rule, beneficial ownership
includes any share over which the individual or entity has voting power
or investment power. In computing the number of shares beneficially
owned by a person and the percentage ownership of that person, shares of
our common stock subject to options held by that person that will be
exercisable on or before May 31, 1999, are deemed outstanding. Unless
otherwise indicated, each person or entity has sole voting and
investment power with respect to shares shown as beneficially owned.
(b) James J. and Agnes C. Kim are husband and wife. Accordingly, each
beneficially owns shares of our common stock held in the name of the
other.
(c) David D. Kim, John T. Kim and Susan Y. Kim are children of James J. and
Agnes C. Kim. Each of the David D. Kim Trust of December 31, 1987, John
T. Kim Trust of December 31, 1987 and Susan Y. Kim Trust of December 31,
1987 has in common Susan Y. Kim and John F.A. Earley as co-trustees, in
addition to a third trustee (John T. Kim in the case of the Susan Y. Kim
Trust and the John T. Kim Trust, and David D. Kim in the case of the
David D. Kim Trust) (the trustees of each trust may be deemed to be the
beneficial owners of the shares held by such trust). In addition, the
trust agreement for each of these trusts encourages the trustees of the
trusts to vote the shares of common stock held by them, in their
discretion, in concert with James Kim's family. Accordingly, the trusts,
together with their respective trustees and James J. and Agnes C. Kim,
may be considered a "group" under Section 13(d) of the Exchange Act.
This group may be deemed to have beneficial ownership of 73,525,000
shares of 62.4% of the outstanding shares of our common stock.
(d) These three trusts together with the trusts described in note (5) below
comprise the Kim Family Trusts.
(e) Includes 8,200,000 shares held by the Trust of Susan Y. Kim dated April
16, 1998 established for the benefit of Susan Y. Kim's two children.
(f) J. & W. Seligman & Co. Incorporated ("JWS") reported in a Schedule 13G
filed with the Commission on February 9, 1999 that it beneficially owned
these shares as of December 31, 1998. JWS also reported that William C.
Morris, as the owner of a majority of the outstanding voting securities
of JWS, may be deemed to beneficially own the shares beneficially owned
by JWS. JWS is the investment adviser for Seligman Communications and
Information Fund, Inc. (the "Fund"). Of the 9,662,800 shares that JWS
beneficially owns, the Fund beneficially owns 8,170,000 shares.
(g) Includes 108,333 shares issuable upon the exercise of stock options that
are exercisable on or before May 31, 1999.
(h) Includes 24,375 shares issuable upon the exercise of stock options that
are exercisable on or before May 31, 1999.
(i) Includes 29,792 shares issuable upon the exercise of stock options that
are exercisable on or before May 31, 1999.
(j) Includes 24,375 shares issuable upon the exercise of stock options that
are exercisable on or before May 31, 1999 and 33,000 shares held jointly
with Mr. O'Brien's wife.
(k) Includes 186,875 shares issuable upon the exercise of stock options that
are exercisable on or before May 31, 1999.
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<PAGE> 10
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1956, Mr. H.S. Kim founded Anam Semiconductor, Inc. ("ASI"). Mr.
H.S. Kim currently serves as the honorary Chairman and a Representative Director
of ASI. ASI is a member of the Anam Group, consisting principally of companies
in Korea in the electronics industry. The family of Mr. H.S. Kim significantly
influences the management of ASI and the other companies in the Anam Group.
Prior to our divestiture of our interest in ASI during 1998, we and the
family of Mr. H.S. Kim collectively owned approximately 40.7% of the
outstanding common stock of ASI. As of February 1, 1999, the family of Mr. H.S.
Kim owned approximately 40.7% of the outstanding common stock of ASI.
Mr. James Kim is the eldest son of Mr. H.S. Kim. He is also our founder
and Chairman and Chief Executive Officer. Since January 1992, Mr. James Kim has
also served as Chairman of the Anam Group and a director of ASI.
