<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
March 10, 2000
---------------------
Date of Report (Date of earliest event reported)
AMKOR TECHNOLOGY, INC.
---------------------
(Exact name of Registrant as specified in its charter)
Delaware
---------------------
(State or other jurisdiction of incorporation)
<TABLE>
<S> <C>
0-29472 23-1722724
- -------------------- ------------------------------------
(Commission File No.) (IRS Employer Identification Number)
</TABLE>
1345 Enterprise Drive
West Chester, PA 19380
(610) 431-9600
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(Address of Principal Executive Offices)
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(Former name or former address, if changed since last report)
<PAGE> 2
Item 5. OTHER EVENTS
a) Our Proposed Acquisition of ASI's Packaging and Test Business and
Investment in ASI
References in this report to "won" or "W" are to the currency of the
Republic of Korea. The won has historically fluctuated significantly against the
U.S. dollar and other foreign currencies in recent years. Unless otherwise
indicated, all conversions of U.S. dollars to won and vice versa have been made
at an exchange rate of W1,135 to $1.00, the base rate under the market average
exchange rate system, as announced by the Korea Financial Telecommunications and
Clearing Institute in Seoul, Korea (the "Market Average Exchange Rate"), on
December 31, 1999. On February 29, 2000, the Market Average Exchange Rate was
W1,132 to U.S.$1.00. No representation is made that the won or U.S. dollar
amounts referred to herein could have been or could be converted into U.S.
dollars or won, as the case may be, at any particular rate or at all.
PROPOSED ACQUISITION
We have agreed with ASI, subject to certain conditions, to purchase ASI's
packaging and test business, which consists primarily of its K1, K2 and K3
factories. The purchase price for these assets will be approximately $950.0
million. The table below provides selected information about these factories:
<TABLE>
<CAPTION>
APPROXIMATE
FACTORY SIZE
FACTORY LOCATION EMPLOYEES (SQUARE FEET) SERVICES
------- -------------- --------- ------------- ---------------------------------
<S> <C> <C> <C> <C>
K1................. Seoul, Korea 3,300 646,000 lead frame packaging and package
and process development
K2................. Pucheon, Korea 1,800 264,000 lead frame and laminates
packaging services
K3................. Pupyong, Korea 1,500 404,000 advanced lead frame packaging and
test services
</TABLE>
In connection with our acquisition of K1, K2 and K3, we will acquire all of
ASI's patents, patent applications and other intellectual property rights
related to its packaging and test business. We also plan to retain the
approximately 6,600 Korean employees currently working at K1, K2 and K3. We
intend to complete the acquisition during the second quarter of 2000.
PROPOSED INVESTMENT
In October 1999, we purchased 10 million shares of ASI's common stock at a
price of W5,000 per share, for approximately $41.6 million. As a result of this
investment and the conversion of ASI's debt to equity by ASI's creditor banks,
we now own approximately 18% of ASI's voting stock. We have also agreed to make
a $459.0 million additional investment in ASI, subject to certain conditions. We
have agreed to invest $309.0 million of this additional investment at the time
we acquire K1, K2 and K3, with the remaining $150.0 million to be invested in
three installments: $30.0 million by June 30, 2000, $60.0 million by August 31,
2000 and $60.0 million by October 31, 2000. However, we have the right to
accelerate this investment. Of this $459.0 million investment, $109.0 million
will be invested at a purchase price of W8,000 per share and the remaining
$350.0 million will be invested at W18,000 per share. Our investment will
fulfill our prior obligation to invest $150.0 million in ASI. Based upon an
exchange rate of W1,135 per $1.00 at December 31, 1999, we would purchase a
total of 37.5 million shares for this $459.0 million investment in ASI. If we
acquire this number of shares of ASI's common stock, assuming ASI's creditor
banks convert an additional W150 billion (approximately $132.0 million) of their
ASI debt to equity in connection with our acquisition and investment, we will
own approximately 43% of ASI's outstanding voting stock.
PROPOSED FINANCING
We intend to finance the purchase of K1, K2 and K3 and the investment in
ASI with our proposed private placement of Series A preferred stock,
approximately $600.0 million of new secured bank debt, a proposed issuance of
$425.0 million of convertible subordinated notes and cash on hand.
In November 1999, we secured a commitment from a group of institutional
investors to provide $410.0 million in equity financing for use in connection
with our proposed acquisition of K1, K2 and K3.
<PAGE> 3
If we consummate our acquisition of K1, K2 and K3, we would issue to these
investors a total of 2,050,000 shares of Series A preferred stock, convertible
into an aggregate of 20,500,000 shares of our common stock. In addition, we
would issue warrants for an aggregate of 3,895,000 million shares of our common
stock with a strike price of $27.50 per share to the Series A preferred stock
investors. These warrants would expire four years after the date we issue them.
