1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- AMENDMENT NO. 1 TO FORM 8-K DATED MAY 2, 2000 AS FILED ON MAY 12, 2000 ---------------- CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 MAY 2, 2000 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) AMKOR TECHNOLOGY, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) 0-29472 23-1722724 COMMISSION FILE NUMBER (I.R.S. EMPLOYER IDENTIFICATION NUMBER) 1345 ENTERPRISE DRIVE WEST CHESTER, PA 19380 (610) 431-9600 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)
2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. In May 2000 we completed our purchase of ASI's three remaining packaging and test factories, known as K1, K2 and K3 for a purchase price of $950.0 million and made an equity investment in ASI of $309.0 million of the total of $459.0 million we committed to invest at that time. On June 30, 2000 we made an investment in ASI of $30.0 million, which represented the second installment of the $459.0 million we committed to invest. We expect to complete the remaining $120.0 million equity investment in two installments in August and October of 2000. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. On May 12, 2000, we filed a current report on Form 8-K related to the acquisition and investment mentioned in Item 2, which incorporated by reference historical and pro forma financial information as of and for the year ended December 31, 1999. On June 19, 2000, we filed a current report on Form 8-K related to the acquisition and investment, which included pro forma financial information as of and for the three months ended March 31, 2000. Filed herein is pro forma financial information as of and for the three months ended March 31, 2000 and for the year ended December 31, 1999.
3 UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA OF AMKOR AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2000 The unaudited pro forma consolidated balance sheet as of March 31, 2000 appearing below gives effect to the following transactions as if they had occurred on March 31, 2000: - our $410.0 million private placement of our common stock; - our incurrence of $750.0 million of new secured bank debt; - our acquisition of K1, K2 and K3 for $950.0 million; - our $459.0 million equity investment in ASI of which $309.0 was made in May 2000, $30.0 million was made in June 2000 and the remaining $120.0 million is expected to be made in two equal installments by August 31, 2000 and October 31, 2000; - ASI's use of the net proceeds from its sale of K1, K2 and K3 and our investment, principally to repay outstanding debt; and - the expected conversion of 150 billion Korean won (approximately $132 million) of ASI's debt to equity by ASI's creditor banks. 136 billion Korean won was converted as of May 2000 with the balance expected to be converted by October 31, 2000. The unaudited pro forma consolidated income statement gives effect to the above transactions and the following transaction for the three months ended March 31, 2000 appearing below as if they occurred on January 1, 1999: - our sale of $258.75 million of 5% Convertible Subordinated Notes due 2007. 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 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. 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 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 the estimated $30.9 million transaction fees and expenses incurred in connection with our acquisition of K1, K2 and K3 and the related financing. The balance of the purchase price for 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 based upon the receipt of an appraisal. 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 our investment in ASI. Under this method of accounting, our 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 investment. Under the equity method, net income and stockholders' equity of the investor should be the same as if the investor fully consolidated the investee. Accordingly, we have included in the unaudited pro forma consolidated income statement for the three months ended March 31, 2000 the equity in the income (loss)
4 of ASI, including amortization of the excess of the cost of our investment over the underlying equity in the net assets. 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.
