e10vqza
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q/ A
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
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For the Quarterly Period Ended March 31, 2006 |
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or |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period
from to |
Commission File Number 000-29472
AMKOR TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
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Delaware
(State of incorporation) |
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23-1722724
(I.R.S. Employer
Identification Number) |
1900 South Price Road
Chandler, AZ 85248
(480) 821-5000
(Address of principal executive offices and zip code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been
subject to filing requirements for the past
90 days. Yes þ No o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated
filer. See definition of accelerated filer and large
accelerated filer in
Rule 12b-2 of the
Exchange Act. (Check one):
Large accelerated
filer o Accelerated
filer þ Non-accelerated
filer o
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b 2 of the Exchange
Act). Yes o No þ
The number of outstanding shares of the registrants Common
Stock as of April 30, 2006 was 176,981,486.
QUARTERLY REPORT ON
FORM 10-Q/ A
March 31, 2006
TABLE OF CONTENTS
2
Explanatory Note
We are amending our Quarterly Report on
Form 10-Q for the
quarter ended March 31, 2006 filed on May 9, 2006 (the
Original Filing) to restate our condensed
consolidated financial statements for the quarters ended
March 31, 2006 and 2005 and the related disclosures. See
Note 2, Restatement of Consolidated Financial
Statements, Special Committee and Company Findings of the
Notes to Condensed Consolidated Financial
Statements. for a detailed discussion of the effect of the
restatement.
The restatement of the Original Filing reflected in this amended
Quarterly Report on
Form 10-Q/ A
includes adjustments arising from the determinations of a
Special Committee, consisting of independent members of the
Board of Directors, which was formed on July 24, 2006 to
conduct an internal investigation into the Companys past
stock option practices, as well as our internal review relating
to our historical financial statements.
For more information on these matters, please refer to
Managements Discussion and Analysis of Financial
Condition and Results of Operations Restatement of
Consolidated Financial Statements, Special Committee and Company
Findings, Note 2 of the Notes to the Condensed
Consolidated Financial Statements, and Item 4,
Controls and Procedures.
As a result of the findings of the Special Committee as well as
our internal review, we concluded that we needed to amend our
Annual Report on
Form 10-K for the
year ended December 31, 2005, originally filed on
March 16, 2006, to restate our consolidated financial
statements for the years ended December 31, 2005, 2004 and
2003 and the related disclosures as well as
Managements Report on Internal Control Over
Financial Reporting as of December 31, 2005. The
Annual Report on
Form 10-K/ A also
includes the restatement of selected consolidated financial data
as of and for the years ended December 31, 2005, 2004,
2003, 2002 and 2001, and the unaudited quarterly financial data
for each of the quarters in the years ended December 31,
2005 and 2004. We also concluded that we needed to amend the
Quarterly Report on
Form 10-Q for the
quarter ended March 31, 2006, originally filed on
May 9, 2006, to restate our condensed consolidated
financial statements for the quarters ended March 31, 2006
and 2005 and the related disclosures. We have restated the
June 30, 2005 financial statements included in the
Quarterly Report on
Form 10-Q for the
quarter ended June 30, 2006. We will restate the
September 30, 2005 financial statements with the filing of
our September 30, 2006
Form 10-Q. We have
not amended and we do not intend to amend any of our other
previously filed annual reports on
Form 10-K or
quarterly reports on
Form 10-Q for the
periods affected by the restatement or adjustments other than
(i) this amended Quarterly Report on
Form 10-Q/A for
the quarter ended March 31, 2006 and (ii) the amended
Annual Report on
Form 10-K/A for
the year ended December 31, 2005.
All of the information in this amended Quarterly Report on
Form 10-Q/A is as
of March 31, 2006 and does not reflect events occurring
after the date of the Original Filing, other than the
restatement, or modify or update disclosures (including, the
exhibits to the Original Filing, except for the updated
Exhibits 31.1, 31.2, 32.1, and 32.2 described below)
affected by subsequent events. For the convenience of the
reader, this amended Quarterly Report on
Form 10-Q/ A sets
forth the Original Filing in its entirety, as amended by, and to
reflect, the restatement. The following sections of this
Form 10-Q/A were
adjusted to reflect the findings of the Special Committee as
well as our internal review:
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Part I Item 1 Unaudited
Financial Statements; |
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Part I Item 2
Managements Discussion and Analysis of Financial Condition
and Results of Operations; |
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Part I Item 4 Controls and
Procedures; |
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Part II Item 1A Risk Factors;
and |
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Part II Item 6 Exhibits |
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This amended Quarterly Report on
Form 10-Q/A should
be read in conjunction with our amended Annual Report on
Form 10-K/A for
the year ended December 31, 2005, our periodic filings made
with the SEC subsequent to the date of the Original Filing and
any Current Reports filed on
Form 8-K
subsequent to the date of the Original Filing. In addition, in
accordance with applicable SEC rules, this amended Quarterly
Report on
Form 10-Q/A
includes updated certifications from our Chief Executive Officer
(CEO) and Chief Financial Officer (CFO) as Exhibits 31.1,
31.2, 32.1, and 32.2.
3
PART I. FINANCIAL INFORMATION
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ITEM 1. |
Financial Statements |
AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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For the Three Months Ended | |
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March 31, | |
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2006 | |
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2005 | |
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(As restated)(1) | |
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(As restated)(1) | |
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(In thousands, except per share data) | |
Net sales
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$ |
645,089 |
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$ |
417,481 |
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Cost of sales
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490,352 |
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374,132 |
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Gross profit
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154,737 |
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43,349 |
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Operating expenses:
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Selling, general and administrative
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60,204 |
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60,513 |
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Research and development
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9,430 |
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8,900 |
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Provision for legal settlements and contingencies
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1,000 |
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50,000 |
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Total operating expenses
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70,634 |
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119,413 |
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Operating income (loss)
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84,103 |
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(76,064 |
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Other (income) expense:
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Interest expense, net
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41,157 |
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40,513 |
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Interest expense, related party
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1,788 |
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Foreign currency loss
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3,928 |
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2,232 |
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Other (income) expense, net
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(936 |
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178 |
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Total other expense, net
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45,937 |
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42,923 |
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Income (loss) before income taxes and minority interests
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38,166 |
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(118,987 |
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Income tax expense
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3,612 |
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1,187 |
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Income (loss) before minority interest income (expense)
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34,554 |
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(120,174 |
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Minority interest income (expense), net of tax
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(115 |
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1,011 |
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Net income (loss)
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$ |
34,439 |
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$ |
(119,163 |
) |
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Income (loss) per common share:
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Basic
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$ |
0.19 |
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$ |
(0.68 |
) |
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Diluted
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$ |
0.19 |
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$ |
(0.68 |
) |
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Shares used in computing income (loss) per common share:
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Basic
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176,801 |
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175,718 |
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Diluted
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190,764 |
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175,718 |
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(1) |
See Note 2, Restatement of Consolidated Financial
Statements, Special Committee and Company Findings of the
Notes to Condensed Consolidated Financial Statements. |
The accompanying notes are an integral part of these statements.
4
AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
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March 31, | |
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December 31, | |
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2006 | |
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2005 | |
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(As restated)(1) | |
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(As restated)(1) | |
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(In thousands) | |
ASSETS |
Current assets:
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Cash and cash equivalents
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$ |
226,243 |
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$ |
206,575 |
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Accounts receivable:
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Trade, net of allowance for doubtful accounts of $4,995 and
$4,947
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381,011 |
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381,495 |
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Other
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9,600 |
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5,089 |
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Inventories, net
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148,253 |
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138,109 |
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Other current assets
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30,414 |
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35,222 |
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Total current assets
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795,521 |
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766,490 |
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Property, plant and equipment, net
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1,454,674 |
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1,419,472 |
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Goodwill
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672,007 |
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653,717 |
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Intangibles, net
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36,421 |
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38,391 |
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Investments
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6,350 |
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9,668 |
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Other assets
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44,930 |
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67,353 |
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Total assets
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$ |
3,009,903 |
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$ |
2,955,091 |
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LIABILITIES AND STOCKHOLDERS EQUITY |
Current liabilities:
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Short-term borrowings and current portion of long-term debt
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$ |
339,146 |
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$ |
184,389 |
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Trade accounts payable
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346,831 |
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326,712 |
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Accrued expenses
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130,927 |
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124,027 |
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Total current liabilities
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816,904 |
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635,128 |
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Long-term debt
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1,678,801 |
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1,856,247 |
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Long-term debt, related party
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100,000 |
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100,000 |
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Other non-current liabilities
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150,576 |
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135,861 |
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Total liabilities
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2,746,281 |
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2,727,236 |
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Commitments and contingencies (see Note 14)
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Minority interests
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3,622 |
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3,950 |
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Stockholders equity:
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Preferred stock, $0.001 par value, 10,000 shares
authorized, designated Series A, none issued
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Common stock, $0.001 par value, 500,000 shares
authorized, issued and outstanding of 176,905 in 2006 and
176,733 in 2005
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178 |
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178 |
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Additional paid-in capital
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1,433,468 |
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1,431,543 |
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Accumulated deficit
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(1,177,035 |
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(1,211,474 |
) |
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Accumulated other comprehensive income
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3,389 |
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3,658 |
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Total stockholders equity
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260,000 |
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223,905 |
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Total liabilities and stockholders equity
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$ |
3,009,903 |
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$ |
2,955,091 |
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(1) |
See Note 2, Restatement of Consolidated Financial
Statements, Special Committee and Company Findings of the
Notes to Condensed Consolidated Financial Statements. |
The accompanying notes are an integral part of these statements.
5
AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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For the Three Months Ended | |
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March 31, | |
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2006 | |
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2005 | |
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(As restated)(1) | |
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(As restated)(1) | |
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(In thousands) | |
Cash flows from operating activities:
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Net income (loss)
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$ |
34,439 |
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$ |
(119,163 |
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Depreciation and amortization
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66,061 |
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60,858 |
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Other non-cash items
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15,007 |
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1,475 |
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Changes in assets and liabilities, excluding effects of
acquisitions
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3,462 |
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50,388 |
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Net cash provided by (used in) operating activities
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118,969 |
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(6,442 |
) |
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Cash flows from investing activities:
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Payments for property, plant and equipment
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(79,098 |
) |
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(66,712 |
) |
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Proceeds from the sale of property, plant and equipment
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923 |
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156 |
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Net cash used in investing activities
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(78,175 |
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(66,556 |
) |
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Cash flows from financing activities:
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Net change in bank overdrafts
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(102 |
) |
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Borrowings under revolving credit facilities
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63,092 |
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55,603 |
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Payments under revolving credit facilities
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(52,628 |
) |
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(63,813 |
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Payments for debt issuance costs
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(485 |
) |
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Payments on long-term debt
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(32,742 |
) |
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(3,504 |
) |
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Proceeds from issuance of stock through stock compensation plans
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|
832 |
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Net cash used in financing activities
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|
(21,931 |
) |
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|
(11,816 |
) |
|
|
|
|
|
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Effect of exchange rate fluctuations on cash and cash equivalents
|
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|
805 |
|
|
|
(710 |
) |
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|
|
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Net increase (decrease) in cash and cash equivalents
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|
19,668 |
|
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|
(85,524 |
) |
Cash and cash equivalents, beginning of period
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|
206,575 |
|
|
|
372,284 |
|
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Cash and cash equivalents, end of period
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|
$ |
226,243 |
|
|
$ |
286,760 |
|
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Supplemental disclosures of cash flow information:
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Cash paid during the period for:
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Interest
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$ |
40,400 |
|
|
$ |
40,170 |
|
|
|
Income taxes
|
|
$ |
1,508 |
|
|
$ |
2,733 |
|
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Non cash investing and financing activities:
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|
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|
|
|
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Application of deposit upon closing of acquisition of minority
interest
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$ |
17,822 |
|
|
$ |
|
|
|
|
(1) |
See Note 2, Restatement of Consolidated Financial
Statements, Special Committee and Company Findings of the
Notes to Condensed Consolidated Financial Statements. |
The accompanying notes are an integral part of these statements.
6
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
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1. |
Interim Financial Statements |
Basis of Presentation. The condensed consolidated
financial statements and related disclosures as of
March 31, 2006 and for the three months ended
March 31, 2006 and 2005 are unaudited, pursuant to the
rules and regulations of the Securities and Exchange Commission
(SEC). Certain information and footnote disclosures
normally included in financial statements prepared in accordance
with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. In
our opinion, these financial statements include all adjustments
(consisting only of normal recurring adjustments) necessary for
the fair presentation of the results for the interim periods.
These financial statements should be read in conjunction with
our latest annual report as of December 31, 2005 filed on
Form 10-K/ A with
the Securities and Exchange Commission. The results of
operations for the three months ended March 31, 2006 are
not necessarily indicative of the results to be expected for the
full year. Certain previously reported amounts have been
reclassified to conform to the current presentation.
Use of Estimates. The condensed consolidated financial
statements have been prepared in conformity with accounting
principles generally accepted in the United States of America
(U.S.), using managements best estimates and
judgments where appropriate. These estimates and judgments
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements. The estimates and judgments will also
affect the reported amounts for certain revenues and expenses
during the reporting period. Actual results could differ
materially from these estimates and judgments.
Income Taxes. We operate in and file income tax returns
in various U.S. and foreign jurisdictions which are subject to
examination by tax authorities. For our larger foreign
operations, our tax returns have been examined through 1999 in
Korea, through 2001 in the Philippines and through 2002 in
Taiwan and Japan. Our U.S. tax returns have been examined
through 2003. Tax returns for open years in all jurisdictions
are subject to change upon examination.
During 2005, the IRS commenced an examination of our
U.S. federal income tax returns for years 2002 and 2003,
which primarily focused on inter-company transfer pricing and
cost-sharing issues carried over from 2000 and 2001 examination.
The IRS proposed four adjustments, and in 2005, we agreed to
three of them, lowering our U.S. net operating loss
carryforwards at December 31, 2005 by $36.1 million.
In April 2006, we reached an
agreement-in-principle
with the IRS on the last adjustment, further reducing our net
operating loss carryforwards by $10 million. Because we
maintain a full valuation allowance on our U.S. net
operating loss carryforwards, these adjustments had no impact on
our consolidated financial condition or results of operations.
Our estimated tax liability is subject to change as examinations
of our tax returns are completed by the tax authorities in the
respective jurisdictions. We believe that any additional taxes
or related interest over the amounts accrued will not have a
material effect on our financial condition, results of
operations or cash flows, nor do we expect that such
examinations will result in a material favorable impact.
However, resolution of these matters involves uncertainties and
there are no assurances that the outcome will be favorable.
Income tax expense for the three months ended March 31,
2006 and 2005 is attributable to foreign withholding taxes and
income taxes at our profitable foreign operations. For the
remainder of 2006, we anticipate an effective income tax rate of
approximately 7.5%, which reflects the utilization of U.S. and
foreign net operating loss carryforwards and tax holidays in
certain foreign jurisdictions. At March 31, 2006, we had
U.S. net operating loss carryforwards totaling
$363.6 million which expire at various times through 2025.
Additionally, at March 31, 2006, we had $85.0 million
of
non-U.S. operating
loss carryforwards, which expire at various times through 2011.
7
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
We maintain a full valuation allowance on substantially all of
our deferred tax assets, including our net operating loss
carryforwards, and we will release such valuation allowance as
the related tax benefits are realized on our tax returns or once
we achieve sustained profitable operations.
|
|
|
New Accounting Standards. |
|
|
|
Recently Issued Standards |
In February 2006, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 155, Accounting for
Certain Hybrid Financial Instruments (SFAS
No. 155), which amends SFAS No. 133,
Accounting for Derivative Instruments and Hedging
Activities (SFAS No. 133) and
SFAS No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities
(SFAS No. 140). SFAS No. 155 simplifies
the accounting for certain derivatives embedded in other
financial instruments by allowing them to be accounted for as a
whole if the holder elects to account for the whole instrument
on a fair value basis. SFAS No. 155 also clarifies and
amends certain other provisions of SFAS No. 133 and SFAS
No. 140. SFAS No. 155 is effective for all financial
instruments acquired, issued or subject to a remeasurement event
occurring in fiscal years beginning after September 15,
2006. Earlier adoption is permitted, provided the Company has
not yet issued financial statements, including for interim
periods, for that fiscal year. We do not expect the adoption of
SFAS No. 155 to have a material impact on our Condensed
Consolidated Financial Statements.
|
|
|
Recently Adopted Standards |
In November 2004, the FASB issued SFAS No. 151,
Inventory Costs, an Amendment of ARB No. 43,
Chapter 4. SFAS No. 151 clarifies that
abnormal amounts of idle facility expense, freight, handling
costs and wasted materials (spoilage) should be recognized
as current-period charges and requires the allocation of fixed
production overheads to inventory based on the normal capacity
of the production facilities. The guidance in this Statement is
effective for inventory costs incurred during fiscal years
beginning after June 15, 2005. We adopted the provisions of
SFAS No. 151 on January 1, 2006. The adoption of
this Statement did not have a material impact on our financial
statements and disclosures.
In December 2004, the FASB issued SFAS No. 153,
Exchanges of Nonmonetary Assets, an Amendment of APB Opinion
No. 29, Accounting for Nonmonetary Transactions.
SFAS No. 153 eliminates the exception from fair value
measurement for nonmonetary exchanges of similar productive
assets in paragraph 21(b) of APB Opinion No. 29 and
replaces it with an exception for exchanges that do not have
commercial substance. SFAS No. 153 specifies that a
nonmonetary exchange has commercial substance if the future cash
flows of the entity are expected to change significantly as a
result of the exchange. SFAS No. 153 is effective in
fiscal years beginning after June 15, 2005. We adopted the
provisions of SFAS No. 153 on January 1, 2006.
The adoption of this statement did not have a material impact on
our financial statements and disclosures.
In May 2005, the FASB issued SFAS No. 154,
Accounting Changes and Error Corrections.
SFAS No. 154 replaces APB No. 20, Accounting
Changes and SFAS No. 3, Reporting Accounting
Changes in Interim Financial Statements and establishes
retrospective application as the required method for reporting a
change in accounting principle. SFAS No. 154 provides
guidance for determining whether retrospective application of a
change in accounting principle is impracticable and how to
report such a change. The reporting of a correction of an error
by restating previously issued financial statements is also
addressed. SFAS No. 154 is effective for accounting
changes and corrections of errors made in fiscal years beginning
after December 15, 2005. We adopted the provisions of
SFAS No. 154 on January 1, 2006.
Effective January 1, 2006, we adopted
SFAS No. 123 (revised 2004), Share-Based Payments
(SFAS No. 123R), which revises
SFAS No. 123, Accounting for Stock-Based
Compensation and supersedes Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees
(See Note 4 for further discussion).
8
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
In November 2005, FASB issued FSP FAS 115-1/
FAS 124-1, The Meaning of Other-Than-Temporary
Impairment and Its Application to Certain Investments (FSP
115-1/124-1). FSP 115-1/124-1 provides guidance on determining
when investments in certain debt and equity securities are
considered impaired, whether that impairment is
other-than-temporary, and on measuring such impairment loss. FSP
115-1/124-1 also includes accounting considerations subsequent
to the recognition of an other-than-temporary impairment and
requires certain disclosures about unrealized losses that have
not been recognized as other-than-temporary impairments. This
FSP is required to be applied to reporting periods beginning
after December 15, 2005. We adopted the provisions FSP
115-1/124-1 on January 1, 2006. The adoption of this FSP
did not have a material impact on our financial statements and
disclosures.
|
|
2. |
Restatement of Consolidated Financial Statements, Special
Committee and Company Findings |
As a result of a report by a third party financial analyst
issued on May 25, 2006, we commenced an initial review of
our historical stock option granting practices. This review
included a review of hard copy documents as well as a limited
set of electronic documents. Following this initial review, on
July 24, 2006 our Board of Directors established a Special
Committee comprised of independent directors to conduct a review
of our historical stock option granting practices during the
period from our initial public offering in 1998 through the
present.