For a more complete description of the rights and privileges of the Series A
preferred stock, as well as a description of ancillary agreements that we would
enter into with the Series A preferred stock investors, see "Proposed Private
Placement of Series A Preferred Stock."
We expect to borrow $600.0 million in term loans under a new $800.0 million
secured credit facility to be provided by a syndicate of institutional lenders.
We are currently in the process of negotiating the terms of the facility, which
will also include an additional $200.0 million revolving credit line. The
initial borrowing under the facility will be subject to the consummation of our
proposed acquisition of K1, K2 and K3 and other related transactions. The
facility will provide for amortization of the drawn amount over a five-year
period and quarterly principal and interest payments. We will be required to
make mandatory prepayments under the facility out of a portion of any excess
cash flow, the net proceeds of any asset sales and the net proceeds of any
issuance of debt or equity securities, subject to certain exceptions. We expect
that the agreement governing the facility will include certain financial
covenants, as well as covenants restricting our ability to incur debt, pay
dividends, make certain investments and payments, and encumber or dispose of
assets. We expect that our obligations under the facility will be guaranteed by
certain of our subsidiaries and will be secured by a pledge of the domestic
assets of our company and our subsidiaries, a pledge of the shares of certain of
our subsidiaries and a pledge of certain intercompany indebtedness.
The closing of our private placement of Series A preferred stock and our
proposed new secured bank financing is expected to take place concurrently with,
and is conditioned upon, the closing of our acquisition of K1, K2 and K3 and our
investment in ASI. We cannot assure you that any of these transactions will
occur.
RELATIONSHIP WITH ASI FOLLOWING OUR ACQUISITION OF ASI'S PACKAGING AND TEST
BUSINESS AND OUR INVESTMENT IN ASI
If we complete our proposed acquisition of K1, K2 and K3 and our proposed
investment in ASI, we expect to continue to have certain contractual and other
business relationships with ASI, including under our wafer fabrication services
supply agreement with ASI. Under this supply agreement, we will continue
to have the exclusive right to all of the wafer output of ASI's wafer
fabrication facility. The supply agreement has a five-year term, expiring
November 1, 2002, and may be terminated by either party upon five years' written
notice after completion of the initial five year term. The supply agreement may
also be terminated upon breach or insolvency of either party. The supply
agreement generally provides for continued cooperation between our company and
ASI in research and development.
Concurrent with the completion of our proposed acquisition of K1, K2 and
K3, we will enter into a transition services agreement with ASI. Pursuant to
this agreement, we will provide many of the same services to ASI's wafer
fabrication business that had been provided by ASI's packaging and test business
prior to its acquisition by us, including human resources, accounting and
general administrative services and customer services.
Following our proposed investment in ASI and the anticipated conversion of
additional ASI debt to equity by ASI's creditor banks, we will own approximately
43% of ASI's outstanding voting stock. Accordingly, we will report ASI's
financial results in our financial statements through the equity method of
accounting. If ASI's results of operations are adversely affected for any
reason, our results of operations will suffer as well. Financial or other
problems affecting ASI could also lead to a complete loss of our investment in
ASI. In addition, under proposed changes in U.S. GAAP, we could be required to
consolidate ASI's financial results with ours. In such an event, adverse changes
in any line item of ASI's financial statements would adversely affect the
corresponding line items in our consolidated financial statements.
<PAGE> 4
Our company and ASI will also continue to have close ties due to our
overlapping ownership and management. We expect that Mr. James Kim will continue
to serve as Chairman and as a Director of ASI and as our Chairman and Chief
Executive Officer. The Kim family currently beneficially owns approximately 59%
of our outstanding common stock and approximately 11% of ASI's voting stock. If
we complete our proposed private placement of Series A preferred stock, our
proposed investment in ASI and if ASI's creditor banks convert additional ASI
debt into equity, the Kim family will beneficially own approximately 51% of our
outstanding voting stock and approximately 6% of ASI's voting stock. Even though
the Kim family's direct ownership of ASI and our company will be reduced, we
believe that the Kim family will continue to exercise significant influence over
our company, ASI and its affiliates.
We have also entered into agreements with ASI and Texas Instruments
relating to our wafer fabrication business. For information on these agreements,
see "Business -- Wafer Fabrication Services" in our report on Form 10-K for the
year ended December 31, 1998.
We may engage in other transactions with ASI from time to time that are
material to us. The indentures governing our senior subordinated notes, our
subordinated notes and our convertible subordinated notes, as well as the
agreements relating to our new secured bank debt, restrict our ability to enter
into transactions with ASI and other affiliates.