5 UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET OF AMKOR MARCH 31, 2000 PRO FORMA PRO FORMA ADJUSTMENTS ADJUSTMENTS FOR ACQUISITION FOR OUR PRIVATE OF K1, K2 AND EQUITY K1, K2 K3 AND OUR FINANCING AND AMKOR AND K3 INVESTMENT IN OUR NEW SECURED PRO FORMA HISTORICAL HISTORICAL ASI BANK DEBT AS ADJUSTED ----------- ----------- --------------- --------------- ----------- (IN THOUSANDS) ASSETS Cash and cash equivalents $ 318,264 $ -- $ -- $ (219,868)(a) $ 98,396 Short-term investments 134,104 -- -- (134,104)(a) -- Accounts receivable: -- Trade 195,871 3,240 (3,240)(b) 69,300(e) 265,171 Due from affiliates 2,575 354,681 (354,681)(b) 2,575 Other 7,220 8,316 (8,316)(b) 7,220 Inventories 81,068 6,451 87,519 Other current assets 16,391 2,289 (2,289)(b) 16,391 ----------- ----------- ----------- ----------- ----------- Total current assets 755,493 374,977 (368,526) (284,672) 477,272 ----------- ----------- ----------- ----------- ----------- Property, plant and equipment, net 916,304 400,287 24,713(c) 1,341,304 ----------- ----------- ----------- ----------- ----------- Investments 64,664 -- 459,000(i) -- 523,664 ----------- ----------- ----------- ----------- ----------- Other assets: Due from Affiliates 27,020 29 (29)(b) 27,020 Excess of cost over net assets acquired 225,989 -- 518,549(d) 744,538 Deferred income taxes -- 36,238 (36,238)(b) -- Other 76,724 4,939 (4,939)(b) 23,812(f) 100,536 ----------- ----------- ----------- ----------- ----------- Total other assets 329,733 41,206 477,343 23,812 872,094 ----------- ----------- ----------- ----------- ----------- Total assets $ 2,066,194 $ 816,470 $ 592,530 $ (260,860) $ 3,214,334 =========== =========== =========== =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Bank overdraft $ 20,031 $ -- $ -- $ -- $ 20,031 Short-term borrowings and current portion of long-term debt 2,839 -- -- (2,839)(j) -- Trade accounts payable 130,787 60,634 (60,634)(b) 130,787 Due to affiliates 30,912 14,376 (14,376)(b) 30,912 Accrued expenses 93,456 13,463 (13,463)(b) 93,456 Accrued income taxes 47,395 -- -- 47,395 ----------- ----------- ----------- ----------- ----------- Total current liabilities 325,420 88,473 (88,473) (2,839) 322,581 ----------- ----------- ----------- ----------- ----------- Long-term debt 9,021 -- -- 750,000(g) 750,000 (9,021)(j) Due to Affiliates -- 112,694 (112,694)(b) -- -- Senior and senior subordinated notes 625,000 -- -- -- 625,000 Convertible subordinated notes 309,213 -- -- -- 309,213 Other noncurrent liabilities 18,165 50,050 (50,050)(b) -- 18,165 ----------- ----------- ----------- ----------- ----------- Total liabilities 1,286,819 251,217 (251,217) 738,140 2,024,959 ----------- ----------- ----------- ----------- ----------- Stockholders' equity: Common stock 131 -- -- 21(h) 152 Warrants to purchase common stock -- -- -- 35,000(h) 35,000 Additional paid-in capital 556,458 -- -- 374,979(h) 931,437 Receivable from stockholders (3,276) -- -- -- (3,276) Retained earnings 226,889 -- -- -- 226,889 Accumulated other comprehensive income (827) -- -- -- (827) Net assets (liabilities) -- 565,253 (565,253)(b) -- -- ----------- ----------- ----------- ----------- ----------- Total stockholders' equity 779,375 565,253 (565,253) 410,000 1,189,375 ----------- ----------- ----------- ----------- ----------- Total liabilities and stockholders' equity $ 2,066,194 $ 816,470 $ (816,470) $ 1,148,140 $ 3,214,334 =========== =========== =========== =========== =========== - ------------------- (a) Net cash used to acquire K1, K2 and K3, to make the additional investment in ASI and to pay transaction fees and expenses. (b) The elimination of those assets and liabilities of K1, K2 and K3 that we did not acquire or assume as part of our acquisition of K1, K2 and K3. (c) The excess of the fair value over the book value of the property, plant and equipment acquired. (d) The excess of the purchase price for K1, K2 and K3 over the estimated fair values of the net assets acquired.
6 (e) The repurchase of accounts receivable to retire our accounts receivable sales agreement. (f) Unpaid transaction fees and expenses, which have been recorded as deferred financing costs and will be amortized over the terms of the debt financing. (g) The financing of the transactions with $750.0 million of new secured bank debt. (h) The issuance of 20,500,000 shares of common stock we issued in a private equity offering and the fair value of the related warrants to purchase 3,895,000 shares of common stock at $27.50 per share. (i) A schedule of our total $459.0 million committed investment follows. Cumulative Date Investment Investment ------------------------------ ---------- ---------- First installment...... May 2, 2000 $ 309,000 $ 309,000 Second installment..... June 30, 2000 30,000 339,000 Third installment...... no later than August 31, 2000 60,000 399,000 Final installment...... no later than October 31, 2000 60,000 459,000 (j) The paydown of existing debt.