Based on the findings of the Special Committee and our internal
review, we identified a number of occasions on which we used an
incorrect measurement date for financial accounting and
reporting purposes. In accordance with Accounting Principles
Board No. 25, Accounting for Stock Issued to
Employees and related interpretations (APB
No. 25) , with respect to the period through December
31, 2005, we should have recorded compensation expense in an
amount per share subject to each option to the extent that the
fair market value of our stock on the correct measurement date
exceeded the exercise price of the option. For periods
commencing January 1, 2006, compensation expense is
recorded in accordance with Statement of Financial Accounting
Standards No. 123(R) (revised) Share-Based
Payment (SFAS No. 123(R)). We have also
identified a number of other option grants for which we failed
to properly apply the provisions of APB No. 25 or Statement
of Financial Accounting Standards No. 123 Accounting
for Stock-Based Compensation
(SFAS No. 123) and related interpretations
of each pronouncement. In considering the causes of the
accounting errors set forth below, the Special Committee
concluded that the evidence does not support a finding of
intentional manipulation of stock option grant pricing by any
member of existing management. However, based on its review, the
Special Committee identified evidence that supports a finding of
intentional manipulation of stock option pricing with respect to
annual grants in 2001 and 2002 by a former executive and that
other former executives may have been aware of, or participated
in this conduct. In addition the Special Committee identified a
number of other factors related to our internal controls that
9
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
contributed to the accounting errors that led to the
restatement. The financial statement impact of these errors, by
type, for the periods indicated is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months | |
|
|
|
|
|
Total | |
|
|
Ended | |
|
Year Ended December 31, | |
|
Cumulative | |
|
Additional | |
|
|
June 30, | |
|
| |
|
Effect | |
|
Compensation | |
|
|
2006 | |
|
2005 | |
|
2004 | |
|
2003 | |
|
2002-1998 | |
|
Expense | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(In thousands) | |
Improper measurement dates for annual stock option grants
|
|
$ |
299 |
|
|
$ |
255 |
|
|
$ |
7,577 |
|
|
$ |
6,453 |
|
|
$ |
80,984 |
|
|
$ |
95,568 |
|
Modifications to stock option grants
|
|
|
|
|
|
|
9 |
|
|
|
(536 |
) |
|
|
711 |
|
|
|
9,345 |
|
|
|
9,529 |
|
Improper measurement dates for other stock option grants
|
|
|
80 |
|
|
|
64 |
|
|
|
217 |
|
|
|
102 |
|
|
|
1,625 |
|
|
|
2,088 |
|
Stock option grants to non-employees
|
|
|
|
|
|
|
|
|
|
|
26 |
|
|
|
172 |
|
|
|
1,443 |
|
|
|
1,641 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional compensation expense
|
|
|
379 |
|
|
|
328 |
|
|
|
7,284 |
|
|
|
7,438 |
|
|
|
93,397 |
|
|
|
108,826 |
|
Tax related effects
|
|
|
129 |
|
|
|
18 |
|
|
|
144 |
|
|
|
198 |
|
|
|
(3,294 |
) |
|
|
(2,805 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate restatement of net income (loss)
|
|
$ |
508 |
|
|
$ |
346 |
|
|
$ |
7,428 |
|
|
$ |
7,636 |
|
|
$ |
90,103 |
|
|
$ |
106,021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Improper Measurement Dates for Annual Stock Option
Grants. We determined that, in connection with our annual
stock option grants to employees in 1999, 2000, 2001, 2002 and
2004, the number of shares that an individual employee was
entitled to receive was not determined until after the original
grant date, and therefore the measurement date for such options
was subsequent to the original grant date. As a result, we have
restated our historical financial statements to increase
stock-based compensation expense by a total of
$95.6 million recognized over the applicable vesting
periods. For certain of these options forfeited in 2002 in
connection with an option exchange program (2002 Option
Exchange Program), the remaining compensation expense was
accelerated into 2002 for those options. For certain other
options, compensation expense was accelerated into 2004, in
connection with the acceleration of all unvested options as of
July 1, 2004 (2004 Accelerated Vesting). We
undertook the 2004 Accelerated Vesting program for the purpose
of enhancing employee morale, helping retain high potential
employees in the face of a downturn in industry conditions and
to avoid future compensation charges subsequent to the adoption
of SFAS No. 123(R).
Modifications to Stock Option Grants. We determined that
from 1998 through 2005, we had not properly accounted for stock
options modified for certain individuals who held consulting,
transition or advisory roles with us. These included instances
of continued vesting after an individual was no longer required
to provide substantive services to Amkor after an individual
converted from an employee to a consultant or advisory role, and
extensions of option vesting and exercise periods. Some of these
modifications were not identified in our financial reporting
processes and were therefore not properly reflected in our
financial statements. As a result, we have restated our
historical financial statements to increase stock-based
compensation expense by a total of $9.5 million recognized
as of the date of the respective modifications.
Improper Measurement Dates for Other Stock Option Grants.
We determined that from 1998 through 2005, we had not properly
accounted for certain employee stock options granted prior to
obtaining authorization of the grants. These options included
those granted as of November 9, 1998 in connection with the
settlement of a deferred compensation liability to employees
that had not been approved by our Board of Directors until
November 10, 1998 as well as stock options granted to new
hires and existing employees in recognition of achievements,
promotions, retentions and other events. As a result of these
errors, we have restated our historical financial statements to
increase stock-based compensation expense by a total of
$2.1 million recognized over the applicable vesting
periods. For certain of these option grants, the recognition of
this expense was also accelerated under the 2002 Option Exchange
Program or the 2004 Accelerated Vesting, as described under
Improper Measurement Dates for Annual Stock Option
Grants.
10
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Stock Option Grants to Non-employees. We determined that
from 1998 to 2004, we had not properly accounted for stock
option grants issued to employees of an equity affiliate,
consultants, or other persons who did not meet the definition of
an employee. We erroneously accounted for such grants in
accordance with APB No. 25 rather than
SFAS No. 123 and related interpretations. As a result,
we have restated our historical financial statements to increase
stock-based compensation expense by a total of $1.6 million.
All of the foregoing charges were non-cash and had no impact on
our reported net sales or cash or cash equivalents. The
aggregate amount of the additional stock-based compensation
expense that we identified as a result of the stock option
review is approximately $108.8 million through
June 30, 2006.
Incremental stock-based
compensation charges of $108.8 million resulted in deferred
income tax benefits of $3.2 million. Such amount is nominal
relative to the amount of the incremental
stock-based
compensation charges as we maintained a full valuation allowance
against our domestic deferred tax assets since 2002 coupled with
the fact that incremental
stock-based
compensation charges relating to our foreign subsidiaries were
not deductible for local tax purposes during the relevant
periods due to the absence of related
re-charge agreements
with those subsidiaries. The $3.2 million deferred tax
benefit resulted primarily from the
write-off of
stock-based
compensation related deferred tax assets to additional
paid-in capital in
2002; such write-off
had originally been charged to income tax expense in 2002. We
also recorded payroll related taxes totaling $0.4 million
primarily relating to certain of our French employees.
As a result of our determination that the exercise prices of
certain option grants were below the market price of our stock
on the actual grant date, we evaluated whether the affected
employees would have any adverse tax consequences under Section
409A of the Internal Revenue Code (the IRC). Because
Section 409A relates to the employees income
recognition as stock options vest, when we accelerated the
vesting of all unvested options in July 2004 (the 2004
Accelerated Vesting described under Improper
Measurement Dates for Annual Grants) the impact of Section
409A was mitigated for substantially all of our outstanding
stock grants. For stock options granted subsequent to the 2004
Accelerated Vesting, the impact of Section 409A is not expected
to materially impact our employees and financial statements as a
result of various transition rules and potential remediation
efforts. Further we considered IRC Section 162(m) and its
established limitation thresholds relating to total remuneration
and concluded, for periods prior to June 30, 2006, that our tax
deductions related to stock-based compensation were not
materially changed as a result of any employee whose
remuneration changed as a result of receiving an option at less
than fair value.
As previously disclosed, we are the subject of an SEC
investigation concerning matters unrelated to our historical
stock option practices. The SEC recently informed us that it is
expanding the scope of its investigation and has requested that
we provide documentation related to our historical stock option
practices. We intend to continue to cooperate with the SEC. As a
result of the aforementioned restatement, the related
disclosures included in the Notes to Condensed Consolidated
Financial Statements have been revised if indicated as restated.
11
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table sets forth the impact of the additional
non-cash charges for stock-based compensation expense and
related tax effects on our historical financial statements for
the three months ended March 31, 2006 and 2005.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, | |
|
|
| |
|
|
2006 | |
|
2005 | |
|
|
| |
|
| |
|
|
As Previously | |
|
|
|
As Previously | |
|
|
|
|
Reported | |
|
Adjustments | |
|
As Restated | |
|
Reported | |
|
Adjustments | |
|
As Restated | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(In thousands, except per share data) | |
Net sales
|
|
$ |
645,089 |
|
|
$ |
|
|
|
$ |
645,089 |
|
|
$ |
417,481 |
|
|
$ |
|
|
|
$ |
417,481 |
|
Cost of sales
|
|
|
490,071 |
|
|
|
281 |
|
|
|
490,352 |
|
|
|
374,086 |
|
|
|
46 |
|
|
|
374,132 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
155,018 |
|
|
|
(281 |
) |
|
|
154,737 |
|
|
|
43,395 |
|
|
|
(46 |
) |
|
|
43,349 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
60,251 |
|
|
|
(47 |
) |
|
|
60,204 |
|
|
|
60,466 |
|
|
|
47 |
|
|
|
60,513 |
|
|
Research and development
|
|
|
9,430 |
|
|
|
|
|
|
|
9,430 |
|
|
|
8,900 |
|
|
|
|
|
|
|
8,900 |
|
|
Provision for legal settlements and contingencies
|
|
|
1,000 |
|
|
|
|
|
|
|
1,000 |
|
|
|
50,000 |
|
|
|
|
|
|
|
50,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
70,681 |
|
|
|
(47 |
) |
|
|
70,634 |
|
|
|
119,366 |
|
|
|
47 |
|
|
|
119,413 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
84,337 |
|
|
|
(234 |
) |
|
|
84,103 |
|
|
|
(75,971 |
) |
|
|
(93 |
) |
|
|
(76,064 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (income) expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
41,157 |
|
|
|
|
|
|
|
41,157 |
|
|
|
40,513 |
|
|
|
|
|
|
|
40,513 |
|
|
Interest expense, related party
|
|
|
1,788 |
|
|
|
|
|
|
|
1,788 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency loss
|
|
|
3,928 |
|
|
|
|
|
|
|
3,928 |
|
|
|
2,232 |
|
|
|
|
|
|
|
2,232 |
|
|
Other (income) expense, net
|
|
|
(936 |
) |
|
|
|
|
|
|
(936 |
) |
|
|
178 |
|
|
|
|
|
|
|
178 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other expense, net
|
|
|
45,937 |
|
|
|
|
|
|
|
45,937 |
|
|
|
42,923 |
|
|
|
|
|
|
|
42,923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes and minority interests
|
|
|
38,400 |
|
|
|
(234 |
) |
|
|
38,166 |
|
|
|
(118,894 |
) |
|
|
(93 |
) |
|
|
(118,987 |
) |
Income tax expense
|
|
|
3,612 |
|
|
|
|
|
|
|
3,612 |
|
|
|
1,187 |
|
|
|
|
|
|
|
1,187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before minority interest income (expense)
|
|
|
34,788 |
|
|
|
(234 |
) |
|
|
34,554 |
|
|
|
(120,081 |
) |
|
|
(93 |
) |
|
|
(120,174 |
) |
Minority interest income (expense), net of tax
|
|
|
(115 |
) |
|
|
|
|
|
|
(115 |
) |
|
|
1,011 |
|
|
|
|
|
|
|
1,011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$ |
34,673 |
|
|
$ |
(234 |
) |
|
$ |
34,439 |
|
|
$ |
(119,070 |
) |
|
$ |
(93 |
) |
|
$ |
(119,163 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
0.20 |
|
|
$ |
(0.01 |
) |
|
$ |
0.19 |
|
|
$ |
(0.68 |
) |
|
$ |
|
|
|
$ |
(0.68 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$ |
0.19 |
|
|
$ |
|
|
|
$ |
0.19 |
|
|
$ |
(0.68 |
) |
|
$ |
|
|
|
$ |
(0.68 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
176,801 |
|
|
|
|
|
|
|
176,801 |
|
|
|
175,718 |
|
|
|
|
|
|
|
175,718 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
191,015 |
|
|
|
|
|
|
|
190,764 |
|
|
|
175,718 |
|
|
|
|
|
|
|
175,718 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table sets forth the impact of the additional
non-cash charges for stock-based compensation expense and
related tax effects on our consolidated balance sheet as of
March 31, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2006 | |
|
|
| |
|
|
As Previously | |
|
|
|
|
Reported | |
|
Adjustments | |
|
As Restated | |
|
|
| |
|
| |
|
| |
|
|
(In thousands, except per share data) | |
ASSETS |
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$ |
226,243 |
|
|
$ |
|
|
|
$ |
226,243 |
|
|
Accounts receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade, net of allowance for doubtful accounts of $4,995
|
|
|
381,011 |
|
|
|
|
|
|
|
381,011 |
|
|
|
Other
|
|
|
9,600 |
|
|
|
|
|
|
|
9,600 |
|
|
Inventories, net
|
|
|
148,253 |
|
|
|
|
|
|
|
148,253 |
|
|
Other current assets
|
|
|
30,414 |
|
|
|
|
|
|
|
30,414 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
795,521 |
|
|
|
|
|
|
|
795,521 |
|
|
Property, plant and equipment, net
|
|
|
1,454,674 |
|
|
|
|
|
|
|
1,454,674 |
|
|
Goodwill
|
|
|
672,007 |
|
|
|
|
|
|
|
672,007 |
|
|
Intangibles, net
|
|
|
36,421 |
|
|
|
|
|
|
|
36,421 |
|
|
Investments
|
|
|
6,350 |
|
|
|
|
|
|
|
6,350 |
|
|
Other assets
|
|
|
44,930 |
|
|
|
|
|
|
|
44,930 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
3,009,903 |
|
|
$ |
|
|
|
$ |
3,009,903 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY |
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings and current portion of long-term debt
|
|
|
339,146 |
|
|
|
|
|
|
|
339,146 |
|
|
Trade accounts payable
|
|
|
346,831 |
|
|
|
|
|
|
|
346,831 |
|
|
Accrued expenses
|
|
|
130,529 |
|
|
|
398 |
|
|
|
130,927 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
816,506 |
|
|
|
398 |
|
|
|
816,904 |
|
|
Long-term debt, related party
|
|
|
100,000 |
|
|
|
|
|
|
|
100,000 |
|
|
Long-term debt
|
|
|
1,678,801 |
|
|
|
|
|
|
|
1,678,801 |
|
|
Other non-current liabilities
|
|
|
150,576 |
|
|
|
|
|
|
|
150,576 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
2,745,883 |
|
|
|
398 |
|
|
|
2,746,281 |
|
Commitments and contingencies (see Note 14)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interests
|
|
|
3,622 |
|
|
|
|
|
|
|
3,622 |
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value, 10,000 shares authorized
designated Series A, none issued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $0.001 par value, 500,000 shares authorized,
issued and outstanding of 176,733 in 2005 and 175,718 in 2004
|
|
|
178 |
|
|
|
|
|
|
|
178 |
|
|
Additional paid-in capital
|
|
|
1,328,119 |
|
|
|
105,349 |
|
|
|
1,433,468 |
|
|
Accumulated deficit
|
|
|
(1,071,288 |
) |
|
|
(105,747 |
) |
|
|
(1,177,035 |
) |
|
Accumulated other comprehensive income
|
|
|
3,389 |
|
|
|
|
|
|
|
3,389 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
260,398 |
|
|
|
(398 |
) |
|
|
260,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$ |
3,009,903 |
|
|
$ |
|
|
|
$ |
3,009,903 |
|
|
|
|
|
|
|
|
|
|
|
13
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table sets forth the impact of the additional
non-cash charges for stock-based compensation expense and
related tax effects on our historical financial statements for
each of the three years ended December 31, 2005.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, | |
|
|
| |
|
|
2005 | |
|
2004 | |
|
2003 | |
|
|
| |
|
| |
|
| |
|
|
As Previously | |
|
|
|
As Previously | |
|
|
|
As Previously | |
|
|
|
|
Reported | |
|
Adjustments | |
|
As Restated | |
|
Reported | |
|
Adjustments | |
|
As Restated | |
|
Reported | |
|
Adjustments | |
|
As Restated | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(In thousands, except per share data) | |
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$ |
2,099,949 |
|
|
$ |
|
|
|
$ |
2,099,949 |
|
|
$ |
1,901,279 |
|
|
$ |
|
|
|
$ |
1,901,279 |
|
|
$ |
1,603,768 |
|
|
$ |
|
|
|
$ |
1,603,768 |
|
Cost of sales
|
|
|
1,743,996 |
|
|
|
182 |
|
|
|
1,744,178 |
|
|
|
1,533,447 |
|
|
|
4,562 |
|
|
|
1,538,009 |
|
|
|
1,267,302 |
|
|
|
3,277 |
|
|
|
1,270,579 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
355,953 |
|
|
|
(182 |
) |
|
|
355,771 |
|
|
|
367,832 |
|
|
|
(4,562 |
) |
|
|
363,270 |
|
|
|
336,466 |
|
|
|
(3,277 |
) |
|
|
333,189 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
243,155 |
|
|
|
164 |
|
|
|
243,319 |
|
|
|
221,915 |
|
|
|
2,866 |
|
|
|
224,781 |
|
|
|
183,291 |
|
|
|
3,963 |
|
|
|
187,254 |
|
Research and development
|
|
|
37,347 |
|
|
|
|
|
|
|
37,347 |
|
|
|
36,707 |
|
|
|
|
|
|
|
36,707 |
|
|
|
30,167 |
|
|
|
|
|
|
|
30,167 |
|
Provision for legal settlements and contingencies
|
|
|
50,000 |
|
|
|
|
|
|
|
50,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of specialty test operations
|
|
|
(4,408 |
) |
|
|
|
|
|
|
(4,408 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
326,094 |
|
|
|
164 |
|
|
|
326,258 |
|
|
|
258,622 |
|
|
|
2,866 |
|
|
|
261,488 |
|
|
|
213,458 |
|
|
|
3,963 |
|
|
|
217,421 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
29,859 |
|
|
|
(346 |
) |
|
|
29,513 |
|
|
|
109,210 |
|
|
|
(7,428 |
) |
|
|
101,782 |
|
|
|
123,008 |
|
|
|
(7,240 |
) |
|
|
115,768 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (income) expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, related party
|
|
|
521 |
|
|
|
|
|
|
|
521 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
165,351 |
|
|
|
|
|
|
|
165,351 |
|
|
|
148,902 |
|
|
|
|
|
|
|
148,902 |
|
|
|
140,281 |
|
|
|
|
|
|
|
140,281 |
|
|
Foreign currency (gain) loss
|
|
|
9,318 |
|
|
|
|
|
|
|
9,318 |
|
|
|
6,190 |
|
|
|
|
|
|
|
6,190 |
|
|
|
(3,022 |
) |
|
|
|
|
|
|
(3,022 |
) |
|
Other (income) expense, net
|
|
|
(444 |
) |
|
|
|
|
|
|
(444 |
) |
|
|
(24,444 |
) |
|
|
|
|
|
|
(24,444 |
) |
|
|
31,052 |
|
|
|
|
|
|
|
31,052 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other expense
|
|
|
174,746 |
|
|
|
|
|
|
|
174,746 |
|
|
|
130,648 |
|
|
|
|
|
|
|
130,648 |
|
|
|
168,311 |
|
|
|
|
|
|
|
168,311 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes, equity investment losses, minority
interests and discontinued operations
|
|
|
(144,887 |
) |
|
|
(346 |
) |
|
|
(145,233 |
) |
|
|
(21,438 |
) |
|
|
(7,428 |
) |
|
|
(28,866 |
) |
|
|
(45,303 |
) |
|
|
(7,240 |
) |
|
|
(52,543 |
) |
Equity investment losses
|
|
|
(55 |
) |
|
|
|
|
|
|
(55 |
) |
|
|
(2 |
) |
|
|
|
|
|
|
(2 |
) |
|
|
(3,290 |
) |
|
|
|
|
|
|
(3,290 |
) |
Minority interests
|
|
|
2,502 |
|
|
|
|
|
|
|
2,502 |
|
|
|
(904 |
) |
|
|
|
|
|
|
(904 |
) |
|
|
(4,008 |
) |
|
|
|
|
|
|
(4,008 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations before income taxes
|
|
|
(142,440 |
) |
|
|
(346 |
) |
|
|
(142,786 |
) |
|
|
(22,344 |
) |
|
|
(7,428 |
) |
|
|
(29,772 |
) |
|
|
(52,601 |
) |
|
|
(7,240 |
) |
|
|
(59,841 |
) |
Income tax provision (benefit)
|
|
|
(5,551 |
) |
|
|
|
|
|
|
(5,551 |
) |
|
|
15,192 |
|
|
|
|
|
|
|
15,192 |
|
|
|
(233 |
) |
|
|
|
|
|
|
(233 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
|
(136,889 |
) |
|
|
(346 |
) |
|
|
(137,235 |
) |
|
|
(37,536 |
) |
|
|
(7,428 |
) |
|
|
(44,964 |
) |
|
|
(52,368 |
) |
|
|
(7,240 |
) |
|
|
(59,608 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,566 |
|
|
|
(396 |
) |
|
|
54,170 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$ |
(136,889 |
) |
|
$ |
(346 |
) |
|
$ |
(137,235 |
) |
|
$ |
(37,536 |
) |
|
$ |
(7,428 |
) |
|
$ |
(44,964 |
) |
|
$ |
2,198 |
|
|
$ |
(7,636 |
) |
|
$ |
(5,438 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From continuing operations
|
|
$ |
(0.78 |
) |
|
$ |
|
|
|
$ |
(0.78 |
) |
|
$ |
(0.21 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.26 |
) |
|
$ |
(0.31 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.35 |
) |
From discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.32 |
|
|
|
|
|
|
|
0.32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per common share
|
|
$ |
(0.78 |
) |
|
$ |
|
|
|
$ |
(0.78 |
) |
|
$ |
(0.21 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.26 |
) |
|
$ |
0.01 |
|
|
$ |
(0.04 |
) |
|
$ |
(0.03 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
176,385 |
|
|
|
|
|
|
|
176,385 |
|
|
|
175,342 |
|
|
|
|
|
|
|
175,342 |
|
|
|
167,142 |
|
|
|
|
|
|
|
167,142 |
|
Diluted
|
|
|
176,385 |
|
|
|
|
|
|
|
176,385 |
|
|
|
175,342 |
|
|
|
|
|
|
|
175,342 |
|
|
|
167,142 |
|
|
|
|
|
|
|
167,142 |
|
14
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table sets forth the impact of the additional
non-cash charges for stock-based compensation expense and
related tax effects on our consolidated balance sheets as of
December 31, 2005 and 2004.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, | |
|
|
| |
|
|
2005 | |
|
2004 | |
|
|
| |
|
| |
|
|
As | |
|
|
|
As | |
|
|
|
|
Previously | |
|
|
|
As | |
|
Previously | |
|
|
|
As | |
|
|
Reported | |
|
Adjustments | |
|
Restated | |
|
Reported | |
|
Adjustments | |
|
Restated | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(In thousands, except per share data) | |
ASSETS |
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$ |
206,575 |
|
|
$ |
|
|
|
$ |
206,575 |
|
|
$ |
372,284 |
|
|
$ |
|
|
|
$ |
372,284 |
|
|
Accounts receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade, net of allowance for doubtful accounts of $4,947 and
$5,074
|
|
|
381,495 |
|
|
|
|
|
|
|
381,495 |
|
|
|
265,547 |
|
|
|
|
|
|
|
265,547 |
|
|
|
Other
|
|
|
5,089 |
|
|
|
|
|
|
|
5,089 |
|
|
|
3,948 |
|
|
|
|
|
|
|
3,948 |
|
|
Inventories, net
|
|
|
138,109 |
|
|
|
|
|
|
|
138,109 |
|
|
|
111,616 |
|
|
|
|
|
|
|
111,616 |
|
|
Other current assets
|
|
|
35,222 |
|
|
|
|
|
|
|
35,222 |
|
|
|
32,591 |
|
|
|
|
|
|
|
32,591 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
766,490 |
|
|
|
|
|
|
|
766,490 |
|
|
|
785,986 |
|
|
|
|
|
|
|
785,986 |
|
|
Property, plant and equipment, net
|
|
|
1,419,472 |
|
|
|
|
|
|
|
1,419,472 |
|
|
|
1,380,396 |
|
|
|
|
|
|
|
1,380,396 |
|
|
Goodwill
|
|
|
653,717 |
|
|
|
|
|
|
|
653,717 |
|
|
|
656,052 |
|
|
|
|
|
|
|
656,052 |
|
|
Intangibles, net
|
|
|
38,391 |
|
|
|
|
|
|
|
38,391 |
|
|
|
47,302 |
|
|
|
|
|
|
|
47,302 |
|
|
Investments
|
|
|
9,668 |
|
|
|
|
|
|
|
9,668 |
|
|
|
13,762 |
|
|
|
|
|
|
|
13,762 |
|
|
Other assets
|
|
|
67,353 |
|
|
|
|
|
|
|
67,353 |
|
|
|
81,870 |
|
|
|
|
|
|
|
81,870 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
2,955,091 |
|
|
$ |
|
|
|
$ |
2,955,091 |
|
|
$ |
2,965,368 |
|
|
$ |
|
|
|
$ |
2,965,368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY |
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings and current portion of long-term debt
|
|
$ |
184,389 |
|
|
$ |
|
|
|
$ |
184,389 |
|
|
$ |
52,147 |
|
|
$ |
|
|
|
$ |
52,147 |
|
|
Trade accounts payable
|
|
|
326,712 |
|
|
|
|
|
|
|
326,712 |
|
|
|
211,808 |
|
|
|
|
|
|
|
211,808 |
|
|
Accrued expenses
|
|
|
123,631 |
|
|
|
396 |
|
|
|
124,027 |
|
|
|
175,075 |
|
|
|
378 |
|
|
|
175,453 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
634,732 |
|
|
|
396 |
|
|
|
635,128 |
|
|
|
439,030 |
|
|
|
378 |
|
|
|
439,408 |
|
|
Long-term debt, related party
|
|
|
100,000 |
|
|
|
|
|
|
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
1,856,247 |
|
|
|
|
|
|
|
1,856,247 |
|
|
|
2,040,813 |
|
|
|
|
|
|
|
2,040,813 |
|
|
Other non-current liabilities
|
|
|
135,861 |
|
|
|
|
|
|
|
135,861 |
|
|
|
109,317 |
|
|
|
|
|
|
|
109,317 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
2,726,840 |
|
|
|
396 |
|
|
|
2,727,236 |
|
|
|
2,589,160 |
|
|
|
378 |
|
|
|
2,589,538 |
|
Commitments and contingencies (see Note 14)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interests
|
|
|
3,950 |
|
|
|
|
|
|
|
3,950 |
|
|
|
6,679 |
|
|
|
|
|
|
|
6,679 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value, 10,000 shares authorized
designated Series A, none issued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $0.001 par value, 500,000 shares authorized,
issued and outstanding of 176,733 in 2005 and 175,718 in 2004
|
|
|
178 |
|
|
|
|
|
|
|
178 |
|
|
|
176 |
|
|
|
|
|
|
|
176 |
|
|
Additional paid-in capital
|
|
|
1,326,426 |
|
|
|
105,117 |
|
|
|
1,431,543 |
|
|
|
1,323,579 |
|
|
|
104,789 |
|
|
|
1,428,368 |
|
|
Accumulated deficit
|
|
|
(1,105,961 |
) |
|
|
(105,513 |
) |
|
|
(1,211,474 |
) |
|
|
(969,072 |
) |
|
|
(105,167 |
) |
|
|
(1,074,239 |
) |
|
Accumulated other comprehensive income
|
|
|
3,658 |
|
|
|
|
|
|
|
3,658 |
|
|
|
14,846 |
|
|
|
|
|
|
|
14,846 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
224,301 |
|
|
|
(396 |
) |
|
|
223,905 |
|
|
|
369,529 |
|
|
|
(378 |
) |
|
|
369,151 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$ |
2,955,091 |
|
|
$ |
|
|
|
$ |
2,955,091 |
|
|
$ |
2,965,368 |
|
|
$ |
|
|
|
$ |
2,965,368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The additional non-cash charges for stock-based compensation
expense and related tax effects had no impact on our
consolidated statements of cash flows. We identified a
classification error relating to stock-based compensation in our
consolidated statements of cash flows and we increased net cash
provided by operating activities by less than $0.1 million
and $0.6 million for the year ended December 31, 2005
and 2004, respectively, offset by a similar decrease in net cash
used in financing activities.