PROPOSED PRIVATE PLACEMENT OF SERIES A PREFERRED STOCK
In November, 1999 we secured a commitment from a group of investors to
provide $410.0 million in equity financing for use in connection with our
proposed acquisition of K1, K2 and K3 and proposed investment in ASI. The
following discussion assumes that we have consummated these transactions.
SERIES A PREFERRED STOCK
We would issue to these investors 2,050,000 shares of Series A preferred
stock, convertible into an aggregate of 20,500,000 shares of our common stock.
The Series A preferred stock would be convertible at any time at the election of
the holder, and would convert automatically upon the earlier of (i) such time
that the fair market value of our common stock exceeded predetermined levels for
30 consecutive trading days or (ii) five years after the first issue date of the
Series A preferred stock. Holders of the Series A preferred stock would be
entitled to receive dividends as may from time to time be declared by the Board
of Directors out of funds legally available therefor and prior to payment of
dividends to holders of common stock. In the event of a liquidation, dissolution
or winding up of our Company, holders of Series A preferred stock would be
entitled to receive $200 per share, or an aggregate of $410.0 million (assuming
issuance of 2,050,000 shares of Series A preferred stock) prior to and in
preference of the holders of common stock. After the Series A preferred stock
liquidation preference is paid, the holders of common stock would be entitled to
share equally and ratably in the remaining assets of the Company, if any.
Holders of Series A preferred stock would be entitled to vote on all
matters on which the holders of common stock are entitled to vote and have the
number of votes equal to the number of shares of common stock into which their
shares of Series A preferred stock are convertible. In addition, the holders of
the Series A preferred stock would be entitled to a class vote to approve (i)
changes to our Certificate of Incorporation or Bylaws if such change would
directly and adversely affect the rights of the Series A preferred stock or (ii)
authorization of any class of stock having preference or priority to the rights
of the Series A preferred stock. Finally, for so long as at least 500,000 shares
of Series A preferred stock remain outstanding, the holders of the Series A
preferred stock will be entitled to elect one member of our Board of Directors.
WARRANTS
We would issue warrants for an aggregate of 3,895,000 shares of common
stock with a strike price of $27.50 per share to the Series A preferred stock
investors. These warrants would expire four years after the date we issue them.
STOCKHOLDER RIGHTS AGREEMENT
We would enter into an agreement with the Series A preferred stock
investors relating to their rights and obligations as stockholders. The
agreement would include the following provisions:
- Registration Rights: Holders of the Series A preferred stock and warrants
issued with respect thereto would be entitled to certain rights with
respect to the registration of the resale of shares of common stock
issued on conversion or exercise thereof (the "Registrable Securities")
under the Securities Act. We will have an obligation to register part or
all of these shares after the first anniversary of the date we first
issue the Series A preferred stock on up to four occasions if the holders
of at least 20% of the Registrable Securities request that we do so,
provided that we have not already caused a registration statement to go
effective within the last nine months. In addition, we shall extend to
the holders of Registrable Securities the right to include their
securities in registrations initiated by us. These registration rights
would expire six years after we issue the Series A preferred stock.
- Preemptive Rights: We would extend to the holders of at least 750,000
shares of Registrable Securities the right to purchase up to their
pro-rata amount of new securities that we issue, subject to various
exceptions, until five years after we issue the Series A preferred stock.
<PAGE> 5
- Board Observation Rights: We would extend to two investors observation
rights to Board of Directors meetings for so long as each investor holds
at least 1,250,000 Registrable Securities.
- Restrictions on Transfer: The holders of Registrable Securities would
agree to limitations on their ability to transfer our securities under
certain circumstances.
- Company Right of First Refusal: The holders of Registrable Securities
would agree to grant us a right of first refusal to acquire shares of our
capital stock held by them on the terms they would propose to transfer
such securities to third parties.
CO-SALE AGREEMENT
We would enter into an agreement with the Series A preferred stock
investors and certain of our existing stockholders to provide the Series A
preferred stock investors with co-sale rights with respect to prospective
transfers of our securities by the existing stockholders.
b) Financial Data of Amkor and ASI
1) Unaudited Pro Forma Consolidated Financial Data of Amkor
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA OF AMKOR
The unaudited pro forma consolidated balance sheet as of December 31, 1999
appearing below gives effect to the following proposed transactions as if they
had occurred on December 31, 1999:
- our proposed $410.0 million private placement of our Series A preferred
stock;
- our proposed incurrence of $600.0 million of new secured bank debt;
- our proposed issuance of $425.0 million of convertible subordinated
notes;
- our proposed acquisition of K1, K2 and K3 for $950.0 million;
- our proposed $459.0 million equity investment in ASI;
- ASI's use of the net proceeds from its proposed sale of K1, K2 and K3 and
our proposed investment, principally to repay outstanding debt; and
- the proposed conversion of W150 billion (approximately $132.0 million) of
ASI's debt to equity by ASI's creditor banks.