7 UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT OF AMKOR FOR THE THREE MONTHS ENDED MARCH 31, 2000 PRO FORMA PRO FORMA ADJUSTMENTS ADJUSTMENTS FOR ACQUISITION FOR OUR PRIVATE OF K1, K2 AND EQUITY K1, K2 K3 AND OUR FINANCING AND AMKOR AND K3 INVESTMENT IN OUR NEW SECURED PRO FORMA HISTORICAL HISTORICAL ASI BANK DEBT AS ADJUSTED ---------- ---------- --------------- --------------- ----------- (IN THOUSANDS) Net Revenues $ 554,811 $ 129,104 $(121,482)(a) $ 562,433 Cost of revenues - including purchases from ASI 445,968 80,248 (121,482)(a) 408,542 12,964 (b) (9,156)(c) --------- --------- --------- --------- --------- Gross profit 108,843 48,856 (3,808) -- 153,891 --------- --------- --------- --------- --------- Operating expenses: Selling, general and administrative 42,071 4,649 46,720 Research and development 3,371 1,291 4,662 --------- --------- --------- --------- --------- Total operating expenses 45,442 5,940 -- -- 51,382 --------- --------- --------- --------- --------- Operating income 63,401 42,916 (3,808) -- 102,509 Other (income) expense: Interest expense, net 15,429 (6,012) 6,012(d) 20,209(g) 36,931 1,590(h) (297)(h) Foreign currency (gain) loss 836 1,952 (1,952)(d) 836 Other (income) expense, net 2,360 (2,506) (1,161)(i) (1,307) --------- --------- --------- --------- --------- Total other (income) expense 18,625 (6,566) 4,060 20,341 36,460 --------- --------- --------- --------- --------- Income (loss) before income taxes and equity income (loss) of investees 44,776 49,482 (7,868) (20,341) 66,049 Provision for (benefit from) income taxes 8,956 14,374 (14,374)(f) (153)(e) 8,803 Equity in income (loss) of investees 1,336 -- (7,383)(j) (6,047) --------- --------- --------- --------- --------- Net income $ 37,156 $ 35,108 $ (877) $ (20,188) $ 51,199 ========= ========= ========= ========= ========= Basic net income per common share $ 0.28 $ 0.34 ========= ========= Diluted net income per common share $ 0.27 $ 0.32 ========= ========= Shares used in computing basic net income per common share 130,872 151,372 ========= ========= Shares used in computing diluted net income per common share 138,538 160,495 ========= ========= - ------------------- (a) We have eliminated the processing charges that we have paid to ASI for services performed for us at the K1, K2 and K3 facilities under our supply agreements. Because we currently sell substantially all of 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 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 K1, K2 and K3. (d) Represents the elimination of interest expense and foreign currency losses related to the debt of K1, K2 and K3 which we have not assumed as part of the acquisition of K1, K2 and K3. (e) Represents an income tax benefit due to the pro forma adjustments for interest expense. (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 $750.0 million of new secured bank debt and on $258.75 million of Convertible Notes at an assumed weighted average
8 interest rate of 8.17% and (2) $1.4 million of amortization of debt issuance costs, which are amortized over the life of the respective debt. (h) Represents interest on funds used to repurchase accounts receivable of $69.3 million and to fund transaction costs and expenses net of interest savings as a result of the pay down of $11.9 million of our existing debt. (i) Represents fees paid by us under our accounts receivable sale agreement. (j) Represents our equity in the income (loss) of ASI, including $13.1 million of amortization of the difference between the cost of our investment over the underlying equity in net assets of ASI, assuming that the investment occurred on January 1, 1999. The pro forma adjustment to reflect our proportionate share of the equity in income (loss) of ASI based on our historical and committed investments follows. Proportionate Pro Forma Share Adjustment ------------- ---------- Ownership after June 30, 2000 installment................. 38.0% $ 5,563 Change in ownership after our committed investments to be made no later than: August 31, 2000........................................ 2.2% 925 October 31, 2000....................................... 1.4% 895 ------- ------- 41.6% $ 7,383 ======= ======= (k) Shares used in computing basic pro forma as adjusted net income per common share for the three months ended March 31, 2000 give effect to the issuance of 20,500,000 shares of common stock we issued in a private equity offering. Shares used in computing the diluted pro forma as adjusted net income per common share for the three months ended March 31, 2000 give effect to the issuance of 20,500,000 shares of common stock we issued in a private equity offering and the exercise of outstanding stock options and warrants to purchase shares of common stock. On a pro forma as adjusted basis, the conversion of convertible subordinated notes is not dilutive.