The cumulative effect of the stock option errors prior to
January 1, 2003 increased additional paid-in capital by
$90.1 million, increased accumulated deficit by
$90.1 million and impacted total stockholders equity
by less than $0.1 million. Incremental stock-based
compensation charges, net of tax, totaled $61.6 million,
$15.8 million, $9.5 million, and $3.2 million for
the years ended December 31, 2002, 2001, 2000 and 1999.
Basic earnings per share (EPS) is computed by
dividing net income (loss) by the weighted average number of
common shares outstanding during the period. Diluted EPS adjusts
net income and the outstanding shares for the dilutive effect of
stock options and convertible debt. The basic and diluted EPS
amounts are the same for the first quarter of 2005 due to net
losses. The following table summarizes the computation of basic
and diluted EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended | |
|
|
March 31, | |
|
|
| |
|
|
2006 | |
|
2005 | |
|
|
(As restated) | |
|
(As restated) | |
|
|
| |
|
| |
|
|
(In thousands, except per | |
|
|
share data) | |
Net income (loss)
|
|
$ |
34,439 |
|
|
$ |
(119,163 |
) |
Adjustment for dilutive securities on net income:
|
|
|
|
|
|
|
|
|
|
Interest on 6.25% convertible notes due 2013, net of tax
|
|
|
1,788 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) - diluted
|
|
$ |
36,227 |
|
|
$ |
(119,163 |
) |
|
|
|
|
|
|
|
Weighted average shares outstanding - basic
|
|
|
176,801 |
|
|
|
175,718 |
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
Stock options
|
|
|
|
|
|
|
|
|
|
Employee stock purchase plan
|
|
|
612 |
|
|
|
|
|
|
6.25% convertible notes due 2013
|
|
|
13,351 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - diluted
|
|
|
190,764 |
|
|
|
175,718 |
|
|
|
|
|
|
|
|
EPS:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
0.19 |
|
|
$ |
(0.68 |
) |
|
Diluted
|
|
$ |
0.19 |
|
|
$ |
(0.68 |
) |
16
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table summarizes the potential shares of common
stock that were excluded from diluted EPS, because the effect of
including these potential shares was antidilutive:
|
|
|
|
|
|
|
|
|
|
|
|
For the | |
|
|
Three Months | |
|
|
Ended | |
|
|
March 31, | |
|
|
| |
|
|
2006 | |
|
2005 | |
|
|
| |
|
| |
|
|
(In thousands) | |
Stock options
|
|
|
15,065 |
|
|
|
17,432 |
|
5% convertible notes
|
|
|
2,554 |
|
|
|
2,554 |
|
5.75% convertible notes
|
|
|
3,781 |
|
|
|
6,657 |
|
|
|
|
|
|
|
|
|
Total potentially dilutive shares
|
|
|
21,400 |
|
|
|
26,643 |
|
|
|
|
|
|
|
|
Stock options excluded from diluted EPS because the exercise
price was greater than the average market price of the common
shares
|
|
|
15,065 |
|
|
|
16,697 |
|
|
|
|
|
|
|
|
|
|
4. |
Stock Compensation Plans |
Effective January 1, 2006, we adopted
SFAS No. 123(R) which revises SFAS No. 123
and supersedes APB Opinion No. 25.
SFAS No. 123(R) requires that all share-based payments
to employees, including grants of employee stock options, be
measured at fair value and expensed in the Condensed
Consolidated Statement of Operations over the service period
(generally the vesting period). Upon adoption, we transitioned
to SFAS No. 123(R) using the modified prospective
method, whereby compensation cost is recognized in the Condensed
Consolidated Statements of Operations beginning with the first
period that SFAS No. 123(R) is effective and
thereafter, with prior periods stock-based compensation
for option and employee stock purchase plan activity still
presented on a pro forma basis. We continue to use the
Black-Scholes option valuation model to value stock options.
Compensation expense is measured and recognized beginning in
2006 as follows:
|
|
|
|
Awards granted after December 31, 2005
Awards are measured at their fair value at date of grant under
the provisions of SFAS No. 123(R). The resulting
compensation expense is recognized in the Condensed Consolidated
Statement of Operations ratably over the vesting period of the
award. However, if the employee becomes eligible for retirement
during the vesting period, the compensation expense is
recognized ratably only until the retirement eligibility date.
For employees eligible for retirement on the date of grant,
compensation expense is recognized immediately. |
|
|
|
Awards granted prior to December 31,
2005 Awards were measured at their fair value at
the date of original grant. Compensation expense associated with
the unvested portion of these options at January 1, 2006 is
recognized in the Condensed Consolidated Statement of Operations
ratably over the remaining vesting period without regard to the
employees retirement eligibility. Upon retirement, any
unrecognized compensation expense will be recognized immediately. |
|
|
|
For all grants, the amount of compensation expense to be
recognized is adjusted for an estimated forfeiture rate which is
based on historical data. As a result of the adoption of
SFAS No. 123(R), we recognized incremental expense of
$1.1 million, with no tax impact, or less than
$0.01 per diluted common share, in the three months ended
March 31, 2006, associated with the expensing of stock
options and employee stock purchase plan activity. |
|
17
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table presents stock-based compensation expense
included in the condensed consolidated statements of operations:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended | |
|
|
| |
|
|
March 31, | |
|
March 31, | |
|
|
2006 | |
|
2005 | |
|
|
(As restated) | |
|
(As restated) | |
|
|
| |
|
| |
|
|
(In thousands) | |
Cost of sales
|
|
$ |
281 |
|
|
$ |
46 |
|
Selling, general, and administrative
|
|
|
814 |
|
|
|
47 |
|
|
|
|
|
|
|
|
Stock-based compensation expense
|
|
$ |
1,095 |
|
|
$ |
93 |
|
|
|
|
|
|
|
|
In November 2005, the FASB issued FASB Staff Position
(FSP) No. 123R-3, Transition Election
Related to Accounting for the Tax Effects of Share-Based Payment
Awards. This pronouncement provides an alternative method of
calculating the excess tax benefit pool available to absorb any
tax deficiencies recognized subsequent to the adoption of
SFAS No. 123(R). We have until November 2006 to make a
one-time election to adopt the transition method. We are
currently evaluating FSP 123R-3; this one-time election will not
affect our Condensed Consolidated Statement of Operations in the
period of adoption.
Prior to January 1, 2006, as permitted under
SFAS No. 123, we applied APB Opinion No. 25 and
related interpretations in accounting for our stock-based
compensation plans. Under APB Opinion No. 25, compensation
expense was recognized for stock option grants if the exercise
price was below the fair value of the underlying stock at the
measurement date.
Had compensation costs been determined consistent with the
requirements of SFAS No. 123, pro forma net loss and
net loss per common share would have been as follows:
|
|
|
|
|
|
|
|
|
For the | |
|
|
Three Months | |
|
|
Ended | |
|
|
March 31, | |
|
|
2005 | |
|
|
(As restated) | |
|
|
| |
|
|
(In thousands, | |
|
|
except | |
|
|
per share data) | |
Net loss:
|
|
|
|
|
|
Net loss, as reported
|
|
$ |
(119,163 |
) |
|
Add: Stock-based compensation expense included in restated
results
|
|
|
93 |
|
|
Deduct: Total stock-based employee compensation determined under
fair value based method, net of tax
|
|
|
(595 |
) |
|
|
|
|
|
Net loss, pro forma
|
|
$ |
(119,665 |
) |
|
|
|
|
Loss per share:
|
|
|
|
|
|
Basic and diluted:
|
|
|
|
|
|
|
As reported
|
|
$ |
(0.68 |
) |
|
|
Pro forma
|
|
$ |
(0.68 |
) |
Pro forma compensation expense under SFAS No. 123 does
not include an upfront estimate of potential forfeitures, but
rather recognizes them as they occur and amortizes the
compensation expense for retirement eligible individuals over
the vesting period without consideration to acceleration of
vesting. These computational differences and the differences in
the terms and nature of 2006 stock-based compensation awards
create incomparability between the pro forma stock compensation
presented above and the stock compensation expense recognized in
2006.
18
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Stock Option Plans. Substantially all of the options
granted are exercisable pursuant to a two or four-year vesting
schedule and the term of the options granted is ten years. A
summary of the stock option plans and the respective plan
termination dates and shares available for grant as of
March 31, 2006 is shown below. For additional information
about our stock compensation plans, refer to Note 12 of the
Notes to Consolidated Financial Statements in our Annual Report
on Form 10-K/ A
for the year ended December 31, 2005.
|
|
|
|
|
|
|
|
|
1998 Director |
|
1998 Stock |
|
|
Stock Option Plans |
|
Option Plan |
|
Plan |
|
2003 Inducement Plan |
|
|
|
|
|
|
|
Contractual Life (yrs)
|
|
10 |
|
10 |
|
10 |
Plan termination date
|
|
January 2008 |
|
January 2008 |
|
Board of Directors Discretion |
Shares available for grant at March 31, 2006
|
|
111,666 |
|
6,215,386 |
|
339,600 |
In order to calculate the fair value of stock options at date of
grant, we used the Black-Scholes option pricing model. Expected
volatilities are weighted based on the historical performance of
our stock and implied volatilities. We also use historical data
to estimate the timing and amount of option exercises and
forfeitures within the valuation model. The expected term of the
options is based on evaluations of historical and expected
future employee exercise behavior and represents the period of
time that options granted are expected to be outstanding. The
risk-free interest rate for periods within the contractual life
of the option is based on the U.S. Treasury yield curve in
effect at the time of grant. The following assumptions were used
to calculate weighted average fair values of the options granted:
|
|
|
|
|
|
|
|
|
|
|
For the | |
|
|
Three Months | |
|
|
Ended | |
|
|
March 31, | |
|
|
| |
|
|
2006 | |
|
2005 | |
|
|
| |
|
| |
|
|
(As restated) | |
Expected life (in years)
|
|
|
5.8 |
|
|
|
5.8 |
|
Risk-free interest rate
|
|
|
4.6 |
% |
|
|
4.0 |
% |
Volatility
|
|
|
77 |
% |
|
|
91 |
% |
Dividend yield
|
|
|
|
|
|
|
|
|
The following is a summary of all option activity for the three
months ended March 31, 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average | |
|
|
|
|
|
|
Weighted Average | |
|
Remaining | |
|
Aggregate | |
|
|
Number of | |
|
Exercise Price | |
|
Contractual Term | |
|
Intrinsic | |
|
|
Shares | |
|
per Share | |
|
(Years) | |
|
Value | |
|
|
| |
|
| |
|
| |
|
| |
Outstanding at December 31, 2005
|
|
|
16,369,994 |
|
|
$ |
10.53 |
|
|
|
|
|
|
|
|
|
Granted
|
|
|
821,975 |
|
|
$ |
6.95 |
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(171,927 |
) |
|
$ |
4.84 |
|
|
|
|
|
|
|
|
|
Cancelled
|
|
|
(890,216 |
) |
|
$ |
10.80 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at March 31, 2006
|
|
|
16,129,826 |
|
|
$ |
10.39 |
|
|
|
6.5 |
|
|
$ |
12,799,968 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at March 31, 2006
|
|
|
13,430,361 |
|
|
$ |
11.40 |
|
|
|
6.0 |
|
|
$ |
3,942,448 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended March 31, 2006 and 2005, the
weighted average grant date fair value of an option granted was
$4.83 per common share and $3.41 per common share,
respectively. The total intrinsic value, the difference between
the exercise price and the market price on the date of exercise,
of all options exercised during the three months ended
March 31, 2006 and 2005 was $0.6 million and $0,
respectively. Total unrecognized compensation expense from stock
options was $9.5 million as of March 31, 2006, which
is expected to be recognized over a weighted-average period of
2.5 years.
19
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Employee Stock Purchase Plan (ESPP). A total of
1,000,000 shares of common stock were available for sale
under the ESPP annually through April 2006. The Board of
Directors resolved to terminate the ESPP in April 2006,
subsequent to the final purchase. There were no new ESPP
purchase rights granted during the three months ended
March 31, 2006 and 2005.
We value our ESPP using the Black-Scholes option pricing model
which incorporates the assumptions noted in the table below. The
risk-free interest rate is based on the U.S. Treasury yield
curve in effect at the time of grant.
|
|
|
|
|
|
|
|
|
|
|
For the | |
|
|
Three Months | |
|
|
Ended | |
|
|
March 31, | |
|
|
| |
|
|
2006 | |
|
2005 | |
|
|
| |
|
| |
Expected life (in years)
|
|
|
0.5 |
|
|
|
0.5 |
|
Risk-free interest rate
|
|
|
4.4 |
% |
|
|
3.8 |
% |
Volatility
|
|
|
64 |
% |
|
|
96 |
% |
Dividend yield
|
|
|
|
|
|
|
|
|
For the three months ended March 31, 2006 and 2005, cash
received from option exercises under all share-based payment
arrangements was $0.8 million and $0 million,
respectively. There was no tax benefit realized. The impact of
these cash receipts is included in financing activities in the
accompanying Condensed Consolidated Statements of Cash Flows.
|
|
5. |
Comprehensive Income (Loss) |
The components of comprehensive income (loss) are summarized
below:
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended | |
|
|
March 31, | |
|
|
| |
|
|
2006 | |
|
2005 | |
|
|
(As restated) | |
|
(As restated) | |
|
|
| |
|
| |
|
|
(In thousands) | |
Net income (loss)
|
|
$ |
34,439 |
|
|
$ |
(119,163 |
) |
Unrealized gain (loss) on investments, net of tax
|
|
|
(2,570 |
) |
|
|
(2,108 |
) |
Foreign currency translation adjustment, net of tax
|
|
|
2,301 |
|
|
|
(1,383 |
) |
|
|
|
|
|
|
|
Total comprehensive income (loss)
|
|
$ |
34,170 |
|
|
$ |
(122,654 |
) |
|
|
|
|
|
|
|
Inventories consist of the following:
|
|
|
|
|
|
|
|
|
|
|
March 31, | |
|
December 31, | |
|
|
2006 | |
|
2005 | |
|
|
| |
|
| |
|
|
(In thousands) | |
Raw materials and purchased components, net of reserves of
$27.7 million and $23.7 million, respectively
|
|
$ |
109,694 |
|
|
$ |
106,308 |
|
Work-in-process
|
|
|
36,529 |
|
|
|
30,124 |
|
Finished goods
|
|
|
2,030 |
|
|
|
1,677 |
|
|
|
|
|
|
|
|
|
|
$ |
148,253 |
|
|
$ |
138,109 |
|
|
|
|
|
|
|
|
20
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
7. |
Property, Plant and Equipment |
Property, plant and equipment consist of the following:
|
|
|
|
|
|
|
|
|
|
|
March 31, | |
|
December 31, | |
|
|
2006 | |
|
2005 | |
|
|
| |
|
| |
|
|
(In thousands) | |
Land
|
|
$ |
111,711 |
|
|
$ |
111,451 |
|
Land use rights
|
|
|
19,945 |
|
|
|
19,945 |
|
Buildings and improvements
|
|
|
655,424 |
|
|
|
655,042 |
|
Machinery and equipment
|
|
|
2,022,615 |
|
|
|
1,958,181 |
|
Furniture, fixtures and other equipment
|
|
|
146,784 |
|
|
|
140,163 |
|
Construction in progress
|
|
|
123,823 |
|
|
|
103,439 |
|
|
|
|
|
|
|
|
|
|
|
3,080,302 |
|
|
|
2,988,221 |
|
Less Accumulated depreciation and amortization
|
|
|
(1,625,628 |
) |
|
|
(1,568,749 |
) |
|
|
|
|
|
|
|
|
|
$ |
1,454,674 |
|
|
$ |
1,419,472 |
|
|
|
|
|
|
|
|
Construction in progress at March 31, 2006 and
December 31, 2005, includes $112.5 million and
$95.4 million, respectively, related to our facility in
Shanghai, China. Associated with this facility, we have rights
to use the land on which the building is located for a period of
50 years.