In addition, the pro forma as adjusted financial data reflects the
following transactions which occurred in 1999:
- our acquisition of K4 in May 1999 for $582.0 million and our incurrence
of $625.0 million of long-term debt in connection with that acquisition;
- our W50 billion (approximately $41.6 million) equity investment in ASI in
October 1999;
- the conversion of W98 billion (approximately $82.0 million) of ASI's debt
into equity by ASI's creditor banks in October 1999; and
- ASI's use of the net proceeds from its sale of K4 and our investment in
October 1999 principally to repay outstanding debt.
The unaudited pro forma consolidated income statement for the year ended
December 31, 1999 appearing below gives effect to these proposed and historical
transactions as if they had occurred on January 1, 1999.
The unaudited pro forma consolidated financial information appearing below
is not necessarily indicative of the results of operations and financial
condition that we would have achieved if the completed and proposed transactions
described above had actually been consummated on such dates, nor are they
necessarily indicative of the future results and financial condition we will
achieve if the proposed transactions are consummated. In addition, while we
expect that the proposed transactions described above will be consummated on the
terms described in this offering memorandum, these transactions may not be
consummated on those terms, or at all. Accordingly, our future results and
financial condition could vary significantly from the unaudited pro forma
consolidated financial information appearing below.
We have used the purchase method of accounting in accordance with APB
Opinion No. 16 "Business Combinations" to prepare the accompanying unaudited pro
forma consolidated financial information. Under this method of accounting, we
allocated (1) the $575.0 million aggregate purchase price of K4, plus $7.0
million of assumed employee benefit liabilities and (2) the $950.0 million
aggregate purchase price of K1, K2 and K3, to specific assets acquired based on
their estimated fair values. The purchase price does not include $20.3 million
of transaction expenses incurred in connection with the acquisition of K4 or the
$30.0 million of estimated transaction fees and expenses expected to be incurred
in connection with our proposed acquisition of K1, K2 and K3. The balance of the
purchase price of both the acquisition of K4 and of K1, K2 and K3 represents the
excess of cost over net assets acquired. We have estimated the preliminary fair
value of K1, K2 and K3 assets based primarily on our knowledge of this business
and on information furnished by ASI. We will determine the final allocation of
the purchase price after the consummation of the acquisition of K1, K2 and K3
based upon the receipt of an appraisal. We will not complete all of the work
required to fully evaluate the assets acquired by the time of the closing of the
acquisitions. Accordingly, we may not finalize purchase accounting adjustments
for up to one year after the closing of our acquisition of K1, K2 and K3.
We have used the equity method of accounting in accordance with APB Opinion
No. 18 to prepare the accompanying unaudited pro forma financial information to
give effect to the investment in ASI. Under this method of accounting, the
investment in ASI is carried at cost plus or minus our equity in all increases
or decreases in the investee's net assets after the date of acquisition. Under
the equity method, net income and stockholders' equity of the investor should be
the same as if the investor fully consolidated the affiliate. Accordingly, we
have included in the unaudited pro forma consolidated income statements for the
year ended December 31, 1999 the equity in the loss of ASI, including
amortization of the excess of the cost of the investment over the underlying
equity in the net assets at the date of acquisition.
We have prepared the unaudited pro forma consolidated financial information
in accordance with U.S. GAAP. These principles require us to make extensive use
of estimates and assumptions that affect: (1) the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the consolidated financial statements and (2) the reported amounts of
revenues and expenses during the reporting periods. Actual results could differ
from those estimates.