In connection with a reorganization of our company and other predecessor
companies in April 1998, Mr. James Kim and members of his family exchanged their
interests in companies, which became part of our company in the reorganization,
in return for shares of our common stock. Currently, Mr. James Kim and members
of his family beneficially own approximately 65.8% of our outstanding common
stock, and Mr. James Kim and other members of his family will continue to
exercise significant control over our company.
We entered into indemnification agreements with our officers and
directors. These agreements contain provisions which may require us, among other
things, to indemnify the officers and directors against certain liabilities that
may arise by reason of their status or service as directors or officers (other
than liabilities arising from willful misconduct of a culpable nature). We also
agreed to advance them any expenses for proceedings against them that we agreed
to indemnify them from.
In connection with the reorganization of our company in April 1998, we
entered into tax indemnification agreements with Mr. and Mrs. James Kim and the
Kim Family Trusts. Under these agreements, Mr. and Mrs. James Kim and the Kim
Family Trusts will indemnify us for their proportionate share of any U.S.
federal or state corporate income taxes attributable to the failure of Amkor
Electronics, Inc. ("AEI") to qualify as an S Corporation for any period or in
any jurisdiction for which S Corporation status was claimed through April 28,
1998. The tax indemnification agreements require us to indemnify Mr. and Mrs.
James Kim and the Kim Family Trusts if they are required to pay additional taxes
or other amounts attributable to taxable years on or before April 28, 1998 if
AEI filed or files tax returns claiming status as an S Corporation.
Amkor Electronics, Inc., our predecessor ("AEI") has made various
distributions to Mr. and Mrs. James Kim and the Kim Family Trusts. These
distributions allowed Mr. and Mrs. James Kim and the Kim Family Trusts to pay
their income taxes on their allocable portions of the income of AEI. Such
distributions totaled approximately $13.0 million, $5.0 million and $33.1
million in 1996, 1997 and 1998, respectively. As a result of the termination of
the S Corporation election and the finalization of the AEI tax returns,
approximately $2.7 million of the 1998 distributions will be refunded to our
company.
Mr. James Kim owns AK Investments, Inc. ("AK Investments"). In February
1998 we sold our investment in ASI common stock to AK Investments for $13.9
million. We determined the market value by using the closing price of ASI shares
on the Korea Stock Exchange on the date of the sale. In exchange for such
shares, AK Investments assumed $13.9 million of the our long-term borrowings
from AUSA.
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<PAGE> 11
In June 1998, we purchased ASI's 40% interest in Amkor/Anam Pilipinas
("AAP") for approximately $34 million.
On a monthly basis, we incur processing charges for packaging and test
and wafer fabrication services performed for us by ASI. Historically, we paid
ASI for these services on net 30-day terms. On July 21, 1998 we entered into a
prepayment agreement with ASI related to packaging and test services. Under this
agreement, we made a $50 million non-interest bearing advance to ASI. This
advance represented approximately one month's processing charges for packaging
and test services. We completely offset this advance against billings by ASI for
packaging and test services provided in the fourth quarter of 1998.
In connection with our wafer foundry agreement with Texas Instruments,
our company and Texas Instruments agreed to revise certain payment and other
terms contained in the Texas Instruments Manufacturing and Purchase Agreement.
As part of the revision, Texas Instruments agreed to advance our company $20
million in June 1998 and another $20 million in December 1998. These advances
represented prepayments of wafer foundry services to be provided in the fourth
quarter of 1998 and first quarter of 1999, respectively. We recorded these
amounts as accrued expenses. In turn, we advanced these funds to ASI as
prepayments for foundry service charges. We completely offset the first $20
million advance to ASI against billings for wafer fabrication services performed
for us by ASI in the fourth quarter of 1998 and intend to offset the second $20
million advance to ASI against billings for wafer fabrication services performed
for us by ASI in the first quarter of 1999. The current portion due from an
affiliate reflects the prepayment to ASI. Under the terms of the revision to the
Texas Instruments Manufacturing and Purchase Agreement, we remain ultimately
responsible for reimbursing Texas Instruments if ASI fails to comply with the
terms of the agreement.