The following table reconciles our activity related to property,
plant and equipment as presented on the Condensed Consolidated
Statements of Cash Flows to property, plant and equipment
additions as reflected in the Condensed Consolidated Balance
Sheets:
|
|
|
|
|
|
|
|
|
|
|
For the Three Months | |
|
|
Ended March 31, | |
|
|
| |
|
|
2006 | |
|
2005 | |
|
|
| |
|
| |
|
|
(In thousands) | |
Payments for property, plant, and equipment
|
|
$ |
79,098 |
|
|
$ |
66,712 |
|
Increase (decrease) in property, plant, and equipment in
accounts payable, accrued expenses and deposits, net
|
|
|
23,854 |
|
|
|
(19,681 |
) |
|
|
|
|
|
|
|
Property, plant and equipment additions
|
|
$ |
102,952 |
|
|
$ |
47,031 |
|
|
|
|
|
|
|
|
|
|
8. |
Goodwill and Other Intangibles Assets |
The change in the carrying value of goodwill, all of which
relates to our packaging services segment, is as follows:
|
|
|
|
|
|
|
(In thousands) | |
|
|
| |
Balance as of December 31, 2005
|
|
$ |
653,717 |
|
Additions
|
|
|
17,822 |
|
Translation adjustments
|
|
|
468 |
|
|
|
|
|
Balance as of March 31, 2006
|
|
$ |
672,007 |
|
|
|
|
|
In January 2006, we acquired an additional 39.6% of Unitive
Semiconductor Taiwan for $18.4 million which was funded out
of escrow set up in December 2005. The majority of the purchase
price was allocated to goodwill resulting in $17.8 million
in additions during the three months ended March 31, 2006.
Additional shares were acquired later in the first quarter of
2006 resulting in a combined ownership of 99.86% as of
March 31, 2006.
21
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Intangibles as of March 31, 2006 consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated | |
|
|
|
|
Gross | |
|
Amortization | |
|
Net | |
|
|
| |
|
| |
|
| |
|
|
(In thousands) | |
Patents and technology rights
|
|
$ |
73,866 |
|
|
$ |
(43,786 |
) |
|
$ |
30,080 |
|
Customer relationship and supply agreements
|
|
|
8,858 |
|
|
|
(2,517 |
) |
|
|
6,341 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
82,724 |
|
|
$ |
(46,303 |
) |
|
$ |
36,421 |
|
|
|
|
|
|
|
|
|
|
|
Intangibles as of December 31, 2005 consist of the
following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated | |
|
|
|
|
Gross | |
|
Amortization | |
|
Net | |
|
|
| |
|
| |
|
| |
|
|
(In thousands) | |
Patents and technology rights
|
|
$ |
73,573 |
|
|
$ |
(41,839 |
) |
|
$ |
31,734 |
|
Customer relationship and supply agreements
|
|
|
8,858 |
|
|
|
(2,201 |
) |
|
|
6,657 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
82,431 |
|
|
$ |
(44,040 |
) |
|
$ |
38,391 |
|
|
|
|
|
|
|
|
|
|
|
Amortization expense was $2.3 million and $2.4 million
for the three months ended March 31, 2006 and 2005,
respectively.
Based on the amortizing assets recognized in our balance sheet
at March 31, 2006, amortization expense for each of the
next five fiscal years is estimated as follows:
|
|
|
|
|
|
|
(In thousands) | |
|
|
| |
2006 Remaining
|
|
$ |
7,276 |
|
2007
|
|
$ |
9,548 |
|
2008
|
|
$ |
9,548 |
|
2009
|
|
$ |
4,790 |
|
2010
|
|
$ |
2,473 |
|
Investments include noncurrent marketable securities and equity
investments as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, | |
|
December 31, | |
|
|
2006 | |
|
2005 | |
|
|
| |
|
| |
|
|
(In thousands) | |
Marketable securities classified as available for sale:
|
|
|
|
|
|
|
|
|
|
DongbuAnam Semiconductor, Inc. (ownership of 1% at
March 31, 2006 and 2% at December 31, 2005)
|
|
$ |
6,255 |
|
|
$ |
8,879 |
|
|
Other marketable securities classified as available for sale
|
|
|
32 |
|
|
|
714 |
|
|
|
|
|
|
|
|
|
|
Total marketable securities
|
|
|
6,287 |
|
|
|
9,593 |
|
Equity method investments
|
|
|
63 |
|
|
|
75 |
|
|
|
|
|
|
|
|
|
|
$ |
6,350 |
|
|
$ |
9,668 |
|
|
|
|
|
|
|
|
As of March 31, 2006 and December 31, 2005, gross
unrealized losses of $2.6 million and $0 million,
respectively are reported as a separate component of accumulated
other comprehensive income in stockholders equity.
22
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Accrued expenses consist of the following:
|
|
|
|
|
|
|
|
|
|
|
March 31, | |
|
December 31, | |
|
|
2006 | |
|
2005 | |
|
|
(As restated) | |
|
(As restated) | |
|
|
| |
|
| |
|
|
(In thousands) | |
Accrued interest
|
|
$ |
35,001 |
|
|
$ |
34,545 |
|
Accrued payroll
|
|
|
27,186 |
|
|
|
26,339 |
|
Customer advances
|
|
|
8,969 |
|
|
|
2,526 |
|
Accrued income taxes
|
|
|
4,557 |
|
|
|
2,776 |
|
Other accrued expenses
|
|
|
55,214 |
|
|
|
57,841 |
|
|
|
|
|
|
|
|
|
|
$ |
130,927 |
|
|
$ |
124,027 |
|
|
|
|
|
|
|
|
Following is a summary of short-term borrowings and long-term
debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, | |
|
December 31, | |
|
|
2006 | |
|
2005 | |
|
|
| |
|
| |
|
|
(In thousands) | |
Debt of Amkor Technology, Inc.
|
|
|
|
|
|
|
|
|
|
Senior secured credit facilities:
|
|
|
|
|
|
|
|
|
|
|
$100.0 million revolving credit facility, LIBOR plus 1.5% -
2.25%, due November 2009
|
|
$ |
|
|
|
$ |
|
|
|
|
Second lien term loan, LIBOR plus 4.5%, due October 2010
|
|
|
300,000 |
|
|
|
300,000 |
|
|
Senior Notes:
|
|
|
|
|
|
|
|
|
|
|
9.25% Senior notes due February 2008
|
|
|
440,500 |
|
|
|
470,500 |
|
|
|
7.125% Senior notes due March 2011
|
|
|
248,711 |
|
|
|
248,658 |
|
|
|
7.75% Senior notes due May 2013
|
|
|
425,000 |
|
|
|
425,000 |
|
|
Senior Subordinated Notes:
|
|
|
|
|
|
|
|
|
|
|
10.5% Senior subordinated notes due May 2009
|
|
|
200,000 |
|
|
|
200,000 |
|
|
Convertible Subordinated Notes:
|
|
|
|
|
|
|
|
|
|
|
5.75% Convertible subordinated notes due June 2006,
convertible at $35.00 per share
|
|
|
132,000 |
|
|
|
133,000 |
|
|
|
5.0% Convertible subordinated notes due March 2007,
convertible at $57.34 per share
|
|
|
146,422 |
|
|
|
146,422 |
|
|
Convertible Subordinated Notes, Related Party:
|
|
|
|
|
|
|
|
|
|
|
6.25% Convertible subordinated notes due December 2013,
convertible at $7.49 per share
|
|
|
100,000 |
|
|
|
100,000 |
|
|
Notes Payable and Other Debt
|
|
|
|
|
|
|
823 |
|
23
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, | |
|
December 31, | |
|
|
2006 | |
|
2005 | |
|
|
| |
|
| |
|
|
(In thousands) | |
Debt of subsidiaries
|
|
|
|
|
|
|
|
|
|
Secured Term Loans:
|
|
|
|
|
|
|
|
|
|
|
Term loan, Taiwan 90-Day Commercial Paper primary market rate
plus 1.2%, due November 2010
|
|
|
56,445 |
|
|
|
55,586 |
|
|
|
Term loan, Taiwan 90-Day Commercial Paper secondary market rate
plus 2.25%, due June 2008
|
|
|
10,737 |
|
|
|
11,329 |
|
|
Secured Equipment and Property Financing
|
|
|
18,463 |
|
|
|
20,454 |
|
|
Revolving Credit Facilities
|
|
|
38,265 |
|
|
|
26,501 |
|
|
Other Debt
|
|
|
1,404 |
|
|
|
2,363 |
|
|
|
|
|
|
|
|
Total Debt
|
|
|
2,117,947 |
|
|
|
2,140,636 |
|
Less: Short-term borrowings and current portion of long-term debt
|
|
|
(339,146 |
) |
|
|
(184,389 |
) |
|
|
|
|
|
|
|
Long-term debt (including related party)
|
|
$ |
1,778,801 |
|
|
$ |
1,956,247 |
|
|
|
|
|
|
|
|
|
|
|
Debt of Amkor Technology Inc. |
In November 2005, we entered into a $100.0 million first
lien revolving credit facility available through November 2009,
with a letter of credit sub-limit of $25.0 million.
Interest is charged under the credit facility at a floating rate
based on the base rate in effect from time to time plus the
applicable margins which range from 0.0% to 0.5% for base rate
revolving loans, or LIBOR plus 1.5% to 2.25% for LIBOR revolving
loans. The interest rate at March 31, 2006, and
December 31, 2005, was 6.33% and 5.89%, respectively;
however, no borrowings were outstanding under this credit
facility. Amkor, along with Unitive Inc. (Unitive)
and Unitive Electronics, Inc. (UEI), are
co-borrowers and guarantors under the facility and each granted
a first priority lien on substantially all of their assets,
excluding inter-company loans and the capital stock of foreign
subsidiaries and certain domestic subsidiaries. As of
March 31, 2006, we had utilized $2.5 million of the
available letter of credit sub-limit, and had $97.5 million
available under this facility. The borrowing base for the
revolving credit facility is based on the valuation of our
eligible accounts receivable. We incur commitment fees on the
unused amounts of the revolving credit facility ranging from
0.25% to 0.50%, based on our liquidity. The $100.0 million
credit facility replaces our prior $30.0 million senior
secured revolving credit facility which we entered into in June
2004. This new facility includes a number of affirmative and
negative covenants, which could restrict our operations. If we
were to default under the first lien revolving credit facility,
we would not be permitted to draw additional amounts, and the
banks could accelerate our obligation to pay all outstanding
amounts.
In October 2004, we entered into a $300.0 million second
lien term loan with a group of institutional lenders. The term
loan bears interest at a rate of LIBOR plus 450 basis
points (9.27% and 8.88% at March 31, 2006 and
December 31, 2005, respectively); and matures in October
2010. Guardian Assets, Inc., Unitive, UEI, Amkor International
Holdings, LLC (AIH), Amkor Technology Limited
(ATL), P-Four, LLC (P-Four) and Amkor/
Anam Pilipinas, Inc. (AAP) are guarantors of the
second lien term loan. The second lien term loans are secured by
a second lien on substantially all of our U.S. assets,
including the shares of certain of our U.S. subsidiaries
and a portion of the shares of some of our foreign subsidiaries.
We do not have the option to prepay the second lien term loan
until October 2006. If we were to elect to prepay the loan, we
would be required to pay a prepayment premium, initially set at
3% of the principal amount prepaid. The second lien term loan
agreements contain a number of affirmative and negative
covenants which could restrict
24
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
our operations. If we were to default under the facility, the
lenders could accelerate our obligation to pay all outstanding
amounts.
|
|
|
Senior and Senior Subordinated Notes |
In February 2001, we issued $500.0 million of
9.25% Senior Notes due February 2008 (the
2008 Notes). As of December 31, 2005, we
had purchased $29.5 million of these notes. In January
2006, we purchased an additional $30.0 million of these
notes and recorded a gain on extinguishment of $0.7 million
which is included in other (income) expense, which was partially
offset by the write-off of a proportionate amount of our
deferred debt issuance costs of $0.2 million. The 2008
Notes are not redeemable prior to their maturity.
In March 2004, we issued $250.0 million of
7.125% Senior Notes due March 2011 (the 2011
Notes). The 2011 Notes were priced at 99.321%, yielding an
effective interest rate of 7.25%. The 2011 Notes are redeemable
by us at any time provided we pay the holders a
make-whole premium and, prior to March 15,
2007, we may redeem up to 35% of the aggregate principal amount
of the notes from the proceeds of one or more equity offerings
at a price of 107.125% of the principal amount plus accrued and
unpaid interest.
In May 2003, we issued $425.0 million of 7.75% Senior
Notes due May 2013 (the 2013 Notes). The 2013 Notes
are not redeemable at our option until May 2008.
In May 1999, we issued $200.0 million of 10.5% Senior
Subordinated Notes due May 2009 (the
2009 Notes). As of March 31, 2006, the
2009 Notes were redeemable at our option at a price of 103.5% of
the principal of the notes plus accrued and unpaid interest,
which percentage was reduced to 101.25% starting May 1,
2006.
The senior and senior subordinated notes contain a number of
affirmative and negative covenants, which could restrict our
operations. As discussed in Note 16 Subsidiary
Guarantors, Unitive, UEI, AIH, ATL,
P-Four and AAP became
guarantors of the senior and senior subordinated notes in 2005
as a result of our acquisition of Unitive and UEI, and the
U.S. domestication of AIH, ATL, P-Four and AAP for
U.S. federal income tax purposes. We are in the process of
consolidating a number of our subsidiaries, and we expect that,
before the end of 2006, all of the guarantees of the senior and
senior subordinated notes will terminate or be released in
accordance with the terms of the indentures governing the notes
in connection with such consolidation, although there can be no
assurances that we will accomplish this.
|
|
|
Convertible Subordinated Notes |
In May 2001, we issued $250.0 million of our
5.75% Convertible Subordinated Notes due June 2006 (the
2006 Notes). The 2006 Notes are convertible into our
common stock at a price of $35.00 per share, subject to
adjustment. The notes are subordinated to the prior payment in
full of all of our senior and senior subordinated debt. In
November 2003, we purchased $17.0 million of the 2006 Notes
with the proceeds of an equity offering. In November 2005, we
purchased an additional $100.0 million of the 2006 Notes
with proceeds from the issuance of $100.0 million of
6.25% Convertible Subordinated Notes due December 2013
described below. We purchased such 2006 Notes on the open market
at 99.125% and recorded a gain on extinguishment of
$0.9 million which is included in other (income) expense.
The gain on extinguishment was partially offset by the write-off
of a proportionate amount of our deferred debt issuance costs of
$0.3 million. In January 2006, we purchased an additional
$1.0 million of the 2006 Notes at 99.25%. As of
March 31, 2006, the 2006 Notes were redeemable at our
option at a price of 101.15% of the principal of the notes plus
accrued and unpaid interest.
In March 2000, we issued $258.8 million of our
5.0% Convertible Subordinated Notes due March 2007 (the
2007 Notes). The 2007 Notes are convertible into our
common stock at any time at a conversion price of
$57.34 per share, subject to adjustment. The notes are
subordinated to the prior payment in full of all of our
25
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
senior and senior subordinated debt. In November 2003, we
repurchased $112.3 million of our 2007 Notes with the
proceeds of an equity offering. We recorded a $2.5 million
loss on extinguishment related to premiums paid for the purchase
of the 2007 Notes and a $2.2 million charge for the
associated unamortized deferred debt issuance costs. These
amounts were included in other (income) expense. As of
March 31, 2006, the 2007 Notes were redeemable at our
option at a price of 100.714% of the principal of the notes plus
accrued and unpaid interest
|
|
|
Convertible Subordinated Notes, Related Party |
In November 2005, we issued $100.0 million of our
6.25% Convertible Subordinated Notes due December 2013 (the
2013 Notes) in a private placement to James J. Kim,
Chairman and Chief Executive Officer, and certain Kim family
trusts. The 2013 Notes are convertible into our common stock at
an initial price of $7.49 per share (the market price of
our common stock on the date of issuance of the 2013 Notes was
$6.20 per share), subject to adjustment. The 2013 Notes are
subordinated to the prior payment in full of all of our senior
and senior subordinated debt. In March 2006, we filed a
registration statement with the SEC registering the notes and
the shares of common stock issuable upon conversion, pursuant to
the requirements of a registration rights agreement. The
proceeds from the sale of the 2013 Notes were used to purchase a
portion of the 2006 Notes described above. The notes are not
redeemable at our option until 2010.
In September 2005, Amkor Technology Taiwan, Inc.
(ATT) entered into a short-term interim financing
arrangement with two Taiwanese banks for New Taiwan
(NT) $1.0 billion (approximately
$30.0 million) (the Bridge Loan) in connection
with a syndication loan led by the same lenders. In November
2005, ATT finalized the NT$1.8 billion (approximately
$53.5 million) syndication loan due November 2010 (the
Syndication Loan), which accrues interest at the
Taiwan 90-Day Commercial Paper Primary Market rate plus 1.2%. At
March 31, 2006, and December 31, 2005, the interest
rate was 3.05% and 3.0%, respectively. A portion of the
Syndication Loan was used to pay off the Bridge Loan. Amkor has
guaranteed the repayment of this loan. The documentation
governing the Syndication Loan includes a number of affirmative,
negative and financial covenants, which could restrict our
operations. If we were to default under the facility, the
lenders could accelerate our obligation to pay all outstanding
amounts.
In June 2005, UST entered into a NT$400.0 million
(approximately $12.2 million) term loan due June 20,
2008 (the UST Note), which accrues interest at the
Taiwan 90-Day Commercial Paper Secondary Market rate plus 2.25%
(4.0% and 3.97% as of March 31, 2006, and December 31,
2005). The proceeds of the UST Note were used to satisfy notes
previously held by UST. Amkor has guaranteed the repayment of
this loan. The documentation governing the UST Note includes a
number of affirmative and negative covenants which could
restrict our operations. If we were to default under the
facility, the lenders could accelerate our obligation to pay all
outstanding amounts.
|
|
|
Secured Equipment and Property Financing |
Our secured equipment and property financing consists of loans
secured with specific assets at our Japanese, Singaporean and
Chinese subsidiaries. Our credit facility in Japan provides for
equipment financing on a three-year basis for each piece of
equipment purchased. The Japanese facility accrues interest at
3.59% on all outstanding balances and has maturities at various
times between 2006 and 2008. In December 2005, our Singaporean
subsidiary entered into a loan with a finance company for
$10.0 million, which accrues interest at 4.86% and is due
December 2008. The loan is guaranteed by Amkor and is secured by
a monetary security deposit and certain of the subsidiarys
equipment. In May 2004, our Chinese subsidiary entered into a
$5.5 million credit facility secured with buildings at one
of our Chinese production facilities and is payable
26
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
ratably through January 2012. The interest rate for the Chinese
credit facility at March 31, 2006, and December 31,
2005, was 5.58%. These equipment and property financings contain
affirmative and negative covenants, which could restrict our
operations, and, if we were to default on our obligations under
these financings, the lenders could accelerate our obligation to
repay amounts borrowed under such facilities.
|
|
|
Revolving Credit Facilities |
Amkor Iwate Corporation, a Japanese subsidiary
(AIC), has a revolving line of credit with a
Japanese bank for 2.5 billion Japanese yen (approximately
$21.2 million), maturing in September 2006, that accrues
interest at the Tokyo Interbank Offering Rate
(TIBOR) plus 0.6%. The interest rate at
March 31, 2006, and December 31, 2005 was 0.67% and
0.66%, respectively, and the line of credit was fully drawn.
Amkor has guaranteed the repayment of this line of credit.
Additionally, AIC has a revolving line of credit at a Japanese
bank for 300.0 million Japanese yen (approximately
$2.5 million), maturing in June 2006, that accrues interest
at TIBOR plus 0.5%. The interest rate at March 31, 2006 and
December 31, 2005 was 0.56% and there was $2.5 million
and $0.0 million drawn as of March 31, 2006 and
December 31, 2005, respectively.
In September 2005, our Philippine subsidiary entered into a
300.0 million Philippine peso (approximately
$5.3 million) one-year revolving line of credit that
accrues interest at LIBOR plus 1.0% (5.2% at December 31,
2005). In January 2006, we repaid all amounts outstanding under
the Philippine revolving line of credit, and replaced it with a
new revolving line of credit for $5.0 million, maturing in
September 2006, that accrues interest at LIBOR plus 1.0% (5.72%
at March 31, 2006), and the line was fully drawn as of
March 31, 2006.
In January 2006, Amkor Assembly & Test (Shanghai) Co.
Ltd., a Chinese subsidiary (AATS), entered into a
$15.0 million working capital facility which bears interest
at LIBOR plus 1.25%, maturing in January 2007. The borrowings to
date of $9.5 million were used to support working capital.
At March 31, 2006, the interest rate ranged from 5.99% to
6.31% based on the dates of borrowing.
These lines of credit contain certain affirmative and negative
covenants, which could restrict our operations. If we were to
default on our obligations under any of these lines of credit,
we would not be permitted to draw additional amounts, and the
lenders could accelerate our obligation to pay all outstanding
amounts.
Other debt includes debt related to our Taiwanese subsidiaries
with fixed and variable interest rates maturing in 2007.
Interest rates on this debt ranged from 2.67% to 3.10% as of
March 31, 2006, and December 31, 2005.
We were in compliance with all of our covenants under all of our
debt obligations as of March 31, 2006. See Subsequent
Events Related to the Review of Stock Option Practices
(Note 18) for discussion of defaults that occurred
subsequent to March 31, 2006.