9 UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA OF ASI AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2000 The unaudited pro forma consolidated balance sheet of ASI as of March 31, 2000 appearing below gives effect to the following transactions as if they had occurred on March 31, 2000. - ASI's sale of K1, K2 and K3 for $950.0 million; - our $459.0 million equity investment in ASI; - ASI's use of the net proceeds from its sale of K1, K2 and K3 and our investment, principally to repay outstanding debt; and - the expected conversion of approximately 150 billion won (approximately $135 million at the exchange rate in effect as of March 31, 2000) of ASI's debt to equity by ASI's creditor banks. The unaudited pro forma consolidated income statement of ASI for the three months ended March 31, 2000 gives effect to the above transactions as if they had occurred on January 1, 1999 using the exchange rate as of that date. The unaudited pro forma consolidated financial information of ASI appearing below is not necessarily indicative of the results of operations and financial condition that ASI would have achieved if the 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. 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.
10 UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET OF ASI MARCH 31, 2000 ASI Pro forma Pro forma Historical Adjustments As Adjusted ---------- ------------ ------------ (in thousands) BALANCE SHEET DATA: Current assets: Cash and cash equivalents $ 29,307 $ 166,900 (a) $ 196,207 Restricted cash 23,805 (2,637)(b) 21,168 Bank deposits 105,237 105,237 Accounts and notes receivable Trade, net of allowance for doubtful accounts 3,240 3,240 Due from affiliates, net of allowance for doubtful accounts 26,072 26,072 Other 31,867 31,867 Short-term loans to affiliates, net 4,578 4,578 Inventories 46,293 (6,451)(b) 39,842 Other current assets 23,720 23,720 ---------- ------------ ------------ Total current assets 294,119 157,812 451,931 Non-current bank deposits 29 29 Restricted cash - - Investments Available for sale 23,558 23,558 Affiliated companies 18,921 18,921 Long-term receivables Due from affiliate 257 257 Others 2,906 2,906 Property, plant and equipment, less accumulated depreciation 1,094,903 (394,835)(b) 700,068 Deferred tax asset-noncurrent 76,067 76,067 Other assets 33,871 (5,433)(b) 28,438 ---------- ------------ ------------ Total assets $ 1,544,631 $ (242,456) $ 1,302,175 =========== ============ ============ Current liabilities: Short-term borrowings $ 44,128 $ $ 44,128 Current portion of long-term debt 56,948 (56,948)(d) - Trade accounts and notes payable 56,101 56,101 Other accounts payable 131,100 131,100 Accrued expenses 4,407 4,407 Forward contract liability 13,857 13,857 Other current liabilities 6,764 6,764 ---------- ------------ ------------ Total current liabilities 313,305 (56,948) 256,357 Long-term debt, net of current portion and discounts on debentures 896,881 (658,495)(d) 238,386 Long-term obligations under capital leases, net of current portion 415,781 (378,557)(d) 37,224 Accrued severance benefits, net 53,992 (50,100)(c) 3,892 Liability for loss contingency 133,211 (126,000)(e) 7,211 ---------- ------------ ------------ Total liabilities 1,813,170 (1,270,100) 543,070 ---------- ------------ ------------ Total stockholders' equity (268,539) 1,027,644(f) 759,105 ---------- ------------ ------------ Total liabilities and stockholders' equity $ 1,544,631 $ (242,456) $ 1,302,175 =========== ============ ============ (a) Represents the amount to be used for purposes other than the repayment of debt (see d) below). (b) Represents the assets of K1, K2 and K3.