To facilitate capacity expansion for new product lines, some of our
customers advance us funds to purchase some equipment to fulfill their
forecasts. In some cases, the customer has requested that the equipment be
installed in ASI's factories. In these cases, we receive funds from the customer
and advance the funds to ASI. In turn, ASI purchases the necessary equipment. We
offset such advances to ASI, by reducing what we pay ASI for packaging and test
services performed by ASI. We then reduce our obligations to the customer by
reducing our selling price for packaging and test services delivered to the
customer. We reflect these amounts in accrued expenses and in the current
portion of due from affiliates. As of December 31, 1998, these amounts were
approximately $2.6 million.
We use Anam S&T Co, Ltd. ("AST"), an affiliate of ASI, as a key supplier
of leadframes. Typically, we pay AST for these services on net 30-day terms. At
the end of July 1998, we temporarily changed our payment policy from net
30-days, to paid-in advance. This change in payment policy created an advance to
AST of approximately $5 million in July 1998. We reflected this amount in
current portion of due from affiliates. As of December 31, 1998 this amount was
approximately $3.5 million.
Mr. James Kim executed certain guarantees to lenders in connection with
certain debt instruments of our subsidiaries that remain outstanding. The total
contingent liability under such guarantees was approximately $91 million as of
December 31, 1998.
In October 1998, we entered into the joint venture with ASI, Taiwan
Semiconductor Manufacturing Corporation, Acer Inc., Scientek International
Investment Co. Ltd., and Chinfon Semiconductor & Technology Company. We called
the joint venture Taiwan Semiconductor Technology Corporation ("TSTC"). We
purchased additional TSTC shares from ASI for $10 million during the fourth
quarter of 1998. The $10 million represented ASI's investment as part of TSTC's
initial round of financing in which we did not participate. ASI did not
participate in TSTC's second round of financing, but we invested $10 million at
that time.
Mr. James Kim and our company were parties to a loan agreement that
terminated in 1998, pursuant to which Mr. James Kim borrowed funds from the
company, subject to our consent. In connection with these borrowed funds, Mr.
James Kim recognized compensation in 1996, 1997 and 1998 in the amount of
$101,716, $3,000 and $0, respectively from imputed interest for loans under this
agreement. Since the beginning of the 1996 fiscal year, the maximum amount
outstanding under this loan agreement was $6.5 million. Mr. James Kim repaid in
full all amounts due prior to our initial public offering consummated in 1998.
In 1996, Mr. James Kim sold his interest in Amkor Anam Test Services,
Inc. to AEI for $910,350. This sale represented half of Amkor Anam Test
Services, Inc.'s outstanding capital stock.
In August 1997, AK Investments purchased certain securities held by our
predecessor for $49.7 million by assuming from our predecessor certain
non-current payables from Anam USA, Inc. ("AUSA"). After the sale of investments
to AK Investments, our predecessor loaned AK Investments an additional $12.8
million. AK Investments repaid this loan in full in March 1998.
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<PAGE> 12
In 1996, the Kim Family Trusts borrowed $5.3 million at market interest
rates from our predecessor to purchase the real estate and develop the
facilities that comprise our Chandler, Arizona facility. In 1997, the Kim Family
Trusts, after making improvements, sold the real estate and facilities back to
our predecessor for $5.7 million. The Kim Family Trusts then used the proceeds
from the sale to repay the original loan from our predecessor.
Members of the Kim family own all of the outstanding shares of Forte
Systems, Inc. ("Forte"). Our company and Forte entered into a loan agreement
under which Forte borrowed funds at market interest rates from us, subject to
our consent. Since the beginning of the 1996 fiscal year, the maximum amount
outstanding under this loan agreement was $3.8 million. In 1998, Forte repaid in
full all amounts due under this agreement.
Members of the Kim family are the majority shareholders of The
Electronics Boutique, Inc. ("Electronics Boutique"). Our company and Electronics
Boutique entered into a loan agreement under which Electronics Boutique borrows
funds at market rates from us, subject to our consent. Since the beginning of
the 1996 fiscal year, Electronics Boutique borrowed up to $3.0 million from us
under this loan agreement in the ordinary course of action. As of December 31,
1998, no outstanding balance under this loan agreement existed. In addition, in
1996, Electronics Boutique borrowed $50 million from our predecessor in
connection with a contemplated acquisition. However, Electronics Boutique
abandoned this acquisition and repaid the $50 million to our predecessor within
eleven working days of the date Electronics Boutique borrowed the funds.