27
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
12. |
Other Non-Current Liabilities |
Other non-current liabilities consist of the following:
|
|
|
|
|
|
|
|
|
|
|
March 31, | |
|
December 31, | |
|
|
2006 | |
|
2005 | |
|
|
| |
|
| |
|
|
(In thousands) | |
Accrued Korean severance (see Note 12)
|
|
$ |
125,709 |
|
|
$ |
116,423 |
|
Customer advances
|
|
|
4,321 |
|
|
|
714 |
|
Other non-current liabilities
|
|
|
20,546 |
|
|
|
18,724 |
|
|
|
|
|
|
|
|
|
|
$ |
150,576 |
|
|
$ |
135,861 |
|
|
|
|
|
|
|
|
|
|
13. |
Pension and Severance Plans |
Our Philippine, Taiwanese and Japanese subsidiaries sponsor
defined benefit plans that cover substantially all of their
respective employees who are not covered by statutory plans.
Charges to expense are based upon costs computed by independent
actuaries. The components of net periodic pension cost for these
defined benefit plans are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
For the | |
|
|
Three Months | |
|
|
Ended | |
|
|
March 31, | |
|
|
| |
|
|
2006 | |
|
2005 | |
|
|
| |
|
| |
|
|
(In thousands) | |
Components of net periodic pension cost and total pension
expense:
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
$ |
1,157 |
|
|
$ |
1,417 |
|
|
Interest cost
|
|
|
684 |
|
|
|
517 |
|
|
Expected return on plan assets
|
|
|
(841 |
) |
|
|
(309 |
) |
|
Amortization of transitional obligation
|
|
|
35 |
|
|
|
36 |
|
|
Recognized actuarial (gain)/loss
|
|
|
451 |
|
|
|
12 |
|
|
|
|
|
|
|
|
|
|
Total pension expense
|
|
$ |
1,486 |
|
|
$ |
1,673 |
|
|
|
|
|
|
|
|
For the three months ended March 31, 2006,
$0.6 million was contributed to fund the pension plans. We
presently anticipate contributing $7.2 million in 2006 to
fund the pension plans.
Our Korean subsidiary participates in an accrued severance plan
that covers employees and directors with one year or more of
service. Eligible plan participants are entitled to receive a
lump-sum payment upon termination of their employment, based on
their length of service and rate of pay at the time of
termination. Accrued severance benefits are estimated assuming
all eligible employees were to terminate their employment at the
balance sheet date. The contributions to the national pension
fund made under the National Pension Plan of the Republic of
Korea are deducted from accrued severance benefit liabilities.
For the three months ended March 31, 2006 and 2005, the
provision recorded for severance benefits was $9.3 million
and $7.1 million, respectively. The balance recorded in
other non-current liabilities (see Note 11) for
accrued severance was $125.7 million and
$116.4 million at March 31, 2006 and December 31,
2005, respectively.
|
|
14. |
Commitments and Contingencies |
|
|
|
Indemnifications and Guarantees |
We have indemnified members of our Board of Directors and our
corporate officers against any threatened, pending or completed
action or proceeding, whether civil, criminal, administrative or
investigative
28
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
by reason of the fact that the individual is or was a director
or officer of the company. The individuals are indemnified, to
the fullest extent permitted by law, against related expenses,
judgments, fines and any amounts paid in settlement. We also
maintain directors and officers insurance coverage in order to
mitigate our exposure to these indemnification obligations. The
maximum amount of future payments is generally unlimited. There
is no amount recorded for these indemnifications at
March 31, 2006 and December 31, 2005. Due to the
nature of these indemnifications, it is not possible to make a
reasonable estimate of the maximum potential loss or range of
loss. No assets are held as collateral and no specific recourse
provisions exist related to these indemnifications.
As of March 31, 2006, we have outstanding $2.5 million
of standby letters of credit and have available an additional
$24.4 million. Such standby letters of credit are used in
our ordinary course of business and are collateralized by our
cash balances.
We generally provide a standard ninety-day warranty on our
services. Our warranty activity has historically been immaterial.
We are currently a party to various legal proceedings, including
those noted below. While we currently believe that the ultimate
outcome of these proceedings, individually and in the aggregate,
will not have a material adverse effect on our financial
position, results of operations or cash flows, litigation and
other legal proceedings are subject to inherent uncertainties.
If an unfavorable ruling or outcome were to occur, there exists
the possibility of a material adverse impact on our results of
operations, financial condition or cash flows. An unfavorable
ruling or outcome could also have a negative impact on the
trading price of our securities. The estimate of the potential
impact from the following legal proceedings on our financial
condition, results of operations or cash flows could change in
the future. We record provisions in our consolidated financial
statements for pending litigation and other legal proceedings
when we determine that an unfavorable outcome is probable and
the amount of the loss can be reasonably estimated. During the
three months ended March 31, 2006 and 2005, we recorded a
provision of $1.0 million and $50.0 million,
respectively related to the legal matters discussed below.
|
|
|
Epoxy Mold Compound Litigation |
Much of our recent litigation relates to an allegedly defective
epoxy mold compound, formerly used in some of our packaging
services, which is alleged to be responsible for certain
semiconductor chip failures. As previously disclosed, the cases
of Fujitsu Limited. v. Cirrus Logic, Inc., et al.,
Seagate Technology LLC v. Atmel Corporation, et al.,
Fairchild Semiconductor Corporation v. Sumitomo Bakelite
Singapore Pte. Ltd., et al., and Maxtor Corporation v.
Koninklijke Philips Electronics N.V., et al., have each
been resolved through trial or settlement, with a complete
dismissal or release of all claims. We have recently reached
agreement to settle the last pending matter, described more
fully below. Other customers of ours have made inquiries in the
past about the epoxy mold compound, which was widely used in the
semiconductor industry, and no assurance can be given that
claims similar to those already asserted will not be made
against us by other customers in the future.
|
|
|
Maxim Integrated Products, Inc. v. Amkor Technology,
Inc., et al. |
In August 2003, we were served with a complaint filed by Maxim
Integrated Products, Inc. (Maxim) against us and
Sumitomo Bakelite Co., Ltd. and Sumitomo Plastics America, Inc.
(collectively Sumitomo) in the Superior Court of
California, Santa Clara County. The complaint seeks damages
related to our use of Sumitomo Bakelites epoxy mold
compound in assembling Maxims semiconductor packages. We
denied all liability and asserted cross-claims against Sumitomo
Bakelite for indemnification.
29
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
On April 27, 2006, all parties reached agreement to settle
this litigation. We have agreed to pay Maxim $3.0 million
of the total settlement, and release our claims against Sumitomo
in consideration of a release from all claims against Amkor
related to this litigation. We had previously reserved
$2.0 million for this settlement and have recorded a charge
of $1.0 million in the Condensed Consolidated Statement of
Operations for the three months ended March 31, 2006.
|
|
|
Amkor Technology, Inc. v. Motorola, Inc. |
In August 2002, we filed a complaint against Motorola, Inc.
(Motorola) seeking declaratory judgment relating to
a controversy between us and Motorola concerning: (i) the
assignment by Citizen Watch Co., Ltd. (Citizen) to
us of a Patent License Agreement dated January 25, 1996
between Motorola and Citizen (the License Agreement)
and concurrent assignment by Citizen to us of Citizens
interest in U.S. Patents 5,241,133 and 5,216,278 (the
133 and 278 patents) which patents
relate to BGA packages; and (ii) our obligation to make
certain payments pursuant to an immunity agreement (the
Immunity Agreement) dated June 30, 1993 between
us and Motorola, pending in the Superior Court of the State of
Delaware in and for New Castle County.
We and Motorola resolved the controversy with respect to all
issues relating to the Immunity Agreement, and all claims and
counterclaims filed by the parties in the case relating to the
Immunity Agreement were dismissed or otherwise disposed of
without further litigation. The claims relating to the License
Agreement and the 133 and 278 Patents remained
pending.
We and Motorola both filed motions for summary judgment on the
remaining claims, and oral arguments were heard in September
2003. On October 6, 2003, the Superior Court of Delaware
ruled in favor of us and issued an Opinion and Order granting
our motion for summary judgment and denying Motorolas
motion for summary judgment. Motorola filed an appeal in the
Supreme Court of Delaware. In May 2004, the Supreme Court
reversed the Superior Courts decision, and remanded for
further development of the factual record. The bench trial in
this matter was concluded on January 27, 2006. Post-trial
briefs have been submitted and post-trial oral arguments have
been heard by the Court; a decision is currently expected mid to
late 2006.
|
|
|
Alcatel Business Systems v. Amkor Technology, Inc., Anam
Semiconductor, Inc. |
On November 5, 1999, we agreed to sell certain
semiconductor parts to Alcatel Microelectronics, N.V.
(AME), a subsidiary of Alcatel S.A. The parts were
manufactured for us by Anam Semiconductor, Inc.
(ASI) and delivered to AME. AME transferred the
parts to another Alcatel subsidiary, Alcatel Business Systems
(ABS), which incorporated the parts into cellular
phone products. In early 2001, a dispute arose as to whether the
parts sold by us were defective.
Paris Commercial Court. On March 18, 2002, ABS and
its insurer filed suit against us and ASI in the Paris
Commercial Court of France, claiming damages of approximately
50.4 million Euros (approximately $59.7 million based
on the spot exchange rate at December 31, 2005.) We have
denied all liability and have not established a loss accrual
associated with this claim. Additionally, we have entered into a
written agreement with ASI whereby ASI has agreed to indemnify
us fully against any and all loss related to the claims of AME,
ABS and ABS insurer. The Paris Commercial Court commenced
a special proceeding before a technical expert to report on the
facts of the dispute. The report of the court-appointed expert
was put forth on December 31, 2003. The report does not
specifically allocate liability to any particular party. On
May 18, 2004, the Paris Commercial Court of France declared
that it did not have jurisdiction over the matter. The Court of
Appeal of Paris heard the appeal regarding jurisdiction during
October 2004, confirmed the first tier ruling and dismissed the
appeal on November 3, 2004. A motion was recently filed by
ABS and its insurer
30
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
before the French Supreme Court to challenge the lack of
jurisdiction ruling and a brief was filed by ABS and its insurer
in June 2005. We filed a response brief before the French
Supreme Court in August 2005.
Arbitration. In response to the French lawsuit described
above, on May 22, 2002, we filed a petition to compel
arbitration in the United States District Court for the Eastern
District of Pennsylvania against ABS, AME and ABS insurer,
claiming that the dispute is subject to the arbitration clause
of the November 5, 1999 agreement between us and AME. ABS
and ABS insurer have refused to arbitrate and continue to
challenge the lack of jurisdiction ruling. The arbitration
proceeding has been stayed pending resolution of the French
lawsuit described above.
|
|
|
Amkor Technology, Inc. v. Carsem (M) Sdn Bhd,
Carsem Semiconductor Sdn Bhd, and Carsem Inc. |
In November 2003, we filed a complaint against Carsem
(M) Sdn Bhd, Carsem Semiconductor Sdn Bhd, and Carsem Inc.
(collectively Carsem) with the International Trade
Commission (ITC) in Washington, D.C., alleging
infringement of our United States Patent Nos. 6,433,277;
6,455,356 and 6,630,723 (collectively the Amkor
Patents) and seeking an exclusionary order barring the
importation by Carsem of infringing products. Subsequently, we
filed a complaint in the Northern District of California,
alleging infringement of the Amkor Patents and seeking an
injunction enjoining Carsem from further infringing the Amkor
Patents, treble damages plus interest, costs and attorneys
fees. We allege that by making, using, selling, offering for
sale, or importing into the U.S. the Carsem Dual and Quad
Flat No-Lead Package, Carsem has infringed on one or more of our
Micro
LeadFrame®
packaging technology claims in the Amkor Patents. The District
Court action had been stayed pending resolution of the ITC case.
The ITC Administrative Law Judge (ALJ) conducted an
evidentiary hearing during July and August of 2004 in Washington
D.C. and issued an initial determination that Carsem infringed
some of our patent claims relating to our
MicroLeadFrame®
package technology, that some of our 21 asserted patent claims
are valid, and that all of our asserted patent claims are
enforceable.
However, the ALJ did not find a statutory violation of the
Tariff Act. We filed a petition in November 2004 to have the
ALJs ruling reviewed by the full International Trade
Commission. The ITC ordered a new claims construction related to
various disputed claim terms and remanded the case to the ALJ
for further proceedings. The ITC subsequently authorized the ALJ
to reopen the record on certain discovery issues related to
third party conception documents. The ITC previously ordered the
ALJ to issue the final Initial Determination by November 9,
2005 and set a date of February 9, 2006 for completion of
the investigation.
On February 9, 2006, the ITC ordered a delay in issuance of
the Final Determination, pending resolution of the discovery
issues related to third party conception documents. The
discovery issues are the subject of a subpoena enforcement
action which is pending in the District Court for the District
of Columbia; a schedule has not yet been established for that
action. The case we filed in 2003 in the Northern District of
California remains stayed pending completion of the ITC
investigation.
Tessera, Inc. v. Amkor Technology, Inc. On
March 2, 2006, Tessera, Inc. filed a Request for
Arbitration with the International Court of Arbitration of the
International Chamber of Commerce, captioned Tessera,
Inc. v. Amkor Technology, Inc. The Request for
Arbitration seeks substantial monetary damages and claims, among
other things, that Amkor is in breach of its license agreement
with Tessera as a result of Amkors failure to pay Tessera
royalties allegedly due on certain packages Amkor assembles for
some of its customers.
|
|
|
Securities Class Action Litigation |
On January 23, 2006, a purported securities class action
suit entitled Nathan Weiss et al. v. Amkor
Technology, Inc. et al., was filed in
U.S. District Court for the Eastern District of
Pennsylvania against Amkor and certain of its current and former
officers. Subsequently, other law firms have filed similar
cases, which we expect to be consolidated with the initial
complaint. The complaints allege, among other things, that Amkor
made certain materially false and misleading statements and
omissions in its disclosures in violation of the
31
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
federal securities laws during the putative class period of
October 2003 to July 2004. The complaints seek certification as
a class action pursuant to Fed. R. Civ. Proc. 23,
appointment of lead counsel, compensatory damages, costs and
expenses, equitable and injunctive relief as permitted by law
and such other further relief as the Court deems just and proper.
|
|
|
Shareholder Derivative Lawsuits |
On February 23, 2006, a purported shareholder derivative
lawsuit entitled Scimeca v. Kim, et al. was
filed in the U.S. District Court for the District of
Arizona against certain of Amkors officers, former
officers and directors. Amkor is named as a nominal defendant.
The complaint includes claims for breach of fiduciary duty,
abuse of control, waste of corporate assets, unjust enrichment
and mismanagement, and is generally based on the same
allegations as in the securities class action litigation
described above.
On March 2, 2006 a purported shareholder derivative lawsuit
entitled Kahn v. Kim, et al. was filed in the
Superior Court of the State of Arizona against certain of
Amkors current and former officers and directors. Amkor is
named as a nominal defendant. The complaint includes claims for
breach of fiduciary duty and unjust enrichment, and is based on
allegations similar to those made in the previously filed
federal shareholder derivative action.
The derivative complaints seek monetary damages, an order
directing the Company to take all necessary actions to improve
corporate governance as may be necessary, equitable and/or
injunctive relief as permitted by law, disgorgement,
restitution, costs, fees, expenses and such other relief as the
Court deems just and proper.
|
|
|
Securities and Exchange Commission Investigation |
In August 2005, the Securities and Exchange Commission
(SEC) issued a formal order of investigation
regarding certain activities with respect to Amkor securities.
As previously announced, the primary focus of the investigation
appears to be activities during the period from June 2003 to
July 2004. Amkor believes that the investigation continues to
relate primarily to transactions in the Companys
securities by certain individuals, and that the investigation
may in part relate to whether tipping with respect to trading in
Amkor securities occurred. The matters at issue involve
activities with respect to Amkor securities during the subject
period by certain insiders or former insiders and persons or
entities associated with them, including activities by or on
behalf of certain current and former members of the Board of
Directors and Amkors Chief Executive Officer. Amkor has
cooperated fully with the SEC on the formal investigation and
the informal inquiry that preceded it. Amkor cannot predict the
outcome of the investigation. In the event that the
investigation leads to SEC action against any current or former
officer or director of the Company, or the Company itself, our
business (including our ability to complete financing
transactions) or the trading price of our securities may be
adversely impacted. In addition, if the SEC investigation
continues for a prolonged period of time, it may have the same
impact regardless of the ultimate outcome of the investigation.
|
|
15. |
Related Party Transactions |
In November 2005, we sold $100.0 million of our
6.25% Convertible Subordinated Notes due 2013 in a private
placement to James J. Kim, Chairman and Chief Executive Officer,
and certain Kim family trusts. The 2013 Notes are convertible
into Amkors common stock and are subordinated to the prior
payment in full of all of Amkors senior and senior
subordinated debt. In March 2006, we filed a registration
statement with the SEC to effect the registration of the notes
and the common stock issuable upon conversion of the notes. See
Note 10 for additional information.
Mr. JooHo Kim is a corporate officer of Amkor and a brother
of Mr. James J. Kim, our Chairman and CEO. Mr. JooHo
Kim owns, with his children, 19.2% of Anam Information
Technology, Inc., a company that
32
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
provides computer hardware and software components to Amkor
Technology Korea, Inc. (a subsidiary of Amkor). For the three
months ended March 31, 2006 and 2005, purchases from Anam
Information Technology, Inc. were $0.2 million and
$0.1 million, respectively. Amounts due to Anam Information
Technology, Inc. at March 31, 2006, and December 31,
2005 were $0.2 million and $0.3 million, respectively.
Mr. JooHo Kim, together with his wife and children, owns
96.1% of Jesung C&M, a company that provides cafeteria
services to Amkor Technology Korea, Inc. For the three months
ended March 31, 2006 and 2005, purchases from Jesung
C&M were $1.6 million and $1.6 million,
respectively. Amounts due to Jesung C&M at March 31,
2006 and December 31, 2005 were $0.6 million and
$0.5 million, respectively.
Dongan Engineering Co., Ltd. is 100% owned by Mr. JooCheon
Kim, a brother of Mr. James J. Kim. Mr. JooCheon Kim
is not an employee of Amkor. Dongan Engineering Co., Ltd.
provides, directly or through affiliate entities, construction
and maintenance services to Amkor Technology Korea, Inc., Amkor
Technology Philippines, Inc. and Amkor Assembly and Test
(Shanghai) Co. Ltd., all of which are subsidiaries of Amkor. For
the three months ended March 31, 2006 and 2005, purchases
from Dongan Engineering Co., Ltd. were $0.0 million and
$0.2 million, respectively. Amounts due to Dongan
Engineering Co., Ltd. at March 31, 2006 and
December 31, 2005 were not significant.
We purchase leadframe inventory from Acqutek
Semiconductor & Technology Co., Ltd. Mr. James J.
Kims ownership in Acqutek Semiconductor &
Technology Co., Ltd. is approximately 17.7%. For the three
months ended March 31, 2006 and 2005, purchases from
Acqutek Semiconductor & Technology Co., Ltd. were
$2.7 million and $2.9 million, respectively. Amounts
due to Acqutek Semiconductor & Technology Co., Ltd. at
March 31, 2006 and December 31, 2005 were
$2.7 million and $1.4 million, respectively.
We lease office space in West Chester, Pennsylvania from trusts
related to Mr. James J. Kim. Amounts paid for this lease
for the three months ended March 31, 2006 and 2005 were
less than $0.1 million and $0.3 million, respectively.
We vacated a portion of this space in connection with the move
of our corporate headquarters to Arizona. We currently lease
approximately 2,700 square feet of office space from these
trusts. The sublease income has been assigned to the trusts as
part of vacating the office space effective July 1, 2005.
For the three months ended March 31, 2006 and 2005, our
sublease income includes $0.0 million and $0.1 million
respectively, from related parties.
|
|
16. |
Subsidiary Guarantors |
As of March 31, 2006, payment obligations under our senior
and senior subordinated notes (see Note 11), totaling
$1,314.2 million, are fully and unconditionally guaranteed
by certain of our wholly-owned subsidiaries. The subsidiaries
that guarantee our senior and senior subordinated notes consist
of: Unitive, UEI, AIH, ATL, P-Four and AAP. We are in the
process of consolidating a number of our subsidiaries, and we
expect that, before the end of 2006, all of the guarantees of
the senior and senior subordinated notes will terminate or be
released in accordance with the terms of the indentures
governing the notes in connection with such consolidation,
although there can be no assurances that we will accomplish this.
Presented below is condensed consolidating financial information
for the parent, Amkor Technology, Inc., the guarantor
subsidiaries and the non-guarantor subsidiaries. Investments in
subsidiaries are accounted for by the parent and subsidiaries on
the equity method of accounting. Earnings of subsidiaries are,
therefore, reflected in the parents and guarantor
subsidiaries investments in subsidiaries accounts.
The elimination columns eliminate investments in subsidiaries
and inter-company balances and transactions. Separate financial
statements and other disclosures concerning the guarantor
subsidiaries are not presented because the guarantor
subsidiaries are wholly-owned and have unconditionally
guaranteed the senior notes and senior subordinated notes on a
joint and several basis. There are no restrictions on the
ability of any guarantor subsidiary to directly or indirectly
make distributions to us.