11 (c) Represents severance benefits payable upon sale of K1, K2 and K3. (d) Represents payment of debt and the conversion of debt to equity as follows: - Conversion of debt to equity by ASI's creditor banks $ 135,000 - Portion of equity investment by Amkor to be used to repay debt 309,000 - Net cash proceeds from the sale of K1, K2 and K3 available for debt payment 650,000(*) ----------- Total debt assumed to be paid on March 31, 2000 $ 1,094,000 =========== (*)Sales price Less: $ 950,000 - Related taxes (107,000) - Severance payment (50,100) - Payment for guarantee obligation (see e) below) (126,000) - Other operational needs (16,900) ---------- $ 650,000 ========== (e) Represents the payment to eliminate guarantee obligations provided for Anam Construction and Anam Electronics Co., Ltd. (f) Represents the conversion of approximated $135 million of ASI's debt to equity by ASI's creditor banks, our $459.0 million equity investment in ASI and a remainder, which is principally comprised of gain on the sale of K1, K2 and K3, net of related tax expense. 136 billion Korean won (approximately $120.0 million) of ASI's debt was converted to equity as of May 2000 with the balance expected to be converted by October 31, 2000. A schedule of our total $459.0 million committed investment follows. Cumulative Date Investment Investment ------------------------------ ---------- ---------- First installment.... May 2, 2000 $309,000 $309,000 Second installment... June 30, 2000 30,000 339,000 Third installment.... no later than August 31, 2000 60,000 399,000 Final installment.... no later than October 31, 2000 60,000 459,000
12 UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT OF ASI FOR THE THREE MONTHS ENDED MARCH 31, 2000 ASI Pro forma Pro forma Historical Adjustments As Adjusted ------------- ------------- ------------- (In thousands except share and per share data) INCOME STATEMENT DATA: Sales $ 79,169 $ $ 79,169 Cost of sales 60,679 60,679 ------------- ------------- ------------- Gross profit 18,490 -- 18,490 ------------- ------------- ------------- Operating expenses Research and development 26 26 Selling and administrative expenses 5,327 5,327 ------------- ------------- ------------- Total operating expenses 5,353 -- 5,353 ------------- ------------- ------------- Operating income (loss) 13,137 -- 13,137 ------------- ------------- ------------- Other (income) expense Interest income (3,085) (3,085) Interest expense 37,612 (28,214)(a) 9,398 Foreign currency (gains) loss 21,819 (17,531)(b) 4,288 Loss(Gain) from disposal of investments (603) (603) Other, net (5,575) (5,575) ------------- ------------- ------------- Total other (income) expense 50,168 (45,745) 4,423 ------------- ------------- ------------- Income (loss) from continuing operations before income taxes, equity in loss of affiliates and minority interest (37,031) 45,745 8,714 Equity in loss of unconsolidated affiliates (501) -- (501) ------------- ------------- ------------- Income (loss) from continuing operations before income taxes (37,532) 45,745 8,213 Provision (benefit) for income taxes (23,948) 14,089(c) (9,859) ------------- ------------- ------------- Income(loss) from continuing operations $ (13,584) $ 31,656 $ 18,072 ============= ============= ============= PER SHARE DATA: Basic income (loss) from continuing operations per common share $ (0.25) $ 0.16 ============= ============= ============= Diluted income (loss) from continuing operations per common share $ (0.25) $ 0.16 ============= ============= ============= Shares used in computing basic net income (loss) per common share 55,031,183 56,407,789(d) 111,438,972 ============= ============= ============= Shares used in computing diluted net income (loss) per common share 58,267,130 56,407,789 114,674,919 ============= ============= =============
13 (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: - Conversion of debt to equity by ASI's creditor banks $ 125,110 - Portion of equity investment by Amkor to be used to repay debt 309,000 - Net cash proceeds from the sale of K1, K3 and K3 available for debt payment 650,000 ----------- Total debt assumed to be paid on January 1, 1999 $ 1,084,110 =========== (b) Represents the elimination of foreign currency loss related to Won currency debt which is assumed to be paid off. (c) Represents income tax expense due to the pro forma adjustments (d) Represents adjustments for the number of common shares as follows: No. of Shares ---------- - Equity investment by Amkor 37,707,039 - Debt to equity conversion by creditor banks 18,700,750 ---------- Total number of shares adjusted 56,407,789 ==========
14 UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA OF AMKOR AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1999 The unaudited pro forma consolidated income statement gives effect to the following transactions as if they occurred on January 1, 1999: - our 410.0 million private placement of our common stock; - our incurrence of $750.0 million of new secured bank debt; - our acquisition of K1, K2 and K3 for $950.0 million; - our $459.0 million equity investment in ASI; - ASI's use of the net proceeds from its sale of K1, K2 and K3 and our investment, principally to repay outstanding debt; - the conversion of 150 billion Korean won(approximately $132 million) of ASI's debt to equity by ASI's creditor banks; and - our sale of $258.75 million of 5% Convertible Subordinated Notes due 2007. - 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 50 billion Korean won(approximately $41.6 million) equity investment in ASI in October 1999; - the conversion of 98 billion Korean won (approximately $82 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, principally to repay outstanding debt. 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 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. 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 the estimated $30.9 million transaction fees and expenses incurred in connection with our acquisition of K1, K2 and K3 and the related financing. The balance of the purchase price for 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 based upon the receipt of an appraisal. 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 our investment in ASI. Under this method of accounting, our investment in ASI is carried at cost plus or minus our equity in
15 all increases or decreases in the investee's net assets after the date of investment. Under the equity method, net income and stockholders' equity of the investor should be the same as if the investor fully consolidated the investee. Accordingly, we have included in the unaudited pro forma consolidated income statement for the year ended December 31, 1999 the equity in the loss of ASI, including amortization of the excess of the cost of our investment over the underlying equity in the net assets. 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.