<PAGE> 6
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
FOR THIS
OFFERING, OUR
SERIES A
PREFERRED
PRO FORMA FINANCING,
ADJUSTMENTS OUR NEW
FOR SECURED BANK
K1, K2 ACQUISITION DEBT AND
AMKOR AND K3 OF K1, K2 OUR INVESTMENT PRO FORMA
HISTORICAL HISTORICAL AND K3 IN ASI AS ADJUSTED
---------- ---------- ----------- -------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents............... $ 98,045 $ -- $ -- $ (90,986)(a) $ 7,059
Short-term investments.................. 136,595 -- -- -- 136,595
Accounts receivable:
Trade................................. 157,281 3,416 (3,416)(b) 71,500(e) 228,781
Due from affiliates................... 6,278 304,762 (304,762)(b) -- 6,278
Other................................. 6,469 3,653 (3,653)(b) -- 6,469
Inventories............................. 91,465 7,984 -- -- 99,449
Other current assets.................... 11,117 2,666 (2,666)(b) -- 13,552
---------- --------- --------- ---------- ----------
Total current assets........... 507,250 322,481 (314,497) (19,486) 495,748
---------- --------- --------- ---------- ----------
Property, plant and equipment, net...... 859,768 404,384 20,616(c) -- 1,284,768
---------- --------- --------- ---------- ----------
Investments............................. 63,672 -- 459,000(j) -- 522,672
---------- --------- --------- ---------- ----------
Other assets:
Due from affiliates................... 27,858 277 (277)(b) -- 27,858
Excess of cost over net assets
acquired............................ 233,532 -- 517,016(d) -- 750,548
Deferred income taxes................. -- 41,656 (41,656)(b) -- --
Other................................. 63,009 4,953 (4,953)(b) 30,000(f) 93,009
---------- --------- --------- ---------- ----------
Total other assets............. 324,399 46,886 470,130 -- 871,415
---------- --------- --------- ---------- ----------
Total assets................... $1,755,089 $ 773,751 $ 635,249 $ 10,514 $3,174,603
========== ========= ========= ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Bank overdraft.......................... $ 16,209 $ -- $ -- $ -- $ 16,209
Short-term borrowings and current
portion of long-term debt............. 6,465 -- -- (6,465)(k) --
Trade accounts payable.................. 122,147 51,360 (51,360)(b) -- 122,147
Due to affiliates....................... 37,913 14,788 (14,788)(b) -- 37,913
Accrued expenses........................ 88,577 13,845 (13,845)(b) -- 88,577
Accrued income taxes.................... 41,587 -- -- -- 41,587
---------- --------- --------- ---------- ----------
Total current liabilities...... 312,898 79,993 (79,993) -- 306,433
Long-term debt.......................... 9,021 -- -- 600,000(g) 600,000
(9,021)(k) --
Due to affiliates....................... -- 124,294 (124,294) -- --
Senior and senior subordinated notes.... 625,000 -- -- -- 625,000
Convertible subordinated notes.......... 53,435 -- -- 425,000(h) 478,435
Other noncurrent liabilities............ 16,994 45,122 (45,122)(b) -- 16,994
---------- --------- --------- ---------- ----------
Total liabilities.............. 1,017,348 249,409 (249,409) 1,025,000 2,026,862
---------- --------- --------- ---------- ----------
Stockholders' equity:
Common stock.......................... 131 -- -- -- 131
Preferred stock....................... -- -- -- 20(i) 20
Warrants outstanding.................. -- -- -- 35,000 35,000
Additional paid-in capital............ 551,964 -- -- 374,980(i) 926,944
Receivable from stockholders.......... (3,276) -- -- -- (3,276)
Retained earnings..................... 189,733 -- -- -- 189,733
Unrealized losses..................... (811) -- -- -- (811)
Net assets (liabilities).............. -- 524,342 (524,342)(b) -- --
---------- --------- --------- ---------- ----------
Total stockholders' equity..... 737,741 524,342 (524,342) 410,000 1,147,741
---------- --------- --------- ---------- ----------
Total liabilities and
stockholders' equity......... $1,755,089 $ 773,751 $(773,751) $1,428,535 $3,174,603
========== ========= ========= ========== ==========
</TABLE>
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(a) Represents net cash to be used to acquire K1, K2 and K3, to make the
additional investment in ASI and to pay transaction fees and expenses.
<PAGE> 7
(b) Represents the elimination of those assets and liabilities of K1, K2 and K3
that we will not acquire or assume as part of our proposed acquisition of
K1, K2 and K3.
(c) Represents the excess of the fair value over the book value of the
property, plant and equipment acquired.
(d) Represents the excess of the purchase price for K1, K2 and K3 over the
estimated fair values of the net assets acquired.
(e) Represents the repurchase of accounts receivable to retire the Company's
accounts receivable sales agreement.
(f) Represents transaction fees and expenses, which have been recorded as
deferred financing costs and will be amortized over the debt's term.
(g) Represents the financing of the transactions with $600.0 million of new
secured bank debt.
(h) Represents the proposed issuance of $425.0 million of convertible
subordinated notes.
(i) Represents the issuance of 2,050,000 shares of Series A preferred stock at
$200 per share (convertible into 20,500,000 shares of common stock at
$20.00 per share).
(j) Represents our additional $459.0 million investment in ASI.
(k) Represents the paydown of existing debt.