Finally, we guaranteed certain vendor obligations and a line of credit of
Electronics Boutique. During the third quarter of 1998, we were released from
our obligations under these guarantees.
In addition, in each of the last three years, we paid various
Electronics Boutique expenses on behalf of Electronics Boutique, and Electronics
Boutique paid many of our expenses on our behalf. These expenses include
insurance premiums, employee medical claims, interest, rent and other
miscellaneous expenses. In 1996, 1997 and 1998, we made net advancements on
behalf of Electronics Boutique of $338,000, $454,000 and $33,000, respectively.
In 1997, Electronics Boutique repaid us $2.4 million of current and prior year's
advancements.
In addition, we also unconditionally guaranteed obligations of EB
Canada, a subsidiary of Electronics Boutique, under a $4 million term loan
agreement and a $1 million line of credit. During the third quarter of 1998, we
were released from our obligations under these guarantees.
We lease office space in West Chester, Pennsylvania from the Kim Family
Trusts. The lease expires in 2006. We have the option to extend the lease for an
additional 10 years. The monthly rent under the lease is $94,000. We also
sub-lease a portion of this office space to Forte. Forte pays us a monthly rent
of $43,000.
At December 31, 1996 and 1997 and 1998, affiliates other than ASI and
AUSA owed us advances and notes receivable of $23.0 million, $36.5 million and
$27.5 million, respectively.
We maintain split-value life insurance policies on the joint lives of
James J. Kim and Agnes C. Kim for the benefit of the Trust of James J. Kim dated
September 30, 1992 (the "1992 Trust"). We pay approximately $700,000 in annual
premiums for these policies. We will receive in death benefits an amount equal
to the lesser of the total net premiums paid in cash by us or the net cash
surrender value of the policy as of the date of death of James J. Kim and Agnes
C. Kim.
The Board of Directors appointed Mr. Robert Denham to our company's
Board of Directors in July 1998. Until December 1997, Mr. Denham served as the
Chairman of Salomon Inc., one of the predecessors of Salomon Smith Barney, Inc.,
one of the underwriters for our initial public offering.
In November 1998, the Board of Directors approved the acquisition of
Amkor/Anam Precision Machine Company, Inc. from ASI for $3.8 million. We believe
that we will consummate this transaction in the first half of 1999.
In January 1998, we loaned $120,000 to Mr. Boruch. This loan bears
interest at 7% per year and is repayable in five equal annual installments.
In addition, for information regarding the interest of the Kim Family
in Anam and for information regarding our anticipated purchase of the K4
factory from ASI and investment of $150 million in ASI, see Item 1 of this
report.
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<PAGE> 13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Annual Report on Form
10-K to be signed, on its behalf by the undersigned, thereunto duly authorized.
AMKOR TECHNOLOGY, INC.
By: *
-------------------------------------
James J. Kim
Chairman and Chief Executive Officer
Date: April 12, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
* Chief Executive Officer and April 29, 1999
- ------------------------------- Chairman
James J. Kim
* President and Director April 29, 1999
- -------------------------------
John N. Boruch
/s/ Frank J. Marcucci Chief Financial Officer April 29, 1999
- ------------------------------- (Principal Financial and
Frank J. Marcucci Accounting Officer)
* Director April 29, 1999
- -------------------------------
Winston J. Churchill
* Director April 29, 1999
- -------------------------------
Robert E. Denham
* Director April 29, 1999
- -------------------------------
Thomas D. George
* Director April 29, 1999
- -------------------------------
Gregory K. Hinckley
* Director April 29, 1999
- -------------------------------
John B. Neff
* BY: /S/ FRANK J. MARCUCCI
- -------------------------------
FRANK J. MARCUCCI,
ATTORNEY-IN-FACT
</TABLE>
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