16 UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT OF AMKOR FOR THE YEAR ENDED DECEMBER 31, 1999 PRO FORMA ADJUSTMENTS FOR ACQUISITION PRO FORMA OF K1, K2 ADJUSTMENT AND K3 FOR K1, K2 AND OUR PRO FORMA AMKOR K4 ACQUISITION AND K3 INVESTMENT ADJUSTMENTS FOR PRO FORMA HISTORICAL HISTORICAL OF K4 HISTORICAL IN ASI RELATED FINANCINGS AS ADJUSTED ---------- ---------- ----------- ---------- ----------- ------------------ ----------- (IN THOUSANDS) 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) 85,810(g) 159,939 -- -- -- -- -- 1,733(h) -- 5,408(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 87,122 182,646 ---------- ---------- -------- --------- --------- ----------- ---------- Income (loss) before income taxes and equity in loss of investees .......... 105,288 1,037 (21,305) 145,147 (35,869) (87,122) 107,176 Provision for (benefit from) income taxes ..... 26,600 -- (5,937)(e) 46,376 (46,376)(f) (1,125) 19,538 Equity in loss of investees .............. (1,969) -- -- -- (69,971)(j) -- (71,940) ---------- ---------- -------- --------- --------- ----------- ---------- Net income ........... $ 76,719 $ 1,037 $(15,368) $ 98,771 $ (59,464) $ (85,997) $ 15,698 ========== ========== ======== ========= ========= =========== ========== Basic net income per common share ........... $ .64 $ .11 ========== ========== Diluted net income per common share ........... $ .63 $ .11 ========== ========== Shares used in computing basic net income per common share(k) ........ 119,341 139,841 Shares used in computing diluted net income per common share(k) ........ 135,067 141,339 - ------------------ (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
17 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 of $22.2 million on $625.0 million of senior and senior subordinated notes at an assumed weighted average interest rate of 9.65%, (2) $1.0 million of amortization of debt issuance costs, which are amortized over the life of the respective debt, and (3) net of $24.5 million of the K4 interest eliminated. (e) Represents an income tax benefit due to the pro forma adjustments for interest expense. (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 $750.0 million of new secured bank debt and on $258.75 million of Convertible Notes at an assumed weighted average interest rate of 8.17% and (2) $6 million of amortization of debt issuance costs, which are amortized over the life of the respective debt. (h) Represents interest on funds used to finance our $41.6 million investment in ASI made in October 1999 and cash used to repurchase accounts receivable of $71.5 million and to fund transaction costs and expenses net of interest savings as a result of the pay down of $15.5 million of our existing debt. (i) Represents fees paid by us under our accounts receivable sale agreement. (j) Represents our equity in the loss of ASI, including $51.5 million of amortization of the difference between the cost of our investment over the underlying equity in net assets of ASI, assuming that the investment occurred on January 1, 1999. The pro forma adjustment to reflect our proportionate share of the equity in loss of ASI based on our historical and committed investments follows. Proportionate Pro Forma Share Adjustment ------------- ------------- Ownership after June 30, 2000 installment................. 38.0% $ 58,471 Change in ownership after our committed investments to be made no later than: August 31, 2000........................................ 2.2% 6,242 October 31, 2000....................................... 1.4% 5,258 ----- --------- 41.6% $ 69,971 ===== ========= (k) Shares used in computing basic pro forma as adjusted net income per common share for the year ended December 31, 1999 give effect to the issuance of 20,500,000 shares of common stock we intend to issue in a private equity offering. Shares used in computing the diluted pro forma as adjusted net income per common share for the year ended December 31, 1999 give effect to the issuance of 20,500,000 shares of common stock we intend to issue in a private equity offering and the exercise of outstanding stock options. On a pro forma as adjusted basis, the conversion of convertible subordinated notes is not dilutive.
