<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
AMENDMENT NO. 1
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[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
COMMISSION FILE NUMBER 000-29472
AMKOR TECHNOLOGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 23-1722724
(STATE OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
</TABLE>
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
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, $0.001 PAR VALUE
5 3/4% CONVERTIBLE SUBORDINATED NOTES DUE 2003
10 1/2% SENIOR SUBORDINATED NOTES DUE 2009
9 1/4% SENIOR NOTES DUE 2006
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 $2,879,410,475 as of March 15, 2000.
The number of shares outstanding of each of the issuer's classes of common
equity, as of March 15, 2000, was as follows: 131,010,532 shares of Common
Stock, $0.001 par value.
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<PAGE> 2
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CONTROL PERSONS; 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,
2000 of our directors and our executive officers:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
James J. Kim......................... 64 Chief Executive Officer and Chairman
John N. Boruch....................... 57 President and Director
Kenneth T. Joyce..................... 52 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).............. 59 Director
Thomas D. George(1)(2)............... 59 Director
Gregory K. Hinckley(2)............... 53 Director
John B. Neff......................... 68 Director
</TABLE>
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(1) Member of Compensation Committee.
(2) Member of Audit Committee.
JAMES J. KIM. James J. Kim, 64, 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 N. Boruch, 57, 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.
KENNETH T. JOYCE. Kenneth T. Joyce, 52, has served as our Chief Financial
Officer since July 1999. Prior to his election as our Chief Financial Officer,
Mr. Joyce served as our Vice President and Operations Controller since 1997.
Prior to joining our company, he was Chief Financial Officer of Selas Fluid
Processing Corporation, a subsidiary of Linde AG. He was Vice President, Finance
and Chief Financial Officer of Selas Corporation of America prior to the sale of
the business to Linde AG. Mr. Joyce began his accounting career in 1971 at KPMG
Peat Marwick. He is a certified public accountant and earned a B.S. in
Accounting from Saint Joseph's University and an M.B.A. in Finance from Drexel
University.
ERIC R. LARSON. Eric Larson, 43, 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, 66, 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
2
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April 1998. Mr. O'Brien joined our predecessor in 1988. Mr. O'Brien earned a
B.S. in Engineering from Texas A&M University.
WINSTON J. CHURCHILL. Winston J. Churchill, 59, 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.
THOMAS D. GEORGE. Thomas D. George, 59. 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 K. Hinckley, 53, 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 B. Neff, 68, 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 four
meetings and acted by unanimous written consent on two occasions during 1999 and
all of the directors attended at least 98% 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 1999, the Committee did not meet apart from
regular meetings with the entire Board.
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<PAGE> 4
THE AUDIT COMMITTEE
The Audit Committee is presently comprised of Messrs. Hinckley and George.
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
with our 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 held six
meetings during 1999.
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 a 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 our review of the copies of such
forms received by us, or written representations from certain reporting persons
that no other reports were required for such persons, we believe that all
Section 16(a) filing requirements applicable to our officers, directors and
ten-percent stockholders were complied with in a timely fashion.
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<PAGE> 5
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation. The following table sets forth compensation earned
during each of the three years in the period ending 1999 by our Chief Executive
Officer, the four other most highly-compensated executive officers
(collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION SECURITIES
------------------- UNDERLYING ALL OTHER
NAME YEAR SALARY BONUS(1) OPTIONS(2) COMPENSATION(3)
---- ---- -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
James J. Kim(4).......................... 1999 $750,000 $500,000 -- $ 14,600
Chief Executive Officer and Chairman 1998 $779,000 $500,000 -- $ 12,000
1997 $500,000 $500,000 -- $ 15,195
John N. Boruch(5)........................ 1999 $540,400 $546,200 100,000 $ 10,200
Chief Operating Officer and 1998 $500,000 $446,200 447,735 $ 170,000
President 1997 $400,000 $413,800 -- $ 18,000
Kenneth T. Joyce......................... 1999 $174,700 $212,900 8,000 $ 6,000
Executive Vice President and Chief 1998 $144,400 $ 21,500 15,000 $ 1,500
Financial Officer
Frank J. Marcucci(6)..................... 1999 $268,500 $173,800 40,000 $1,523,300
Executive Vice President and Former 1998 $265,400 $291,840 157,735 $ 12,000
Chief Financial Officer 1997 $245,000 $273,765 -- $ 251,000
Eric R. Larson........................... 1999 $260,100 $223,100 30,000 $ 6,000
Executive Vice President, Wafer Fab 1998 $250,300 $148,000 90,000 $ 6,000
1997 $220,000 $100,000 -- --
Michael D. O'Brien....................... 1999 $262,600 $223,300 30,000 $ 6,000
Executive Vice President, Operations 1998 $259,400 $173,285 119,028 $ 6,000
1997 $240,000 $173,280 -- $ 6,000
</TABLE>
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(1) Bonus amounts include amounts earned in the year indicated but that were
approved by our Board of Directors and paid in the following year.