<PAGE> 8
UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
FOR THIS
PRO FORMA OFFERING, OUR
PRO FORMA ADJUSTMENTS EQUITY FINANCING,
ADJUSTMENT FOR OUR NEW SECURED
FOR K1, K2 ACQUISITION BANK DEBT AND
AMKOR K4 ACQUISITION AND K3 OF K1, K2 OUR INVESTMENT PRO FORMA
HISTORICAL HISTORICAL OF K4 HISTORICAL AND K3 IN ASI AS ADJUSTED
---------- ---------- ------------ ---------- ----------- ----------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenues............... $1,909,972 $ 42,582 $(39,353)(a) $435,659 $(407,751)(a) $ -- $1,941,109
Cost of revenues --
including purchases
from ASI.................. 1,577,226 30,725 (39,353)(a) 289,233 (407,751)(a) -- 1,472,235
10,751(b) 51,881(b) --
(4,792)(c) (35,685)(c) --
---------- -------- -------- -------- --------- -------- ----------
Gross profit............ 332,746 11,857 (5,959) 146,426 (16,196) -- 468,874
---------- -------- -------- -------- --------- -------- ----------
Operating expenses:
Selling, general and
administrative.......... 145,233 2,344 -- 16,120 -- -- 163,697
Research and
development............. 11,436 536 -- 3,383 -- -- 15,355
---------- -------- -------- -------- --------- -------- ----------
Total operating
expenses............ 156,669 2,880 -- 19,503 -- -- 179,052
---------- -------- -------- -------- --------- -------- ----------
Operating income........ 176,077 8,977 (5,959) 126,923 (16,196) -- 289,822
---------- -------- -------- -------- --------- -------- ----------
Other (income) expense:
Interest expense, net..... 45,364 24,492 (1,319)(d) (19,091) 19,091(d) 79,420(g) 152,690
-- -- -- -- -- 1,733(h) --
4,549(h) --
(1,549)(h) --
Foreign currency (gain)
loss.................... 308 (16,665) 16,665(d) (582) 582(d) -- 308
Other (income) expense,
net..................... 25,117 113 -- 1,449 -- (4,280)(i) 22,399
---------- -------- -------- -------- --------- -------- ----------
Total other (income)
expense............. 70,789 7,940 15,346 (18,224) 19,673 79,873 175,397
---------- -------- -------- -------- --------- -------- ----------
Income (loss) before
income taxes and
minority interest..... 105,288 1,037 (21,305) 145,147 (35,869) (79,873) 114,425
Provision for (benefit
from) income taxes........ 26,600 -- (5,937)(e) 46,376 (46,376)(p) (182) 20,481
Equity in loss of
investees................. (1,969) -- -- -- (67,766)(j) -- (69,735)
---------- -------- -------- -------- --------- -------- ----------
Net income.............. $ 76,719 $ 1,037 $(15,368) $ 98,771 $ (57,259) $(79,691) $ 24,209
========== ======== ======== ======== ========= ======== ==========
Basic net income
per common share........ .64 .20
Diluted net income
per common share........ .63 .17
Shares used in computing
basic net income per
common share............ 119,341 119,341
Shares used in computing
diluted net income per
common share............ 135,067 141,339
</TABLE>
- ---------------
(a) We have eliminated the processing charges that we have paid to ASI for
services performed for us at the K4 and the K1, K2 and K3 facilities under
our supply agreements. Because we currently sell substantially all of K4's
and K1, K2 and K3's services, the net revenue from the sale of these
services to our customers is already reflected in our historical net
revenues.
(b) Represents the amortization of goodwill related to our acquisition of K4 and
our acquisition of K1, K2 and K3, assuming a ten-year life.
(c) Represents change in depreciation expense based on adjusted book values of
acquired property, plant and equipment of K4 and of K1, K2 and K3.
(d) Represents the elimination of interest expense and foreign currency losses
related to the debt of K4 and of K1, K2 and K3 which we have not assumed as
part of the acquisition of K4 and will not assume as part of our acquisition
of K1, K2 and K3. As it relates to the Acquisition of K4, interest expense,
net includes (1) interest expense on $625 million of senior and senior
subordinated notes at an assumed weighted average interest rate of 9.65% and
(2) $1,017 of amortization of debt issuance costs, which are amortized over
the life of the respective debt:
(e) Represents an income tax benefit due to the pro forma adjustments for
interest expense.
<PAGE> 9
(f) Represents the elimination of income tax expenses at K1, K2 and K3 due to
the fact that profits of K1, K2 and K3 will be subject to a tax holiday in
Korea.
(g) Represents: (1) Interest expense on $600.0 million of new secured bank debt
and on $425.0 million of convertible notes at an assumed weighted average
interest rate of 7.23% and (2) $5,332 of amortization of debt issuance
costs, which are amortized over the life of the respective debt.
(h) Represents the net interest on funds used to finance the following: (1) the
Company's $41.6 million investment in ASI made in October 1999; (2) cash
used to pay down $15.5 million of the Company's existing debt offset by
interest expense foregone on the same debt and (3) cash used to repurchase
accounts receivable of $71.5 million and to fund transaction costs and
expenses.