33
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Condensed Consolidating Statement of Operations
For the three months ended March 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor | |
|
Non-Guarantor | |
|
|
|
|
|
|
Parent | |
|
Subsidiaries | |
|
Subsidiaries | |
|
Eliminations | |
|
Consolidated | |
|
|
(As restated) | |
|
(As restated) | |
|
(As restated) | |
|
(As restated) | |
|
(As restated) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(In thousands) | |
Net sales
|
|
$ |
528,274 |
|
|
$ |
85,770 |
|
|
$ |
322,578 |
|
|
$ |
(291,533 |
) |
|
$ |
645,089 |
|
Cost of sales
|
|
|
445,202 |
|
|
|
73,712 |
|
|
|
259,805 |
|
|
|
(288,367 |
) |
|
|
490,352 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
83,072 |
|
|
|
12,058 |
|
|
|
62,773 |
|
|
|
(3,166 |
) |
|
|
154,737 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
33,287 |
|
|
|
7,045 |
|
|
|
23,038 |
|
|
|
(3,166 |
) |
|
|
60,204 |
|
|
Research and development
|
|
|
423 |
|
|
|
1,482 |
|
|
|
7,525 |
|
|
|
|
|
|
|
9,430 |
|
|
Provision for legal settlements and contingencies
|
|
|
1,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
34,710 |
|
|
|
8,527 |
|
|
|
30,563 |
|
|
|
(3,166 |
) |
|
|
70,634 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
48,362 |
|
|
|
3,531 |
|
|
|
32,210 |
|
|
|
|
|
|
|
84,103 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (income) expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
21,711 |
|
|
|
2,447 |
|
|
|
16,999 |
|
|
|
|
|
|
|
41,157 |
|
|
Interest expense, related party
|
|
|
1,788 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,788 |
|
|
Foreign currency (gain) loss
|
|
|
(2,065 |
) |
|
|
1,263 |
|
|
|
4,730 |
|
|
|
|
|
|
|
3,928 |
|
|
Other (income) expense, net
|
|
|
(8,549 |
) |
|
|
(10,176 |
) |
|
|
(2,094 |
) |
|
|
19,883 |
|
|
|
(936 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other expense, net
|
|
|
12,885 |
|
|
|
(6,466 |
) |
|
|
19,635 |
|
|
|
19,883 |
|
|
|
45,937 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes and minority interests
|
|
|
35,477 |
|
|
|
9,997 |
|
|
|
12,575 |
|
|
|
(19,883 |
) |
|
|
38,166 |
|
Income tax expense
|
|
|
1,038 |
|
|
|
1,512 |
|
|
|
1,062 |
|
|
|
|
|
|
|
3,612 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before minority interest income (expense)
|
|
|
34,439 |
|
|
|
8,485 |
|
|
|
11,513 |
|
|
|
(19,883 |
) |
|
|
34,554 |
|
Minority interest income (expense), net of tax
|
|
|
|
|
|
|
|
|
|
|
(115 |
) |
|
|
|
|
|
|
(115 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$ |
34,439 |
|
|
$ |
8,485 |
|
|
$ |
11,398 |
|
|
$ |
(19,883 |
) |
|
$ |
34,439 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Condensed Consolidating Statement of Operations
For the three months ended March 31, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor | |
|
Non-Guarantor | |
|
|
|
|
|
|
Parent | |
|
Subsidiaries | |
|
Subsidiaries | |
|
Eliminations | |
|
Consolidated | |
|
|
(As restated) | |
|
(As restated) | |
|
(As restated) | |
|
(As restated) | |
|
(As restated) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(In thousands) | |
Net sales
|
|
$ |
280,912 |
|
|
$ |
111,445 |
|
|
$ |
229,021 |
|
|
$ |
(203,897 |
) |
|
$ |
417,481 |
|
Cost of sales
|
|
|
249,396 |
|
|
|
113,329 |
|
|
|
212,512 |
|
|
|
(201,105 |
) |
|
|
374,132 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
31,516 |
|
|
|
(1,884 |
) |
|
|
16,509 |
|
|
|
(2,792 |
) |
|
|
43,349 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
31,006 |
|
|
|
11,699 |
|
|
|
20,600 |
|
|
|
(2,792 |
) |
|
|
60,513 |
|
|
Research and development
|
|
|
1,068 |
|
|
|
1,869 |
|
|
|
5,963 |
|
|
|
|
|
|
|
8,900 |
|
|
Provision for legal settlements and contingencies
|
|
|
50,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
82,074 |
|
|
|
13,568 |
|
|
|
26,563 |
|
|
|
(2,792 |
) |
|
|
119,413 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(50,558 |
) |
|
|
(15,452 |
) |
|
|
(10,054 |
) |
|
|
|
|
|
|
(76,064 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (income) expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
24,543 |
|
|
|
1,019 |
|
|
|
14,951 |
|
|
|
|
|
|
|
40,513 |
|
|
Interest expense, related party
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency loss
|
|
|
650 |
|
|
|
820 |
|
|
|
762 |
|
|
|
|
|
|
|
2,232 |
|
|
Other (income) expense, net
|
|
|
43,103 |
|
|
|
17,661 |
|
|
|
13,788 |
|
|
|
(74,374 |
) |
|
|
178 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other expense, net
|
|
|
68,296 |
|
|
|
19,500 |
|
|
|
29,501 |
|
|
|
(74,374 |
) |
|
|
42,923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes and minority interests
|
|
|
(118,854 |
) |
|
|
(34,952 |
) |
|
|
(39,555 |
) |
|
|
74,374 |
|
|
|
(118,987 |
) |
Income tax expense (benefit)
|
|
|
309 |
|
|
|
(26 |
) |
|
|
904 |
|
|
|
|
|
|
|
1,187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before minority interest income (expense)
|
|
|
(119,163 |
) |
|
|
(34,926 |
) |
|
|
(40,459 |
) |
|
|
74,374 |
|
|
|
(120,174 |
) |
Minority interest income (expense), net of tax
|
|
|
|
|
|
|
|
|
|
|
1,011 |
|
|
|
|
|
|
|
1,011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$ |
(119,163 |
) |
|
$ |
(34,926 |
) |
|
$ |
(39,448 |
) |
|
$ |
74,374 |
|
|
$ |
(119,163 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Condensed Consolidating Balance Sheet
March 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor | |
|
Non-Guarantor | |
|
|
|
|
|
|
Parent | |
|
Subsidiaries | |
|
Subsidiaries | |
|
Eliminations | |
|
Consolidated | |
|
|
(As restated) | |
|
(As restated) | |
|
(As restated) | |
|
(As restated) | |
|
(As restated) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(In thousands) | |
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$ |
125,930 |
|
|
$ |
7,640 |
|
|
$ |
92,673 |
|
|
$ |
|
|
|
$ |
226,243 |
|
|
Accounts receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade, net of allowance
|
|
|
284,622 |
|
|
|
2,634 |
|
|
|
93,755 |
|
|
|
|
|
|
|
381,011 |
|
|
|
Other
|
|
|
5,155 |
|
|
|
1,474 |
|
|
|
2,971 |
|
|
|
|
|
|
|
9,600 |
|
|
Inventories, net
|
|
|
99,204 |
|
|
|
9,081 |
|
|
|
39,968 |
|
|
|
|
|
|
|
148,253 |
|
|
Other current assets
|
|
|
4,570 |
|
|
|
1,166 |
|
|
|
24,678 |
|
|
|
|
|
|
|
30,414 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
519,481 |
|
|
|
21,995 |
|
|
|
254,045 |
|
|
|
|
|
|
|
795,521 |
|
Intercompany
|
|
|
1,146,144 |
|
|
|
(117,148 |
) |
|
|
(1,028,996 |
) |
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
40,640 |
|
|
|
295,591 |
|
|
|
1,118,443 |
|
|
|
|
|
|
|
1,454,674 |
|
Goodwill
|
|
|
37,188 |
|
|
|
24,287 |
|
|
|
610,532 |
|
|
|
|
|
|
|
672,007 |
|
Intangibles, net
|
|
|
15,994 |
|
|
|
3,941 |
|
|
|
16,486 |
|
|
|
|
|
|
|
36,421 |
|
Investments
|
|
|
677,343 |
|
|
|
368,253 |
|
|
|
828,240 |
|
|
|
(1,867,486 |
) |
|
|
6,350 |
|
Other assets
|
|
|
24,944 |
|
|
|
5,744 |
|
|
|
14,242 |
|
|
|
|
|
|
|
44,930 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
2,461,734 |
|
|
|
602,663 |
|
|
|
1,812,992 |
|
|
|
(1,867,486 |
) |
|
|
3,009,903 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short term borrowings and current portion of long-term debt
|
|
|
278,422 |
|
|
|
5,000 |
|
|
|
55,724 |
|
|
|
|
|
|
|
339,146 |
|
|
Other current liabilities
|
|
|
204,562 |
|
|
|
52,795 |
|
|
|
220,401 |
|
|
|
|
|
|
|
477,758 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
482,984 |
|
|
|
57,795 |
|
|
|
276,125 |
|
|
|
|
|
|
|
816,904 |
|
|
Long-term debt
|
|
|
1,614,211 |
|
|
|
|
|
|
|
64,590 |
|
|
|
|
|
|
|
1,678,801 |
|
|
Long-term debt, related party
|
|
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
Other noncurrent liabilities
|
|
|
4,539 |
|
|
|
13,127 |
|
|
|
132,910 |
|
|
|
|
|
|
|
150,576 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
2,201,734 |
|
|
|
70,922 |
|
|
|
473,625 |
|
|
|
|
|
|
|
2,746,281 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interests
|
|
|
|
|
|
|
|
|
|
|
3,622 |
|
|
|
|
|
|
|
3,622 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
260,000 |
|
|
|
531,741 |
|
|
|
1,335,745 |
|
|
|
(1,867,486 |
) |
|
|
260,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$ |
2,461,734 |
|
|
$ |
602,663 |
|
|
$ |
1,812,992 |
|
|
$ |
(1,867,486 |
) |
|
$ |
3,009,903 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Condensed Consolidating Balance Sheet
December 31, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor | |
|
Non-Guarantor | |
|
|
|
|
|
|
Parent | |
|
Subsidiaries | |
|
Subsidiaries | |
|
Eliminations | |
|
Consolidated | |
|
|
(As restated) | |
|
(As restated) | |
|
(As restated) | |
|
(As restated) | |
|
(As restated) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(In thousands) | |
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$ |
106,833 |
|
|
$ |
10,432 |
|
|
$ |
89,310 |
|
|
$ |
|
|
|
$ |
206,575 |
|
|
Accounts receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade, net of allowance
|
|
|
263,022 |
|
|
|
3,346 |
|
|
|
115,127 |
|
|
|
|
|
|
|
381,495 |
|
|
|
Other
|
|
|
4,489 |
|
|
|
1,492 |
|
|
|
(892 |
) |
|
|
|
|
|
|
5,089 |
|
|
Inventories, net
|
|
|
94,813 |
|
|
|
8,463 |
|
|
|
34,833 |
|
|
|
|
|
|
|
138,109 |
|
|
Other current assets
|
|
|
4,049 |
|
|
|
1,035 |
|
|
|
30,138 |
|
|
|
|
|
|
|
35,222 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
473,206 |
|
|
|
24,768 |
|
|
|
268,516 |
|
|
|
|
|
|
|
766,490 |
|
Intercompany
|
|
|
1,211,929 |
|
|
|
(106,643 |
) |
|
|
(1,105,286 |
) |
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
41,574 |
|
|
|
299,915 |
|
|
|
1,077,983 |
|
|
|
|
|
|
|
1,419,472 |
|
Goodwill
|
|
|
37,188 |
|
|
|
24,288 |
|
|
|
592,241 |
|
|
|
|
|
|
|
653,717 |
|
Intangibles, net
|
|
|
16,763 |
|
|
|
4,059 |
|
|
|
17,569 |
|
|
|
|
|
|
|
38,391 |
|
Investments
|
|
|
629,599 |
|
|
|
338,801 |
|
|
|
845,900 |
|
|
|
(1,804,632 |
) |
|
|
9,668 |
|
Other assets
|
|
|
45,624 |
|
|
|
(190 |
) |
|
|
21,919 |
|
|
|
|
|
|
|
67,353 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
2,455,883 |
|
|
|
584,998 |
|
|
|
1,718,842 |
|
|
|
(1,804,632 |
) |
|
|
2,955,091 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short term borrowings and current portion of long-term debt
|
|
|
133,823 |
|
|
|
5,302 |
|
|
|
45,264 |
|
|
|
|
|
|
|
184,389 |
|
|
Other current liabilities
|
|
|
206,579 |
|
|
|
46,470 |
|
|
|
197,690 |
|
|
|
|
|
|
|
450,739 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
340,402 |
|
|
|
51,772 |
|
|
|
242,954 |
|
|
|
|
|
|
|
635,128 |
|
|
Long-term debt
|
|
|
1,790,579 |
|
|
|
|
|
|
|
65,668 |
|
|
|
|
|
|
|
1,856,247 |
|
|
Long-term debt, related party
|
|
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
Other noncurrent liabilities
|
|
|
997 |
|
|
|
11,771 |
|
|
|
123,093 |
|
|
|
|
|
|
|
135,861 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
2,231,978 |
|
|
|
63,543 |
|
|
|
431,715 |
|
|
|
|
|
|
|
2,727,236 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interests
|
|
|
|
|
|
|
|
|
|
|
3,950 |
|
|
|
|
|
|
|
3,950 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
223,905 |
|
|
|
521,455 |
|
|
|
1,283,177 |
|
|
|
(1,804,632 |
) |
|
|
223,905 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$ |
2,455,883 |
|
|
$ |
584,998 |
|
|
$ |
1,718,842 |
|
|
$ |
(1,804,632 |
) |
|
$ |
2,955,091 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Condensed Consolidating Statement of Cash Flows
For the three months ended March 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor | |
|
Non-Guarantor | |
|
|
|
|
|
|
Parent | |
|
Subsidiaries | |
|
Subsidiaries | |
|
Eliminations | |
|
Consolidated | |
|
|
(As restated) | |
|
(As restated) | |
|
(As restated) | |
|
(As restated) | |
|
(As restated) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(In thousands) | |
Net cash flows provided by operating activities
|
|
$ |
13,943 |
|
|
$ |
19,386 |
|
|
$ |
85,640 |
|
|
$ |
|
|
|
$ |
118,969 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from continuing investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of plant, property and equipment
|
|
|
(5,218 |
) |
|
|
(9,879 |
) |
|
|
(64,001 |
) |
|
|
|
|
|
|
(79,098 |
) |
|
Other investing activities
|
|
|
(6,400 |
) |
|
|
(11,997 |
) |
|
|
(33,779 |
) |
|
|
53,099 |
|
|
|
923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(11,618 |
) |
|
|
(21,876 |
) |
|
|
(97,780 |
) |
|
|
53,099 |
|
|
|
(78,175 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from continuing financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in bank overdrafts and revolving credit facilities
|
|
|
|
|
|
|
(300 |
) |
|
|
10,764 |
|
|
|
|
|
|
|
10,464 |
|
|
Payments on long-term debt and debt issuance costs
|
|
|
(30,775 |
) |
|
|
(1 |
) |
|
|
(2,451 |
) |
|
|
|
|
|
|
(33,227 |
) |
|
Other financing activities
|
|
|
47,531 |
|
|
|
|
|
|
|
6,400 |
|
|
|
(53,099 |
) |
|
|
832 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
16,756 |
|
|
|
(301 |
) |
|
|
14,713 |
|
|
|
(53,099 |
) |
|
|
(21,931 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effects of exchange rate fluctuations on cash and cash
equivalents
|
|
|
16 |
|
|
|
(1 |
) |
|
|
790 |
|
|
|
|
|
|
|
805 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
19,097 |
|
|
|
(2,792 |
) |
|
|
3,363 |
|
|
|
|
|
|
|
19,668 |
|
Cash and cash equivalents, beginning of period
|
|
|
106,833 |
|
|
|
10,432 |
|
|
|
89,310 |
|
|
|
|
|
|
|
206,575 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
$ |
125,930 |
|
|
$ |
7,640 |
|
|
$ |
92,673 |
|
|
$ |
|
|
|
$ |
226,243 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Condensed Consolidating Statement of Cash Flows
For the three months ended March 31, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantor | |
|
Non-Guarantor | |
|
|
|
|
|
|
Parent | |
|
Subsidiaries | |
|
Subsidiaries | |
|
Eliminations | |
|
Consolidated | |
|
|
(As restated) | |
|
(As restated) | |
|
(As restated) | |
|
(As restated) | |
|
(As restated) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(In thousands) | |
Net cash flows provided by (used in) operating activities
|
|
$ |
(26,435 |
) |
|
$ |
1,671 |
|
|
$ |
18,322 |
|
|
$ |
|
|
|
$ |
(6,442 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from continuing investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of plant, property and equipment
|
|
|
(2,503 |
) |
|
|
(7,762 |
) |
|
|
(56,447 |
) |
|
|
|
|
|
|
(66,712 |
) |
|
Other investing activities
|
|
|
(40,053 |
) |
|
|
480 |
|
|
|
(293 |
) |
|
|
40,022 |
|
|
|
156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(42,556 |
) |
|
|
(7,282 |
) |
|
|
(56,740 |
) |
|
|
40,022 |
|
|
|
(66,556 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from continuing financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in bank overdrafts and revolving credit facilities
|
|
|
(102 |
) |
|
|
|
|
|
|
(8,210 |
) |
|
|
|
|
|
|
(8,312 |
) |
|
Payments of long-term debt,
|
|
|
|
|
|
|
(456 |
) |
|
|
(3,048 |
) |
|
|
|
|
|
|
(3,504 |
) |
|
Other financing activities
|
|
|
|
|
|
|
1,500 |
|
|
|
38,522 |
|
|
|
(40,022 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
(102 |
) |
|
|
1,044 |
|
|
|
27,264 |
|
|
|
(40,022 |
) |
|
|
(11,816 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effects of exchange rate fluctuations on cash and cash
equivalents related
|
|
|
|
|
|
|
|
|
|
|
(710 |
) |
|
|
|
|
|
|
(710 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
(69,093 |
) |
|
|
(4,567 |
) |
|
|
(11,864 |
) |
|
|
|
|
|
|
(85,524 |
) |
Cash and cash equivalents, beginning of period
|
|
|
267,692 |
|
|
|
26,217 |
|
|
|
78,375 |
|
|
|
|
|
|
|
372,284 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
$ |
198,599 |
|
|
$ |
21,650 |
|
|
$ |
66,511 |
|
|
$ |
|
|
|
$ |
286,760 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On April 27, 2006, Amkor and Sumitomo Bakelite Co., Ltd.
and Sumitomo Plastics America, Inc. (collectively
Sumitomo) reached resolution with Maxim Integrated
Products, Inc. (Maxim) with respect to pending
litigation involving allegedly defective epoxy mold compound.
Amkor has agreed to pay Maxim $3.0 million of the total
settlement and release its claims against Sumitomo in
consideration of a release from all claims against Amkor related
to this litigation. We had previously reserved $2.0 million
for this matter and recorded a charge of $1.0 million in
the Condensed Consolidated Statement of Operations for the three
months ended March 31, 2006. The settlement of this case
resolves the last pending litigation regarding the allegedly
defective epoxy mold compound, as discussed in our Annual Report
on Form 10-K/ A
for the year ended December 31, 2005.
On April 28, 2006, we announced that we have commenced a
cash tender offer for up to $200 million aggregate
principal amount of our outstanding 9.25% Senior Notes due
2008, subject to completing the contemplated financing thereof.
39
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
18. |
Subsequent Events Related to the Review of Stock Option
Practices (Discussed in Note 2) |
On August 11, 2006, we received a letter dated
August 10, 2006 from U.S. Bank National Association
(US Bank) as trustee for the holders of our
5% Convertible Subordinated Notes due 2007,
10.5% Senior Subordinated Notes due 2009, 9.25% Senior
Notes due 2008, 9.25% Senior Notes due 2016 (issued in May
2006), 6.25% Convertible Subordinated Notes Due 2013,
7.75% Senior Notes due 2013 and 2.5% Convertible
Senior Subordinated Notes due 2011 (issued in May 2006) stating
that US Bank, as trustee, had not received our financial
statements for the fiscal quarter ended June 30, 2006 and
that we have 60 days from the date of the letter to file
our Quarterly Report on
From 10-Q for the
fiscal quarter ended June 30, 2006 or it will be considered
an Event of Default under the indentures governing
each of the above-listed notes.
On August 11, 2006, we received a letter dated
August 11, 2006 from Wells Fargo Bank National Association
(Wells Fargo), as trustee for our 7.125% Senior
Notes due 2011, stating that we failed to file our Quarterly
Report on
Form 10-Q for the
fiscal quarter ended June 30, 2006, demanding that we
immediately file such quarterly report and indicating that
unless we file a
Form 10-Q within
60 days after the date of such letter, it will ripen into
an Event of Default under the indenture governing
our 7.125% Senior Notes due 2011.
If an Event of Default were to occur under any of
the notes described above, the trustees or holders of at least
25% in aggregate principal amount of such series then
outstanding could attempt to declare all related unpaid
principal and premium, if any, and accrued interest on such
series of notes then outstanding to be immediately due and
payable. As of August 31, 2006, there is approximately
$1.62 billion of aggregate unpaid principal outstanding of
the above mentioned notes.
On September 14, 2006, we commenced the solicitation of
consents from the holders of the following series of our notes:
(i) $400.0 million aggregate outstanding principal
amount of 9.25% Senior Notes due 2016 (issued in May 2006),
(ii) $250.0 million aggregate outstanding principal
amount of 7.125% Senior Notes due 2011,
(iii) $425.0 million aggregate outstanding principal
amount of 7.75% Senior Notes due 2013, (iv) approximately
$88.2 million aggregate outstanding principal amount of
9.25% Senior Notes due 2008, (v) approximately
$21.9 million aggregate outstanding principal amount of
10.5% Senior Subordinated Notes due 2009,
(vi) approximately $142.4 million aggregate
outstanding principal amount of 5% Convertible Subordinated
Notes due 2007, and (vii) $190.0 million aggregate
outstanding principal amount of 2.50% Convertible Senior
Subordinated Notes due 2011 (issued May 2006).