18 UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA OF ASI AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1999 The unaudited pro forma consolidated income statement of ASI for the year ended December 31, 1999 appearing below gives effect to the following transactions as if they had occurred on January 1, 1999 using the exchange rate as of that date: - ASI's sale of K1, K2 and K3 for $950.0 million; - our $459.0 million equity investment in ASI; - ASI's use of the net proceeds from its sale of K1, K2 and K3 and our investment, principally to repay outstanding debt; and - the conversion of 150 billion Korean won(approximately $132 million at the exchange rate in effect as of December 31, 1999) of ASI's debt to equity by ASI's creditor banks. - ASI's sale of K4 to our company in May 1999 for $582.0 million; - our 50 billion Korean won(approximately $41.6 million) equity investment in ASI in October 1999; - the conversion of 98 billion Korean won(approximately $82 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, principally to repay outstanding debt. The unaudited pro forma consolidated financial information of ASI appearing below is not necessarily indicative of the results of operations and financial condition that ASI would have achieved if the 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. 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.
19 UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT OF ASI FOR THE YEAR ENDED DECEMBER 31, 1999 ASI PRO FORMA PRO FORMA HISTORICAL ADJUSTMENTS AS ADJUSTED ------------- ------------- ------------- 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 Provision for doubtful accounts ............... 901 901 Selling and administrative expenses ........... 24,267 24,267 ------------- ------------- ------------- Total operating expenses .............. 25,255 -- 25,255 ------------- ------------- ------------- Operating income ................................ 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 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 .... (191,972) 176,629 (15,343) Equity in loss of unconsolidated affiliates ..... 31,787 -- 31,787 ------------- ------------- ------------- Income (loss) from continuing operations before income taxes .................................. (223,759) 176,629 (47,130) Provision (benefit) for income taxes ............ (54,000) 54,402(c) 402 ------------- ------------- ------------- Income (loss) from continuing operations ........ $ (169,759) $ 122,227 $ (47,532) ============= ============= ============= PER SHARE DATA: Basic income (loss) from continuing operations per common share ........................... $ (5.82) $ (0.43) ============= ============= ============= Diluted income (loss) from continuing operation per common share ........................... $ (5.82) $ (0.43) ============= ============= ============= Shares used in computing basic net income (loss) per common share .................... 29,208,739 81,007,520(d) 110,216,259 ============= ============= ============= Shares used in computing diluted net income (loss) per common share .................... 32,444,636 81,007,520(d) 113,452,206 ============= ============= ============= - --------------- (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: Conversion of debt to equity in October 1999.............. $ 82,200 Net cash proceeds from sale of K4 used for debt payment in May 1999............................................... 520,100 Conversion of debt to equity by ASI's creditor banks.................................................. 125,400 Portion of equity investment by Amkor used to repay debt.......................................... 309,000 Net cash proceeds from the 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 ==========
20 (b) Represents the elimination of foreign currency (gain) loss related to won currency debt which is assumed to be paid off. (c) Represents income tax expense due to the pro forma adjustments. (d) Represents adjustments for the number of common shares as follows: Equity investment by Amkor......................... 37,708,974 Debt to equity conversion by creditor banks........ 18,750,000 Increase in the number of shares related to Amkor's equity investment in October 1999................................ 8,273,973 Increase in the number of shares related to debt to equity conversion in October 1999................................ 16,274,573 ---------- Total number of shares adjusted................... 81,007,520 ==========
21 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: July 17, 2000