(2) Long-term compensation represents stock options issued under the 1998 Stock
Plan.
(3) All other compensation for all of the named executives includes amounts paid
to each executive's 401(k) plan.
(4) All other compensation for Mr. Kim includes a $6,000 premium paid by us for
a term life insurance policy, of which Mr. Kim's children are the
beneficiaries. In 1999 and 1997, all other compensation for Mr. Kim includes
imputed loan interest.
(5) All other compensation for Mr. Boruch in 1998 includes 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. In 1998 and 1997, all other compensation
for Mr. Boruch includes a $4,000 premium paid by us for a term life
insurance policy, of which Mr. Boruch's daughters are the beneficiaries. In
1999 and 1997, all other compensation for Mr. Boruch includes imputed loan
interest.
(6) Mr. Marcucci served as Chief Financial Officer through July 1999 and served
as an Executive Vice President through December 31, 1999. He continues to
serve as an employee in accordance with the terms of an employment
agreement. At the conclusion of his services as an Executive Vice President
he received a bonus of $1,459,000. All other compensation for Mr. Marcucci
in 1999 also includes a $9,500 employee loan forgiven by us, cash payment of
$36,500 for his accrued and unused vacation at the end of the year and
imputed loan interest. All other compensation for Mr. Marcucci in 1998 and
1997 includes a $6,000 premium paid by us for a term life insurance policy,
of which Mr. Marcucci's wife is the beneficiary. All other compensation for
Mr. Marcucci in 1997 includes an aggregate of $239,000 paid by us for a life
insurance premium and a bonus to cover the income taxes owed by Mr. Marcucci
as a result of the payment of this insurance premium.
5
<PAGE> 6
OPTION GRANTS IN FISCAL 1999
The following table provides information concerning each grant of options
to purchase our common stock made during 1999 to the Named Executive Officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
-------------------------------------------------- MINUS EXERCISE PRICE AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS EXERCISE STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO PRICE OPTION TERM(A)
OPTIONS EMPLOYEES IN PER SHARE EXPIRATION ----------------------------
NAME GRANTED(#) FISCAL YEAR ($/SH)(B) DATE 5% 10%
---- ---------- ------------ --------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James J. Kim.................. -- -- -- -- -- --
Chief Executive Officer and
Chairman
John N. Boruch................ 100,000 6.8% $9.06 5/7/09 $569,779 $1,443,931
Chief Operating Officer and
President
Kenneth T. Joyce.............. 8,000 0.5% $9.06 5/7/09 $ 45,582 $ 115,514
Executive Vice President and
Chief Financial Officer
Frank J. Marcucci............. 40,000 2.7% $9.06 5/7/09 $227,911 $ 577,572
Former Executive Vice
President and Chief
Financial Officer
Eric R. Larson................ 30,000 2.0% $9.06 5/7/09 $170,934 $ 433,179
Executive Vice President,
Wafer Fab
Michael D. O'Brien............ 30,000 2.0% $9.06 5/7/09 $170,934 $ 433,179
Executive Vice President,
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 1999 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.
Option Exercises. During 1999, 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, 1999. 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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YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES DOLLAR VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1999 DECEMBER 31, 1999(A)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James J. Kim.................. -- -- -- -- -- --
Chief Executive Officer and
Chairman
John N. Boruch................ -- -- 171,262 376,473 $3,023,299 $6,874,035
Chief Operating Officer and
President
Kenneth T. Joyce.............. -- -- 5,938 17,063 $ 102,422 $ 309,838
Executive Vice President and
Chief Financial Officer
Frank J. Marcucci............. -- -- 56.470 141,265 $1,043,142 $2,700,291
Former Executive Vice
President and Chief
Financial Officer
Eric R. Larson................ -- -- 35,625 84,375 $ 614,531 $1,513,669
Executive Vice President,
Wafer Fab
Michael D. O'Brien............ -- -- 43,487 105,541 $ 792,128 $1,991,814
Executive Vice President,
Operations
</TABLE>
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(a) The value of unexercised options equals (i) $28.25, the value of our common
stock as of December 31, 1999 as reported by the Nasdaq Stock Market, minus
(ii) 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
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<PAGE> 8
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 AND INSIDER PARTICIPATION
The Compensation Committee currently consists of Messrs. Churchill and
George. No member of the Compensation Committee was an officer or employee of
ours or any of our subsidiaries during fiscal 1999. 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 February 29, 2000 by:
- each person or entity who is known by us to beneficially own 5% or more
of our outstanding common stock;
- each of our directors; and
- all of our executive officers.