(i) Represents the Company's fees paid under its accounts receivable sale
agreement.
(j) Represents the Company's equity in the loss of ASI, including amortization
of the difference between the cost of the Company's investment over the
underlying equity in net assets of ASI at the date of acquisition.
<PAGE> 10
2) Unaudited Pro Forma Consolidated Financial Data of ASI
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA OF ASI
The unaudited pro forma consolidated balance sheet of ASI as of December
31, 1999 appearing below gives effect to the following proposed transactions as
if they had occurred on December 31, 1999:
- ASI's proposed sale of K1, K2 and K3 for $950.0 million and its use of
the net proceeds principally to repay outstanding debt;
- our proposed $459.0 million equity investment in ASI;
- ASI's use of the net proceeds from its proposed sale of K1, K2 and K3 and
our proposed investment, principally to repay outstanding debt; and
- the proposed conversion of W150 billion (approximately $125.4 million at
the January 1, 1999 exchange rate) of ASI's debt to equity by ASI's
creditor banks.
In addition, the pro forma as adjusted financial data reflects the
following transactions which occurred in 1999:
- ASI's sale of K4 to our company in May 1999 for $582.0 million;
- our W50 billion (approximately $41.6 million) equity investment in ASI in
October 1999;
- the conversion of W98 billion (approximately $82.0 million) of ASI's debt
into equity by ASI's creditor banks in October 1999; and
- ASI's use of the net proceeds from its sale of K4 and our investment in
October 1999, principally to repay outstanding debt.
The unaudited pro forma consolidated income statement of ASI for the year
ended December 31, 1999 appearing below gives effect to these proposed and
historical transactions as if they had occurred on January 1, 1999.
The unaudited pro forma consolidated financial information appearing below
is not necessarily indicative of the results of operations and financial
condition that ASI would have achieved if the completed and proposed
transactions described above had actually been consummated on such dates, nor
are they necessarily indicative of the future results and financial condition
ASI will achieve if the proposed transactions are consummated. In addition,
while ASI expects that the proposed transactions described above will be
consummated on the terms described in this offering memorandum, these
transactions may not be consummated on those terms, or at all. Accordingly,
ASI's future results and financial condition could vary significantly from the
unaudited pro forma consolidated financial information appearing below.
The unaudited pro forma consolidated financial information of ASI appearing
below is based on financial statements prepared in accordance with U.S. GAAP.
These principles require the extensive use of estimates and assumptions that
affect: (1) the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the consolidated financial
statements and (2) the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
<PAGE> 11
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, 1999
-----------------------------------------
PRO FORMA PRO FORMA
ACTUAL ADJUSTMENT AS ADJUSTED
---------- ---------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Current assets:
Cash and cash equivalents......................... $ 56,469 $ 184,900(a) $ 241,369
Restricted cash................................... 41,086 (2,881)(b) 38,205
Bank deposits..................................... 105,414 105,414
Accounts and notes receivable
Trade, net of allowance for doubtful
accounts..................................... 3,416 3,416
Due from affiliates, net of allowance for
doubtful accounts............................ 29,377 29,377
Other.......................................... 22,797 22,797
Short-term loans to affiliates, net............... 4,464 4,464
Inventories....................................... 41,949 (7,984)(b) 33,965
Other current assets.............................. 6,894 6,894
---------- ---------- ----------
Total current assets...................... 311,866 174,035 485,901
Non-current bank deposits........................... 204 204
Restricted cash..................................... 73 73
Investments
Available for sale................................ 28,128 28,128
Affiliated companies.............................. 18,550 18,550
Long-term receivables
Due from affiliate................................ 250 250
Others............................................ 2,906 2,906
Property, plant and equipment, less accumulated
depreciation...................................... 1,037,935 (398,932)(b) 639,003
Deferred tax asset-noncurrent....................... 53,212 53,212
Other assets........................................ 34,345 (5,690)(b) 28,655
---------- ---------- ----------
Total assets.............................. $1,487,469 $ (230,587) $1,256,882
========== ========== ==========
Current liabilities:
Short-term borrowings............................. $ 69,328 $ $ 69,328
Current portion of long-term debt................. 73,882 (73,882)(d) --
Trade accounts and notes payable.................. 48,902 48,902
Other accounts payable............................ 77,141 77,141
Accrued expenses.................................. 3,850 3,850
Forward contract liability........................ 15,364 15,364
Other current liabilities......................... 13,318 13,318
---------- ---------- ----------
Total current liabilities................. 301,785 (73,882) 227,903
Long-term debt, net of current portion and discounts
on debentures..................................... 875,175 (606,911)(d) 268,264
Long-term obligations under capital leases, net of
current portion................................... 429,590 (403,607)(d) 25,983
Accrued severance benefits, net..................... 48,757 (45,100)(c) 3,657
Liability for loss contingency...................... 129,912 (117,000)(e) 12,912
Other long-term liabilities......................... -- --
---------- ---------- ----------
Total liabilities......................... $1,785,219 (1,246,500) 538,719
---------- ---------- ----------
Total stockholders' equity................ (297,750) 1,015,913(f) 718,163
---------- ---------- ----------
Total liabilities and stockholders'
equity.................................. $1,487,469 $ (230,587) $1,256,882
========== ========== ==========
</TABLE>
<PAGE> 12
(a) Represents the amount to be used for FAB investment and other operational
needs.