In each case, we were seeking consents for a waiver of certain
defaults and events of default, and the consequences thereof,
that may have occurred or may occur under the indenture
governing each series of notes from our failure to file with the
Securities and Exchange Commission and deliver to the trustee
and the holders of such series of notes any reports or other
information, including a quarterly report on Form 10-Q for
the quarter ended June 30, 2006, and the waiver of the
application of certain provisions of the indentures governing
each series of notes. With the filing of our Quarterly Report on
Form 10-Q for the
quarter ended June 30, 2006, concurrent with the filing of
our Annual Report on
Form 10-K/ A for
the year ended December 31, 2005 and this Quarterly Report
on Form 10-Q/ A,
we have cured all alleged defaults outlined in the US Bank and
Wells Fargo letters described above. Accordingly, we have
terminated all consent solicitations with respect to our
outstanding notes and will not be paying any consent fees under
any such consent solicitation.
|
|
|
Listing on The Nasdaq Stock Market |
On August 14, 2006, we received a written Staff
Determination notice from the Nasdaq Stock Market stating that
we are not in compliance with Nasdaqs Marketplace
Rule 4310(c)(14) because we have not timely filed our
Quarterly Report on
Form 10-Q for the
Quarter ended June 30, 2006, and that, therefore,
Amkors securities are subject to delisting. On
August 21, 2006, we appealed the Staffs delisting
determination to the Nasdaq Listings Qualifications Panel
(Panel) and requested an oral hearing before the
Panel. On August 24, 2006, the Nasdaq Staff confirmed that
our appeal had stayed the delisting action pending a final
written decision
40
AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
by the Panel. A hearing before the Panel occurred on
September 26, 2006 and the Panels decision is still
pending. There can be no assurances that the Panel will grant
our request for continued listing.
|
|
|
Litigation and Other Legal Matters |
We are currently a party to various legal proceedings and other
legal matters, including those noted below. While we currently
believe that the ultimate outcome of these matters, individually
and in the aggregate, will not have a material adverse effect on
our financial position, results of operations or cash flows,
these matters are subject to inherent uncertainties. If an
unfavorable ruling or event were to occur, there exists the
possibility of a material adverse impact on our net results in
the period in which the ruling or event occurs. The estimate of
the potential impact from the following legal proceedings and
other legal matters on our financial position, results of
operations or cash flows could change in the future. We record
provisions in our consolidated financial statements for pending
litigation when we determine that an unfavorable outcome is
probable and the amount of the loss can be reasonably estimated.
|
|
|
Update Regarding SEC Investigation |
As previously disclosed, we are the subject of an SEC
investigation concerning matters unrelated to our historical
stock option practices. In July 2006, the Board of Directors
established a Special Committee to review our historical stock
option practices and informed the SEC of these efforts. The SEC
recently informed us that it is expanding the scope of its
investigation and has requested that we provide documentation
related to these matters. We intend to continue to cooperate
with the SEC.
|
|
|
Securities Class Action Litigation |
On January 23, 2006, a purported securities class action
suit entitled Nathan Weiss et al. v. Amkor Technology,
Inc. et al., was filed in U.S. District Court for the
Eastern District of Pennsylvania against Amkor and certain of
its current and former officers. Subsequently, other law firms
filed two similar cases, which were consolidated with the
initial complaint. On August 15, 2006, plaintiffs filed an
amended complaint adding additional officer, director and former
director defendants and alleging improprieties in certain option
grants. The amended complaint further alleges that defendants
improperly recorded and accounted for stock options in violation
of generally accepted accounting principles and made materially
false and misleading statements and omissions in its disclosures
in violation of the federal securities laws, during the period
from July 2001 to July 2006. The amended complaint seeks
certification as a class action pursuant to Fed. R. Civ.
Proc. 23, compensatory damages, costs and expenses, and
such other further relief as the Court deems just and proper.
|
|
|
Shareholder Derivative Lawsuits |
On February 23, 2006, a purported shareholder derivative
lawsuit entitled Scimeca v. Kim, et al. was filed in
the U.S. District Court for the District of Arizona against
certain of our current and former officers and directors. Amkor
is named as a nominal defendant. The complaint includes claims
for breach of fiduciary duty, abuse of control, waste of
corporate assets, unjust enrichment and mismanagement, and is
generally based on the same allegations as in the securities
class action litigation described above. In September 2006, the
plaintiff amended the complaint to add allegations relating to
option grants and added additional defendants, including the
remaining members of the current board, former board members,
and former officers.
On March 2, 2006, a purported shareholder derivative
lawsuit entitled Kahn v. Kim, et al. was filed in the
Superior Court of the State of Arizona against certain of our
current and former officers and directors. Amkor is named as a
nominal defendant. The complaint includes claims for breach of
fiduciary duty and unjust enrichment, and is based on
allegations similar to those made in the previously filed
federal shareholder derivative action. This action has been
stayed pending resolution of the federal derivative suit
referenced above.
The derivative complaints seek monetary damages, an order
directing the Company to take all necessary actions to improve
corporate governance as may be necessary, equitable and/or
injunctive relief as permitted by law, disgorgement,
restitution, costs, fees, expenses and such other relief as the
Court deems just and proper.
41
|
|
ITEM 2. |
Managements Discussion and Analysis of Financial
Condition and Results of Operations |
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion contains forward-looking statements
within the meaning of the federal securities laws, including but
not limited to statements regarding: (1) the condition and
growth of the industry in which we operate, including trends
toward increased outsourcing, reductions in inventory and demand
and selling prices for our services, (2) our anticipated
capital expenditures and financing needs, (3) our belief as
to our future capacity utilization rates, revenue, gross
margins, operating performance and liquidity, (4) our
contractual obligations and (5) other statements that are
not historical facts. In some cases, you can identify
forward-looking statements by terminology such as
may, will, should,
expects, plans, anticipates,
believes, estimates,
predicts, potential,
continue, intend or the negative of
these terms or other comparable terminology. Because such
statements include risks and uncertainties, actual results may
differ materially from those anticipated in such forward-looking
statements as a result of certain factors, including those set
forth in the following discussion as well as in Risk
Factors that May Affect Future Operating Performance set
forth in this
Form 10-Q/ A in
Part II Item 1A Risk Factors. The
following discussion provides information and analysis of our
results of operations for the three months ended March 31,
2006 and our liquidity and capital resources. You should read
the following discussion in conjunction with our condensed
consolidated financial statements and the related notes,
included elsewhere in this quarterly report as well as other
reports we file with the Securities and Exchange Commission.
Restatement of Consolidated Financial Statements, Special
Committee and Company Findings
As a result of a report by a third party financial analyst
issued on May 25, 2006, we commenced an initial review of
our historical stock option granting practices. This review
included a review of hard copy documents as well as a limited
set of electronic documents. Following this initial review, on
July 24, 2006 our Board of Directors established a Special
Committee comprised of independent directors to conduct a review
of our historical stock option granting practices during the
period from our initial public offering in 1998 through the
present.
Based on the findings of the Special Committee and our internal
review, we identified a number of occasions on which we used an
incorrect measurement date for financial accounting and
reporting purposes. In accordance with Accounting Principles
Board No. 25, Accounting for Stock Issued to
Employees and related interpretations, with respect to the
period through December 31, 2005, we should have recorded
compensation expense in an amount per share subject to each
option to the extent that the fair market value of our stock on
the correct measurement date exceeded the exercise price of the
option. For periods commencing January 1, 2006,
compensation expense is recorded in accordance with Statement of
Financial Accounting Standards No. 123(R)
(revised) Share-Based Payment. We have also
identified a number of other option grants for which we failed
to properly apply the provisions of APB No. 25 or SFAS
No. 123 and related interpretations of each pronouncement.
In considering the causes of the accounting errors set forth
below, the Special Committee concluded that the evidence does
not support a finding of intentional manipulation of stock
option grant pricing by any member of existing management.
However, based on its review, the Special Committee identified
evidence that supports a finding of intentional manipulation of
stock option pricing with respect to annual grants in 2001 and
2002 by a former executive and that other former executives may
have been aware of, or participated in this conduct. In addition
the Special Committee identified a
42
number of other factors related to our internal controls that
contributed to the accounting errors that led to the
restatement. The financial statement impact of these errors, by
type, for the periods indicated is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months | |
|
|
|
|
|
Total | |
|
|
Ended | |
|
Year Ended December 31, | |
|
Cumulative | |
|
Additional | |
|
|
June 30, | |
|
| |
|
Effect | |
|
Compensation | |
|
|
2006 | |
|
2005 | |
|
2004 | |
|
2003 | |
|
2002-1998 | |
|
Expense | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(In thousands) | |
Improper measurement dates for annual stock option grants
|
|
$ |
299 |
|
|
$ |
255 |
|
|
$ |
7,577 |
|
|
$ |
6,453 |
|
|
$ |
80,984 |
|
|
$ |
95,568 |
|
Modifications to stock option grants
|
|
|
|
|
|
|
9 |
|
|
|
(536 |
) |
|
|
711 |
|
|
|
9,345 |
|
|
|
9,529 |
|
Improper measurement dates for other stock option grants
|
|
|
80 |
|
|
|
64 |
|
|
|
217 |
|
|
|
102 |
|
|
|
1,625 |
|
|
|
2,088 |
|
Stock option grants to non-employees
|
|
|
|
|
|
|
|
|
|
|
26 |
|
|
|
172 |
|
|
|
1,443 |
|
|
|
1,641 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional compensation expense
|
|
|
379 |
|
|
|
328 |
|
|
|
7,284 |
|
|
|
7,438 |
|
|
|
93,397 |
|
|
|
108,826 |
|
Tax related effects
|
|
|
129 |
|
|
|
18 |
|
|
|
144 |
|
|
|
198 |
|
|
|
(3,294 |
) |
|
|
(2,805 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate restatement of net income (loss)
|
|
$ |
508 |
|
|
$ |
346 |
|
|
$ |
7,428 |
|
|
$ |
7,636 |
|
|
$ |
90,103 |
|
|
$ |
106,021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Improper Measurement Dates for Annual Stock Option
Grants. We determined that, in connection with our annual
stock option grants to employees in 1999, 2000, 2001, 2002 and
2004, the number of shares that an individual employee was
entitled to receive was not determined until after the original
grant date, and therefore the measurement date for such options
was subsequent to the original grant date. As a result, we have
restated our historical financial statements to increase
stock-based compensation expense by a total of
$95.6 million recognized over the applicable vesting
periods. For certain of these options forfeited in 2002 in
connection with an option exchange program (2002 Option
Exchange Program), the remaining compensation expense was
accelerated into 2002. For certain other options, compensation
expense was accelerated into 2004, in connection with the
acceleration of all unvested options as of July 1, 2004
(2004 Accelerated Vesting). We undertook the 2004
Accelerated Vesting program for the purpose of enhancing
employee morale, helping retain high potential employees in the
face of a downturn in industry conditions and to avoid future
compensation charges subsequent to the adoption of SFAS
No. 123(R).
Modifications to Stock Option Grants. We determined that
from 1998 through 2005, we had not properly accounted for stock
options modified for certain individuals who held consulting,
transition or advisory roles with us. These included instances
of continued vesting after an individual was no longer required
to provide substantive services to Amkor after an individual
converted from an employee to a consultant or advisory role, and
extensions of option vesting and exercise periods. Some of these
modifications were not identified in our financial reporting
processes and were therefore not properly reflected in our
financial statements. As a result, we have restated our
historical financial statements to increase stock-based
compensation expense by a total of $9.5 million recognized
as of the date of the respective modifications.
Improper Measurement Dates for Other Stock Option Grants.
We determined that from 1998 through 2005, we had not properly
accounted for certain employee stock options granted prior to
obtaining authorization of the grants. These options included
those granted as of November 9, 1998 in connection with the
settlement of a deferred compensation liability to employees
that had not been approved by our Board of Directors until
November 10, 1998 as well as stock options granted to new
hires and existing employees in recognition of achievements,
promotions, retentions and other events. As a result of these
errors, we have restated our historical financial statements to
increase stock-based compensation expense by a total of
$2.1 million recognized over the applicable vesting
periods. For certain of these option grants, the recognition of
this expense was also accelerated under the 2002 Option Exchange
Program or the 2004 Accelerated Vesting, as described under
Improper Measurement Dates for Annual Stock Option
Grants.
Stock Option Grants to Non-employees. We determined that
from 1998 to 2004, we had not properly accounted for stock
option grants issued to employees of an equity affiliate,
consultants, or other persons who did not meet the definition of
an employee. We erroneously accounted for such grants in
accordance with APB
43
No. 25 rather than SFAS No. 123 and related
interpretations. As a result, we have restated our historical
financial statements to increase stock-based compensation
expense by a total of $1.6 million.
All of the foregoing charges were non-cash and had no impact on
our reported net sales or cash or cash equivalents. The
aggregate amount of the additional stock-based compensation
expense that we identified as a result of the stock option
review is approximately $108.8 million through
June 30, 2006.
Incremental stock-based
compensation charges of $108.8 million resulted in deferred
income tax benefits of $3.2 million. Such amount is nominal
relative to the amount of the incremental
stock-based
compensation charges as we maintained a full valuation allowance
against our domestic deferred tax assets since 2002 coupled with
the fact that incremental
stock-based
compensation charges relating to our foreign subsidiaries were
not deductible for local tax purposes during the relevant
periods due to the absence of related
re-charge agreements
with those subsidiaries. The $3.2 million deferred tax
benefit resulted primarily from the
write-off of
stock-based
compensation related deferred tax assets to additional
paid-in capital in
2002; such write-off
had originally been charged to income tax expense in 2002. We
also recorded payroll related taxes totaling $0.4 million
primarily relating to certain of our French employees.
As a result of our determination that the exercise prices of
certain option grants were below the market price of our stock
on the actual grant date, we evaluated whether the affected
employees would have any adverse tax consequences under Section
409A of the Internal Revenue Code (the IRC). Because
Section 409A relates to the employees income
recognition as stock options vest, when we accelerated the
vesting of all unvested options in July 2004 (the 2004
Accelerated Vesting described under Improper
Measurement Dates for Annual Grants) the impact of Section
409A was mitigated for substantially all of our outstanding
stock grants. For stock options granted subsequent to the 2004
Accelerated Vesting, the impact of Section 409A is not expected
to materially impact our employees and financial statements as a
result of various transition rules and potential remediation
efforts. Further we considered IRC Section 162(m) and its
established limitation thresholds relating to total remuneration
and concluded, for periods prior to June 30, 2006, that our tax
deductions related to stock-based compensation were not
materially changed as a result of any employee whose
remuneration changed as a result of receiving an option at less
than fair value.
As previously disclosed, we are the subject of an SEC
investigation concerning matters unrelated to our historical
stock option practices. The SEC recently informed us that it is
expanding the scope of its investigation and has requested that
we provide documentation related to our historical stock option
practices. We intend to continue to cooperate with the SEC. As a
result of the restatement, the related disclosures included in
Managements Discussion and Analysis of Financial Condition
and Results of Operations have been revised if indicated as
restated.
As a result of the findings of the Special Committee as well as
our internal review, we concluded that we needed to amend our
Annual Report on
Form 10-K for the
year ended December 31, 2005, originally filed on
March 16, 2006, to restate our consolidated financial
statements for the years ended December 31, 2005, 2004 and
2003 and the related disclosures as well as
Managements Report on Internal Control Over
Financial Reporting as of December 31, 2005. The
Annual Report on
Form 10-K/ A also
includes the restatement of selected consolidated financial data
as of and for the years ended December 31, 2005, 2004,
2003, 2002 and 2001, and the unaudited quarterly financial data
for each of the quarters in the years ended December 31,
2005 and 2004. We also concluded that we needed to amend the
Quarterly Report on
Form 10-Q for the
quarter ended March 31, 2006, originally filed on
May 9, 2006, to restate our condensed consolidated
financial statements for the quarters ended March 31, 2006
and 2005 and the related disclosures. We have restated the
June 30, 2005 financial statements included in the
Quarterly Report on
Form 10-Q for the
quarter ended June 30, 2006. We will restate the
September 30, 2005 financial statements with the filing of
our September 30, 2006
Form 10-Q. We have
not amended and we do not intend to amend any of our other
previously filed annual reports on
Form 10-K or
quarterly reports on
Form 10-Q for the
periods affected by the restatement or adjustments other than
(i) this amended Quarterly Report on
Form 10-Q/A for
the quarter ended March 31, 2006 and (ii) the amended
Annual Report on
Form 10-K/A for
the year ended December 31, 2005.