<TABLE>
<CAPTION>
BENEfiCIAL OWNERSHIP(a)
-----------------------
NUMBER OF PERCENTAGE
NAME AND ADDRESS SHARES OWNERSHIP
---------------- ---------- ----------
<S> <C> <C>
James J. and Agnes C. Kim(b)(c)............................. 30,053,921 22.9
1345 Enterprise Drive
West Chester, PA 19380
David D. Kim Trust of December 31, 1987(c)(d)............... 14,457,344 11.0
1500 E. Lancaster Avenue
Paoli, PA 19301
John T. Kim Trust of December 31, 1987(c)(d)................ 14,457,344 11.0
1500 E. Lancaster Avenue
Paoli, PA 19301
Susan Y. Kim Trust of December 31, 1987(c)(d)(e)............ 14,457,344 11.0
1500 E. Lancaster Avenue
Paoli, PA 19301
J. & W. Seligman & Co. Incorporated(f)...................... 10,848,800 8.3
100 Park Avenue
New York, New York 10017
Capital Group International, Inc.(g)........................ 7,370,400 5.6
11100 Santa Monica Blvd
Los Angeles, CA 90025
Winston J. Churchill(h)..................................... 15,000 *
Thomas D. George(h)......................................... 15,000 *
Gregory K. Hinckley(h)...................................... 6,000 *
John B. Neff(h)............................................. 65,000 *
John N. Boruch(i)........................................... 203,985 *
Eric R. Larson(j)........................................... 49,609 *
Kenneth T. Joyce(k)......................................... 8,237 *
Michael D. O'Brien(l)....................................... 81,444 *
All directors and executive officers as a group (9
persons)(m)............................................... 30,498,196 23.2
</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 April 29, 2000 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
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<PAGE> 10
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 73,425,953 shares or 56.1% of
the outstanding shares of our common stock.
(d) These three trusts together with the trusts described in note (e) 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 10, 2000 that it beneficially owned
these shares as of December 31, 1999. 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 10,848,800 shares that JWS
beneficially owns, the Fund beneficially owns 9,050,000 shares.
(g) Capital Group International, Inc. reported in a Schedule 13G filed with the
Commission on February 14, 2000 that it beneficially owned these shares as
of December 31, 1999.
(h) Includes 5,000 shares issuable upon the exercise of stock options that are
exercisable on or before April 29, 2000.
(i) Includes 189,914 shares issuable upon the exercise of stock options that
are exercisable on or before April 29, 2000.
(j) Includes 39,374 shares issuable upon the exercise of stock options that are
exercisable on or before April 29, 2000.
(k) Includes 6,562 shares issuable upon the exercise of stock options that are
exercisable on or before April 29, 2000.
(l) Includes 48,444 shares issuable upon the exercise of stock options that are
exercisable on or before April 29, 2000 and 33,000 shares held jointly with
Mr. O'Brien's wife.
(m) Includes 304,294 shares issuable upon the exercise of stock options that are
exercisable on or before April 29, 2000.
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.
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. Currently, Mr. James
Kim and members of his family beneficially own approximately 59% of our
outstanding common stock, and Mr. James Kim and other members of his family will
continue to exercise significant control over our company.
In December 1999 the Company announced that it was in discussions with ASI
to purchase it's three remaining packaging and test factories, known as K1, K2
and K3 combined with an additional equity investment in ASI. In February 2000,
the Company announced that it had reached an agreement with ASI to purchase K1,
K2 and K3 for $950.0 million and committed to make an additional equity
investment in ASI of approximately $459.0 million. The commitment to make this
equity investment supersedes the existing commitment to ASI to purchase $150.0
million in equity, previously agreed to as part of the terms of ASI's
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Workout with its Korean Creditor Banks, excluding the $41.6 million already
invested in October 1999. The Company expects to complete the purchase of K1, K2
and K3 and investment in ASI during the second quarter of 2000. If we make the
additional $459.0 million investment in the common stock of ASI and ASI's
Creditor banks convert W150 billion (approximately $132.0 million) of debt to
common stock of ASI, the Company's and the Creditor banks' ownership in ASI
voting stock will be approximately 43% and 34%, respectively.
In October 1999, the Company acquired 10,000,000 shares of ASI common stock
for approximately $41.6 million (W50.0 billion) representing the Company's first
installment of its commitment to invest in ASI over a four year period in
connection with ASI's Workout with its Korean Creditor Banks. The remaining
portion of the obligation will be canceled under the terms of the agreement to
purchase K1, K2 and K3. The Company owns 18% of ASI's common stock and members
of the Kim family own 11%.
On May 17, 1999, the Company purchased certain assets and liabilities of
ASI's packaging and test business located in Kwangju, Korea ("K4"). The purchase
price for K4 was $575.0 million in cash plus the assumption of approximately
$7.0 million of employee benefit liabilities. In connection with the acquisition
of K4, the Company has entered into a transition services agreement with ASI.