(b) Represents the assets of K1, K2 and K3 to be sold.
(c) Represents severance benefits to be paid upon sale of K1, K2 and K3.
(d) Represents payment of debt using proceeds from the proposed sale of K1, K2
and K3, Amkors' proposed equity investment and the proposed conversion of
debt to equity by ASI's creditor banks as follows:
<TABLE>
<S> <C>
Proposed conversion of debt to equity by ASI creditor
banks..................................................... $ 125,400
Proposed equity investment by Amkor, excluding the portion
used for FAB investment................................... 309,000
Net cash proceed from the proposed sale of K1, K2 and K3
available for debt payment................................ 650,000
----------
Total debt assumed to be paid on January 1,
1999............................................. $1,084,400
==========
</TABLE>
(e) Represents the amount to be used for the payment to eliminate guarantee
obligations provided for Anam Construction and Anam Electronics.
(f) Represents proposed conversion of debt equity by ASI creditor banks,
proposed equity investment by Amkor and gain on proposed sale of K1, K2 and
K3, net of related tax expense.
<PAGE> 13
UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1999
------------------------------------------
ASI PRO FORMA PRO FORMA
HISTORICAL ADJUSTMENTS AS ADJUSTED
---------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Sales................................................. $ 285,925 $ $285,925
Cost of sales......................................... 239,632 239,632
--------- --------- --------
Gross profit.......................................... 46,293 -- 46,293
--------- --------- --------
Operating expenses
Research and development............................ 87 87
Amortization of goodwill............................ -- --
Provision for doubtful accounts..................... 901 901
Impairment of long-lived assets..................... -- --
Selling and administrative expenses................. 24,267 24,267
--------- --------- --------
Total operating expenses.................... 25,255 -- 25,255
--------- --------- --------
Operating income (loss)............................... 21,038 -- 21,038
--------- --------- --------
Other (income) expense
Interest income..................................... (5,902) (5,902)
Interest expense.................................... 185,315 (150,657)(a) 34,658
Foreign currency (gains) loss....................... 33,198 (25,972)(b) 7,226
Loss (gain) from disposal of investments............ 601 601
Loss on valuation of inventories.................... 2,041 2,041
Impairment loss on loans to affiliates.............. 22,646 22,646
Guarantee obligation loss........................... -- --
Other, net.......................................... (24,889) (24,889)
--------- --------- --------
Total other (income) expense................ 213,010 (176,629) 36,381
--------- --------- --------
Income (loss) from continuing operations before income
taxes, equity in loss of affiliates and minority
interest............................................ (191,972) 176,629 (15,343)
Equity in loss of unconsolidated affiliates........... 31,787 -- 31,787
223,759 76,629 (47,130)
Provision for income taxes............................ (54,000) 54,402(d) 402
--------- --------- --------
Income (loss) from continuing operations.............. (169,759) 122,227 (47,532)
</TABLE>
(a) Represents the elimination of interest expense related to debt which was
assumed to be paid off and the conversion of debt to equity as follows:
<TABLE>
<S> <C>
Conversion of debt to equity in October, 1999............. $ 82,200
Net cash proceed from sale of K4 used for debt payment.... 520,100
Proposed conversion of debt to equity by ASI creditor
banks.................................................. 125,400
Proposed equity investment by Amkor, excluding the portion
used for FAB investment................................ 309,000
Net cash proceed from the proposed sale of K1, K2 and K3
available for debt payment............................. 650,000
----------
Total debt assumed to be paid on January 1,
1999............................................. $1,686,700
==========
</TABLE>
(b) Represents the elimination of foreign currency (gain) loss related won
currency debt which in assumed to be paid off.
(c) Income from discontinued operations and gain on sale of K4 is eliminated.
(d) Represents income tax expense due to the pro forma adjustments.
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMKOR TECHNOLOGY, INC.
By: /s/ Kenneth T. Joyce
------------------------
Kenneth T. Joyce
Chief Financial Officer
Dated: March 10, 2000