44
The following table sets forth the impact of the additional
non-cash charges for stock-based compensation expense and
related tax effects on our historical financial statements for
the three months ended March 31, 2006 and 2005.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, | |
|
|
| |
|
|
2006 | |
|
2005 | |
|
|
| |
|
| |
|
|
As Previously | |
|
|
|
As Previously | |
|
|
|
|
Reported | |
|
Adjustments | |
|
As Restated | |
|
Reported | |
|
Adjustments | |
|
As Restated | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(In thousands, except per share data) | |
Net sales
|
|
$ |
645,089 |
|
|
$ |
|
|
|
$ |
645,089 |
|
|
$ |
417,481 |
|
|
$ |
|
|
|
$ |
417,481 |
|
Cost of sales
|
|
|
490,071 |
|
|
|
281 |
|
|
|
490,352 |
|
|
|
374,086 |
|
|
|
46 |
|
|
|
374,132 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
155,018 |
|
|
|
(281 |
) |
|
|
154,737 |
|
|
|
43,395 |
|
|
|
(46 |
) |
|
|
43,349 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
60,251 |
|
|
|
(47 |
) |
|
|
60,204 |
|
|
|
60,466 |
|
|
|
47 |
|
|
|
60,513 |
|
|
Research and development
|
|
|
9,430 |
|
|
|
|
|
|
|
9,430 |
|
|
|
8,900 |
|
|
|
|
|
|
|
8,900 |
|
|
Provision for legal settlements and contingencies
|
|
|
1,000 |
|
|
|
|
|
|
|
1,000 |
|
|
|
50,000 |
|
|
|
|
|
|
|
50,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
70,681 |
|
|
|
(47 |
) |
|
|
70,634 |
|
|
|
119,366 |
|
|
|
47 |
|
|
|
119,413 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
84,337 |
|
|
|
(234 |
) |
|
|
84,103 |
|
|
|
(75,971 |
) |
|
|
(93 |
) |
|
|
(76,064 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (income) expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
41,157 |
|
|
|
|
|
|
|
41,157 |
|
|
|
40,513 |
|
|
|
|
|
|
|
40,513 |
|
|
Interest expense, related party
|
|
|
1,788 |
|
|
|
|
|
|
|
1,788 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency loss
|
|
|
3,928 |
|
|
|
|
|
|
|
3,928 |
|
|
|
2,232 |
|
|
|
|
|
|
|
2,232 |
|
|
Other (income) expense, net
|
|
|
(936 |
) |
|
|
|
|
|
|
(936 |
) |
|
|
178 |
|
|
|
|
|
|
|
178 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other expense, net
|
|
|
45,937 |
|
|
|
|
|
|
|
45,937 |
|
|
|
42,923 |
|
|
|
|
|
|
|
42,923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes and minority interests
|
|
|
38,400 |
|
|
|
(234 |
) |
|
|
38,166 |
|
|
|
(118,894 |
) |
|
|
(93 |
) |
|
|
(118,987 |
) |
Income tax expense
|
|
|
3,612 |
|
|
|
|
|
|
|
3,612 |
|
|
|
1,187 |
|
|
|
|
|
|
|
1,187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before minority interest income (expense)
|
|
|
34,788 |
|
|
|
(234 |
) |
|
|
34,554 |
|
|
|
(120,081 |
) |
|
|
(93 |
) |
|
|
(120,174 |
) |
Minority interest income (expense), net of tax
|
|
|
(115 |
) |
|
|
|
|
|
|
(115 |
) |
|
|
1,011 |
|
|
|
|
|
|
|
1,011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$ |
34,673 |
|
|
$ |
(234 |
) |
|
$ |
34,439 |
|
|
$ |
(119,070 |
) |
|
$ |
(93 |
) |
|
$ |
(119,163 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
0.20 |
|
|
$ |
(0.01 |
) |
|
$ |
0.19 |
|
|
$ |
(0.68 |
) |
|
$ |
|
|
|
$ |
(0.68 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$ |
0.19 |
|
|
$ |
|
|
|
$ |
0.19 |
|
|
$ |
(0.68 |
) |
|
$ |
|
|
|
$ |
(0.68 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
176,801 |
|
|
|
|
|
|
|
176,801 |
|
|
|
175,718 |
|
|
|
|
|
|
|
175,718 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
191,015 |
|
|
|
|
|
|
|
190,764 |
|
|
|
175,718 |
|
|
|
|
|
|
|
175,718 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45
The following table sets forth the impact of the additional
non-cash charges for stock-based compensation expense and
related tax effects on our consolidated balance sheet as of
March 31, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2006 | |
|
|
| |
|
|
As Previously | |
|
|
|
|
Reported | |
|
Adjustments | |
|
As Restated | |
|
|
| |
|
| |
|
| |
|
|
(In thousands, except per share data) | |
ASSETS |
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$ |
226,243 |
|
|
$ |
|
|
|
$ |
226,243 |
|
|
Accounts receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade, net of allowance for doubtful accounts of $4,995
|
|
|
381,011 |
|
|
|
|
|
|
|
381,011 |
|
|
|
Other
|
|
|
9,600 |
|
|
|
|
|
|
|
9,600 |
|
|
Inventories, net
|
|
|
148,253 |
|
|
|
|
|
|
|
148,253 |
|
|
Other current assets
|
|
|
30,414 |
|
|
|
|
|
|
|
30,414 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
795,521 |
|
|
|
|
|
|
|
795,521 |
|
|
Property, plant and equipment, net
|
|
|
1,454,674 |
|
|
|
|
|
|
|
1,454,674 |
|
|
Goodwill
|
|
|
672,007 |
|
|
|
|
|
|
|
672,007 |
|
|
Intangibles, net
|
|
|
36,421 |
|
|
|
|
|
|
|
36,421 |
|
|
Investments
|
|
|
6,350 |
|
|
|
|
|
|
|
6,350 |
|
|
Other assets
|
|
|
44,930 |
|
|
|
|
|
|
|
44,930 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
3,009,903 |
|
|
$ |
|
|
|
$ |
3,009,903 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY |
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings and current portion of long-term debt
|
|
|
339,146 |
|
|
|
|
|
|
|
339,146 |
|
|
Trade accounts payable
|
|
|
346,831 |
|
|
|
|
|
|
|
346,831 |
|
|
Accrued expenses
|
|
|
130,529 |
|
|
|
398 |
|
|
|
130,927 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
816,506 |
|
|
|
398 |
|
|
|
816,904 |
|
|
Long-term debt, related party
|
|
|
100,000 |
|
|
|
|
|
|
|
100,000 |
|
|
Long-term debt
|
|
|
1,678,801 |
|
|
|
|
|
|
|
1,678,801 |
|
|
Other non-current liabilities
|
|
|
150,576 |
|
|
|
|
|
|
|
150,576 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
2,745,883 |
|
|
|
398 |
|
|
|
2,746,281 |
|
Commitments and contingencies (see Note 14)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interests
|
|
|
3,622 |
|
|
|
|
|
|
|
3,622 |
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value, 10,000 shares authorized
designated Series A, none issued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $0.001 par value, 500,000 shares authorized,
issued and outstanding of 176,733 in 2005 and 175,718 in 2004
|
|
|
178 |
|
|
|
|
|
|
|
178 |
|
|
Additional paid-in capital
|
|
|
1,328,119 |
|
|
|
105,349 |
|
|
|
1,433,468 |
|
|
Accumulated deficit
|
|
|
(1,071,288 |
) |
|
|
(105,747 |
) |
|
|
(1,177,035 |
) |
|
Accumulated other comprehensive income
|
|
|
3,389 |
|
|
|
|
|
|
|
3,389 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
260,398 |
|
|
|
(398 |
) |
|
|
260,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$ |
3,009,903 |
|
|
$ |
|
|
|
$ |
3,009,903 |
|
|
|
|
|
|
|
|
|
|
|
46
The following table sets forth the impact of the additional
non-cash charges for stock-based compensation expense and
related tax effects on our historical financial statements for
each of the three years ended December 31, 2005.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, | |
|
|
| |
|
|
2005 | |
|
2004 | |
|
2003 | |
|
|
| |
|
| |
|
| |
|
|
As Previously | |
|
|
|
As Previously | |
|
|
|
As Previously | |
|
|
|
|
Reported | |
|
Adjustments | |
|
As Restated | |
|
Reported | |
|
Adjustments | |
|
As Restated | |
|
Reported | |
|
Adjustments | |
|
As Restated | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(In thousands, except per share data) | |
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$ |
2,099,949 |
|
|
$ |
|
|
|
$ |
2,099,949 |
|
|
$ |
1,901,279 |
|
|
$ |
|
|
|
$ |
1,901,279 |
|
|
$ |
1,603,768 |
|
|
$ |
|
|
|
$ |
1,603,768 |
|
Cost of sales
|
|
|
1,743,996 |
|
|
|
182 |
|
|
|
1,744,178 |
|
|
|
1,533,447 |
|
|
|
4,562 |
|
|
|
1,538,009 |
|
|
|
1,267,302 |
|
|
|
3,277 |
|
|
|
1,270,579 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
355,953 |
|
|
|
(182 |
) |
|
|
355,771 |
|
|
|
367,832 |
|
|
|
(4,562 |
) |
|
|
363,270 |
|
|
|
336,466 |
|
|
|
(3,277 |
) |
|
|
333,189 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
243,155 |
|
|
|
164 |
|
|
|
243,319 |
|
|
|
221,915 |
|
|
|
2,866 |
|
|
|
224,781 |
|
|
|
183,291 |
|
|
|
3,963 |
|
|
|
187,254 |
|
Research and development
|
|
|
37,347 |
|
|
|
|
|
|
|
37,347 |
|
|
|
36,707 |
|
|
|
|
|
|
|
36,707 |
|
|
|
30,167 |
|
|
|
|
|
|
|
30,167 |
|
Provision for legal settlements and contingencies
|
|
|
50,000 |
|
|
|
|
|
|
|
50,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of specialty test operations
|
|
|
(4,408 |
) |
|
|
|
|
|
|
(4,408 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
326,094 |
|
|
|
164 |
|
|
|
326,258 |
|
|
|
258,622 |
|
|
|
2,866 |
|
|
|
261,488 |
|
|
|
213,458 |
|
|
|
3,963 |
|
|
|
217,421 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
29,859 |
|
|
|
(346 |
) |
|
|
29,513 |
|
|
|
109,210 |
|
|
|
(7,428 |
) |
|
|
101,782 |
|
|
|
123,008 |
|
|
|
(7,240 |
) |
|
|
115,768 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (income) expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, related party
|
|
|
521 |
|
|
|
|
|
|
|
521 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
165,351 |
|
|
|
|
|
|
|
165,351 |
|
|
|
148,902 |
|
|
|
|
|
|
|
148,902 |
|
|
|
140,281 |
|
|
|
|
|
|
|
140,281 |
|
|
Foreign currency (gain) loss
|
|
|
9,318 |
|
|
|
|
|
|
|
9,318 |
|
|
|
6,190 |
|
|
|
|
|
|
|
6,190 |
|
|
|
(3,022 |
) |
|
|
|
|
|
|
(3,022 |
) |
|
Other (income) expense, net
|
|
|
(444 |
) |
|
|
|
|
|
|
(444 |
) |
|
|
(24,444 |
) |
|
|
|
|
|
|
(24,444 |
) |
|
|
31,052 |
|
|
|
|
|
|
|
31,052 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other expense
|
|
|
174,746 |
|
|
|
|
|
|
|
174,746 |
|
|
|
130,648 |
|
|
|
|
|
|
|
130,648 |
|
|
|
168,311 |
|
|
|
|
|
|
|
168,311 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes, equity investment losses, minority
interests and discontinued operations
|
|
|
(144,887 |
) |
|
|
(346 |
) |
|
|
(145,233 |
) |
|
|
(21,438 |
) |
|
|
(7,428 |
) |
|
|
(28,866 |
) |
|
|
(45,303 |
) |
|
|
(7,240 |
) |
|
|
(52,543 |
) |
Equity investment losses
|
|
|
(55 |
) |
|
|
|
|
|
|
(55 |
) |
|
|
(2 |
) |
|
|
|
|
|
|
(2 |
) |
|
|
(3,290 |
) |
|
|
|
|
|
|
(3,290 |
) |
Minority interests
|
|
|
2,502 |
|
|
|
|
|
|
|
2,502 |
|
|
|
(904 |
) |
|
|
|
|
|
|
(904 |
) |
|
|
(4,008 |
) |
|
|
|
|
|
|
(4,008 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations before income taxes
|
|
|
(142,440 |
) |
|
|
(346 |
) |
|
|
(142,786 |
) |
|
|
(22,344 |
) |
|
|
(7,428 |
) |
|
|
(29,772 |
) |
|
|
(52,601 |
) |
|
|
(7,240 |
) |
|
|
(59,841 |
) |
Income tax provision (benefit)
|
|
|
(5,551 |
) |
|
|
|
|
|
|
(5,551 |
) |
|
|
15,192 |
|
|
|
|
|
|
|
15,192 |
|
|
|
(233 |
) |
|
|
|
|
|
|
(233 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
|
(136,889 |
) |
|
|
(346 |
) |
|
|
(137,235 |
) |
|
|
(37,536 |
) |
|
|
(7,428 |
) |
|
|
(44,964 |
) |
|
|
(52,368 |
) |
|
|
(7,240 |
) |
|
|
(59,608 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,566 |
|
|
|
(396 |
) |
|
|
54,170 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$ |
(136,889 |
) |
|
$ |
(346 |
) |
|
$ |
(137,235 |
) |
|
$ |
(37,536 |
) |
|
$ |
(7,428 |
) |
|
$ |
(44,964 |
) |
|
$ |
2,198 |
|
|
$ |
(7,636 |
) |
|
$ |
(5,438 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From continuing operations
|
|
$ |
(0.78 |
) |
|
$ |
|
|
|
$ |
(0.78 |
) |
|
$ |
(0.21 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.26 |
) |
|
$ |
(0.31 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.35 |
) |
From discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.32 |
|
|
|
|
|
|
|
0.32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per common share
|
|
$ |
(0.78 |
) |
|
$ |
|
|
|
$ |
(0.78 |
) |
|
$ |
(0.21 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.26 |
) |
|
$ |
0.01 |
|
|
$ |
(0.04 |
) |
|
$ |
(0.03 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
176,385 |
|
|
|
|
|
|
|
176,385 |
|
|
|
175,342 |
|
|
|
|
|
|
|
175,342 |
|
|
|
167,142 |
|
|
|
|
|
|
|
167,142 |
|
Diluted
|
|
|
176,385 |
|
|
|
|
|
|
|
176,385 |
|
|
|
175,342 |
|
|
|
|
|
|
|
175,342 |
|
|
|
167,142 |
|
|
|
|
|
|
|
167,142 |
|
47
The following table sets forth the impact of the additional
non-cash charges for stock-based compensation expense and
related tax effects on our consolidated balance sheets as of
December 31, 2005 and 2004.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, | |
|
|
| |
|
|
2005 | |
|
2004 | |
|
|
| |
|
| |
|
|
As | |
|
|
|
As | |
|
|
|
|
Previously | |
|
|
|
As | |
|
Previously | |
|
|
|
As | |
|
|
Reported | |
|
Adjustments | |
|
Restated | |
|
Reported | |
|
Adjustments | |
|
Restated | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(In thousands, except per share data) | |
ASSETS |
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$ |
206,575 |
|
|
$ |
|
|
|
$ |
206,575 |
|
|
$ |
372,284 |
|
|
$ |
|
|
|
$ |
372,284 |
|
|
Accounts receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade, net of allowance for doubtful accounts of $4,947 and
$5,074
|
|
|
381,495 |
|
|
|
|
|
|
|
381,495 |
|
|
|
265,547 |
|
|
|
|
|
|
|
265,547 |
|
|
|
Other
|
|
|
5,089 |
|
|
|
|
|
|
|
5,089 |
|
|
|
3,948 |
|
|
|
|
|
|
|
3,948 |
|
|
Inventories, net
|
|
|
138,109 |
|
|
|
|
|
|
|
138,109 |
|
|
|
111,616 |
|
|
|
|
|
|
|
111,616 |
|
|
Other current assets
|
|
|
35,222 |
|
|
|
|
|
|
|
35,222 |
|
|
|
32,591 |
|
|
|
|
|
|
|
32,591 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
766,490 |
|
|
|
|
|
|
|
766,490 |
|
|
|
785,986 |
|
|
|
|
|
|
|
785,986 |
|
|
Property, plant and equipment, net
|
|
|
1,419,472 |
|
|
|
|
|
|
|
1,419,472 |
|
|
|
1,380,396 |
|
|
|
|
|
|
|
1,380,396 |
|
|
Goodwill
|
|
|
653,717 |
|
|
|
|
|
|
|
653,717 |
|
|
|
656,052 |
|
|
|
|
|
|
|
656,052 |
|
|
Intangibles, net
|
|
|
38,391 |
|
|
|
|
|
|
|
38,391 |
|
|
|
47,302 |
|
|
|
|
|
|
|
47,302 |
|
|
Investments
|
|
|
9,668 |
|
|
|
|
|
|
|
9,668 |
|
|
|
13,762 |
|
|
|
|
|
|
|
13,762 |
|
|
Other assets
|
|
|
67,353 |
|
|
|
|
|
|
|
67,353 |
|
|
|
81,870 |
|
|
|
|
|
|
|
81,870 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
2,955,091 |
|
|
$ |
|
|
|
$ |
2,955,091 |
|
|
$ |
2,965,368 |
|
|
$ |
|
|
|
$ |
2,965,368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY |
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings and current portion of long-term debt
|
|
$ |
184,389 |
|
|
$ |
|
|
|
$ |
184,389 |
|
|
$ |
52,147 |
|
|
$ |
|
|
|
$ |
52,147 |
|
|
Trade accounts payable
|
|
|
326,712 |
|
|
|
|
|
|
|
326,712 |
|
|
|
211,808 |
|
|
|
|
|
|
|
211,808 |
|
|
Accrued expenses
|
|
|
123,631 |
|
|
|
396 |
|
|
|
124,027 |
|
|
|
175,075 |
|
|
|
378 |
|
|
|
175,453 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
634,732 |
|
|
|
396 |
|
|
|
635,128 |
|
|
|
439,030 |
|
|
|
378 |
|
|
|
439,408 |
|
|
Long-term debt, related party
|
|
|
100,000 |
|
|
|
|
|
|
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
1,856,247 |
|
|
|
|
|
|
|
1,856,247 |
|
|
|
2,040,813 |
|
|
|
|
|
|
|
2,040,813 |
|
|
Other non-current liabilities
|
|
|
135,861 |
|
|
|
|
|
|
|
135,861 |
|
|
|
109,317 |
|
|
|
|
|
|
|
109,317 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
2,726,840 |
|
|
|
396 |
|
|
|
2,727,236 |
|
|
|
2,589,160 |
|
|
|
378 |
|
|
|
2,589,538 |
|
Commitments and contingencies (see Note 14)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interests
|
|
|
3,950 |
|
|
|
|
|
|
|
3,950 |
|
|
|
6,679 |
|
|
|
|
|
|
|
6,679 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value, 10,000 shares authorized
designated Series A, none issued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $0.001 par value, 500,000 shares authorized,
issued and outstanding of 176,733 in 2005 and 175,718 in 2004
|
|
|
178 |
|
|
|
|
|
|
|
178 |
|
|
|
176 |
|
|
|
|
|
|
|
176 |
|
|
Additional paid-in capital
|
|
|
1,326,426 |
|
|
|
105,117 |
|
|
|
1,431,543 |
|
|
|
1,323,579 |
|
|
|
104,789 |
|
|
|
1,428,368 |
|
|
Accumulated deficit
|
|
|
(1,105,961 |
) |
|
|
(105,513 |
) |
|
|
(1,211,474 |
) |
|
|
(969,072 |
) |
|
|
(105,167 |
) |
|
|
(1,074,239 |
) |
|
Accumulated other comprehensive income
|
|
|
3,658 |
|
|
|
|
|
|
|
3,658 |
|
|
|
14,846 |
|
|
|
|
|
|
|
14,846 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
224,301 |
|
|
|
(396 |
) |
|
|
223,905 |
|
|
|
369,529 |
|
|
|
(378 |
) |
|
|
369,151 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$ |
2,955,091 |
|
|
$ |
|
|
|
$ |
2,955,091 |
|
|
$ |
2,965,368 |
|
|
$ |
|
|
|
$ |
2,965,368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48
The additional non-cash charges for stock-based compensation
expense and related tax effects had no impact on our
consolidated statements of cash flows. We identified a
classification error relating to stock-based compensation in our
consolidated statements of cash flows and we increased net cash
provided by operating activities by less than $0.1 million
and $0.6 million for the year ended December 31, 2005
and 2004, respectively, offset by a similar decrease in net cash
used in financing activities.
Of the aggregate $108.8 million of non-cash charges for
additional stock-based compensation expense, approximately
$90.1 million relates to fiscal years prior to
January 1, 2003. The impact of these charges including the
related tax effects, for each of the five years ended
December 31, 2002 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, | |
|
|
| |
|
|
2002 | |
|
2001 | |
|
2000 | |
|
1999 | |
|
1998 | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(In thousands, except per share data) | |
Net sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As previously reported
|
|
$ |
1,406,178 |
|
|
$ |
1,336,674 |
|
|
$ |
2,009,701 |
|
|
$ |
1,617,235 |
|
|
$ |
1,452,285 |
|
|
Adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As restated
|
|
|
1,406,178 |
|
|
|
1,336,674 |
|
|
|
2,009,701 |
|
|
|
1,617,235 |
|
|
|
1,452,285 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As previously reported
|
|
$ |
95,615 |
|
|
$ |
52,251 |
|
|
$ |
567,381 |
|
|
$ |
319,877 |
|
|
$ |
243,479 |
|
|
Adjustment
|
|
|
(10,316 |
) |
|
|
(4,820 |
) |
|
|
(2,540 |
) |
|
|
(9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As restated
|
|
|
85,299 |
|
|
|
47,431 |
|
|
|
564,841 |
|
|
|
319,868 |
|
|
|
243,479 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As previously reported
|
|
$ |
(416,920 |
) |
|
$ |
(277,148 |
) |
|
$ |
297,746 |
|
|
$ |
156,478 |
|
|
$ |
122,625 |
|
|
Adjustment
|
|
|
(52,929 |
) |
|
|
(22,045 |
) |
|
|
(13,077 |
) |
|
|
(4,493 |
) |
|
|
(24 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As restated
|
|
|
(469,849 |
) |
|
|
(299,193 |
) |
|
|
284,669 |
|
|
|
151,985 |
|
|
|
122,601 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As previously reported
|
|
$ |
(835,089 |
) |
|
$ |
(456,487 |
) |
|
$ |
137,801 |
|
|
$ |
65,999 |
|
|
$ |
70,496 |
|
|
Adjustment
|
|
|
(61,352 |
) |
|
|
(15,590 |
) |
|
|
(9,311 |
) |
|
|
(3,169 |
) |
|
|
(16 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As restated
|
|
|
(896,441 |
) |
|
|
(472,077 |
) |
|
|
128,490 |
|
|
|
62,830 |
|
|
|
70,480 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As previously reported
|
|
$ |
8,330 |
|
|
$ |
5,626 |
|
|
$ |
16,352 |
|
|
$ |
10,720 |
|
|
$ |
4,964 |
|
|
Adjustment
|
|
|
(250 |
) |
|
|
(223 |
) |
|
|
(185 |
) |
|
|
(7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As restated
|
|
|
8,080 |
|
|
|
5,403 |
|
|
|
16,167 |
|
|
|
10,713 |
|
|
|
4,964 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As previously reported
|
|
$ |
(826,759 |
) |
|
$ |
(450,861 |
) |
|
$ |
154,153 |
|
|
$ |
76,719 |
|
|
$ |
75,460 |
|
|
Adjustment
|
|
|
(61,602 |
) |
|
|
(15,813 |
) |
|
|
(9,496 |
) |
|
|
(3,176 |
) |
|
|
(16 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As restated
|
|
|
(888,361 |
) |
|
|
(466,674 |
) |
|
|
144,657 |
|
|
|
73,543 |
|
|
|
75,444 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per common share as restated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From continuing operations
|
|
$ |
(5.46 |
) |
|
$ |
(3.00 |
) |
|
$ |
0.88 |
|
|
$ |
0.53 |
|
|
$ |
0.66 |
|
|
From discontinued operations
|
|
|
0.05 |
|
|
|
0.03 |
|
|
|
0.11 |
|
|
|
0.09 |
|
|
|
0.05 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$ |
(5.41 |
) |
|
$ |
(2.97 |
) |
|
$ |
0.99 |
|
|
$ |
0.62 |
|
|
$ |
0.71 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, | |
|
|
| |
|
|
2002 | |
|
2001 | |
|
2000 | |
|
1999 | |
|
1998 | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(In thousands, except per share data) | |
Diluted income (loss) per common share as restated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From continuing operations
|
|
$ |
(5.46 |
) |
|
$ |
(3.00 |
) |
|
$ |
0.85 |
|
|
$ |
0.53 |
|
|
|
0.66 |
|
|
From discontinued operations
|
|
|
0.05 |
|
|
|
0.03 |
|
|
|
0.11 |
|
|
|
0.08 |
|
|
|
0.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$ |
(5.41 |
) |
|
$ |
(2.97 |
) |
|
|
0.96 |
|
|
|
0.61 |
|
|
|
0.70 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, | |
|
|
| |
|
|
2003 | |
|
2002 | |
|
2001 | |
|
2000 | |
|
1999 | |
|
1998 | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(In thousands) | |
Other Assets (Deferred Tax Assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As previously reported
|
|
$ |
67,601 |
|
|
$ |
114,178 |
|
|
$ |
197,186 |
|
|
$ |
101,897 |
|
|
$ |
63,009 |
|
|
$ |
34,932 |
|
|
Adjustment
|
|
|
|
|
|
|
|
|
|
|
13,197 |
|
|
|
6,881 |
|
|
|
1,725 |
|
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As restated
|
|
|
67,601 |
|
|
|
114,178 |
|
|
|
210,383 |
|
|
|
108,778 |
|
|
|
64,734 |
|
|
|
34,940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As previously reported
|
|
$ |
170,145 |
|
|
$ |
184,223 |
|
|
$ |
145,544 |
|
|
$ |
147,352 |
|
|
$ |
88,577 |
|
|
$ |
77,004 |
|
|
Adjustment
|
|
|
236 |
|
|
|
38 |
|
|
|
4 |
|
|
|
|
|
|
|
(170 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As restated
|
|
|
170,381 |
|
|
|
184,261 |
|
|
|
145,548 |
|
|
|
147,352 |
|
|
|
88,407 |
|
|
|
77,004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As previously reported
|
|
$ |
1,317,164 |
|
|
$ |
1,170,227 |
|
|
$ |
1,123,541 |
|
|
$ |
975,026 |
|
|
$ |
551,964 |
|
|
$ |
381,061 |
|
|
Adjustment
|
|
|
97,505 |
|
|
|
90,067 |
|
|
<