Pursuant to this agreement, ASI will continue to provide many of the same
non-manufacturing related services to K4 that it provided prior to the
acquisition, including transportation and shipping, human resources, and
accounting and general administrative services. The Company has incurred
approximately $5.8 million of costs during the year ended December 31, 1999 for
the services provided under this agreement. In addition, the Company has also
entered into an intellectual property license agreement with ASI that was
effective upon the closing of the acquisition.
In 1999, approximately 53% of the Company's packaging and test revenues as
well as 100% of the Company's wafer fabrication revenues 1999 were derived from
services performed for the Company by ASI. By the terms of a long-standing
agreement, the Company has been responsible for marketing and selling ASI's
semiconductor packaging and test services, except to customers in Korea. The
Company has worked closely with ASI in developing new technologies and products.
Effective January 1, 1998, the Company entered into five-year supply agreements
with ASI giving the Company the first right to market and sell substantially all
of ASI's packaging and test services and the exclusive right to market and sell
all of the wafer output of ASI's new wafer foundry, both of which have
negotiable pricing terms. These agreements are cancellable by either party upon
five years prior written notice at any time after the fifth anniversary of the
effective date.
On July 1, 1999, the Company acquired the stock of AAPMC for $3.8 million,
which was paid to ASI during June 1999. AAPMC supplies machine tooling used by
the Company at its Philippine operations. As an interim step to this
acquisition, during April 1999, the Company assumed and repaid $5.7 million
The Company previously met a significant portion of its financing from
financing arrangements provided by AUSA. A majority of the amount due to AUSA
represented outstanding amounts under financing obtained by AUSA for the benefit
of the Company with the balance representing payables to AUSA for packaging and
test service charges and wafer fabrication service charges from ASI. Based on
guarantees provided by ASI, AUSA obtained for the benefit of the Company a
continuous series of short-term financing arrangements which generally were less
than six months in duration, and typically were less than two months in
duration. Because of the short-term nature of these loans, the flows of cash to
and from AUSA under this arrangement were significant. Purchases from ASI
through AUSA were $714.5 million 1999. Charges from AUSA for interest and bank
charges were $1.4 million for 1999. The net amounts payable to ASI and AUSA were
$28.3 million at December 31, 1999.
To facilitate capacity expansion for new product lines, certain customers
advanced the Company funds to purchase certain equipment to fulfill such
customers forecasts. In certain cases, the customer has requested that the
equipment be installed in the ASI factories. In these cases, the Company
receives funds from the customer and advances the funds to ASI. ASI in turn
purchases the necessary equipment. ASI repays the Company through a reduction of
the monthly processing charges related to the customer product being assembled.
The Company will reduce its obligation to the customer through a reduction in
the accounts receivable, due from the customer, at the time services are billed.
As of December 31, 1999 this amount was approximately $1.1 million.
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The Company utilizes Anam Semiconductor & Technology Co., Ltd. ("AST"), an
affiliate of ASI, as a key supplier of leadframes. The Company pays for its
materials before shipment. As of December 31, 1999, the balance paid in advance
to AST was approximately $1.5 million. Payments to AST were approximately $33.0
million during 1999.
Anam Engineering and Construction, an affiliate of ASI, built the packaging
facility for AAP in the Philippines. Payments to Anam Engineering and
Construction were $3.9 million in 1999. Anam Precision Equipment and Anam
Instruments manufacture certain equipment used by the Philippine operations.
Payments to Anam Precision Equipment and Anam Instruments were $14.6 million in
1999, respectively.
A principal stockholder of the Company has extended guarantees on behalf of
the Company in the amount of $16.0 million at December 31, 1999.
The Company leases office space in West Chester, Pennsylvania from certain
stockholders of the Company. The lease expires in 2006. The Company has the
option to extend the lease for an additional 10 years through 2016. Amounts paid
for these leases in 1999 were $1.1 million.
At December 31, 1999, the Company had net balances due from affiliates
other than ASI and AUSA of $24.5 million.
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 $33.1 million in 1998. 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.
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.
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.
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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 28, 2000
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 28, 2000
- ----------------------------------------------------- Chairman
James J. Kim
* President and Director April 28, 2000
- -----------------------------------------------------
John N. Boruch
/s/ KENNETH JOYCE Chief Financial Officer April 28, 2000
- ----------------------------------------------------- (Principal Financial and
Kenneth Joyce Accounting Officer)
* Director April 28, 2000
- -----------------------------------------------------
Winston J. Churchill
* Director April 28, 2000
- -----------------------------------------------------
Thomas D. George
* Director April 28, 2000
- -----------------------------------------------------
Gregory K. Hinckley
* Director April 28, 2000
- -----------------------------------------------------
John B. Neff
</TABLE>
* By: /s/ KENNETH JOYCE
-------------------------------
Kenneth Joyce
Attorney-in-Fact
13
