AMKOR TECHNOLOGY, INC. 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005
1. DESCRIPTION OF THE PLAN
The following description of the Amkor Technology, Inc. 401(k) Plan (the Plan) provides
only general information. Participants should refer to the Plan document for a more
complete description of the Plans provisions.
General
The Plan is a defined contribution plan covering substantially all employees of Amkor
Technology, Inc. (the Employer or Company) on the first day of the month following
date of hire. The Plan is intended to comply with the applicable requirements of the
Internal Revenue Code of 1986, as amended (the IRC) and the provisions of the Employee
Retirement Income Security Act of 1974, as amended (ERISA).
Administration
Under ERISA, the Employer is the designated administrator of the Plan and has exclusive
authority and responsibility for all matters in connection with the operation and
administration of the Plan (excluding the authority and responsibility to invest, manage
and control the assets of the Plan specifically allocated to the trustee). The Employer
has contracted with The Vanguard Group (Vanguard) and its affiliates to maintain
participants Plan accounts and to provide certain other recordkeeping and administrative
services for the Plan. Vanguard also serves as the Plans trustee.
The Employer has paid certain expenses incurred in the administration of the Plan. Such
expenses are primarily comprised of legal, accounting and auditing fees.
Employee Contributions
Participants may elect to defer up to 60% of their eligible compensation (as defined in
the Plan) each year, subject to IRC limits. Participants may also contribute amounts
representing eligible distributions from other qualified plans.
Each year, the Employer contributes non-discretionary matching deferral contributions in
an amount equal to 75% of each participants deferral contributions to the Plan, not to
exceed $6,000. Plan participants must complete one year of service to be eligible for
Employer matching contributions. The Employer may also make annual discretionary matching
contributions.
Salary deferral agreements shall be made, terminated, or changed according to procedures
and limitations set up by the Plan administrator and the Plan document. Participants
currently entitled to receive retirement benefits from another qualified retirement plan
may elect to transfer that benefit into a rollover contribution amount under the Plan.
Participants may designate the percentage of their total contribution, including the
Companys matching portion, to be invested in any of the funds in which the Plan invests.
Participants can change investment elections and contributions percentages at any time.
Participant Accounts
Each participants account is credited with the participants contributions, any
qualified rollover contributions and Employer matching contributions and an allocation of
Plan earnings or losses and administrative expenses, if applicable. Allocations of Plan
earnings or losses are based on participant account balances. The benefit to which a
participant is entitled is the balance of the participants vested account.
Withdrawals
While employed with the Company, participants must reach the age of 591/2 to withdraw
Employer matching contributions. Participant contributions may be withdrawn at age 591/2;
earlier withdrawals will be subject to an additional 10% tax unless such withdrawals are
made due to death, disability, severance of employment after age 55, or a financial
hardship as determined by the Plan.
Vesting
Participants are immediately vested in their contributions plus actual earnings (if any)
thereon. Vesting in Employer matching contributions plus actual earnings (if any) thereon
is based on participants years of credited service. A participant is 34% vested after
one year of credited service, 67% vested after two years of credited service and 100%
vested after three years of credited service.
Active participants will become fully vested in Employer matching contributions if they
reach normal retirement age (age 59), become disabled (as defined in the plan), or die.
Forfeitures
Forfeitures occur when a participant who is not 100% vested in Employer contributions
elects to withdraw from the Plan. At December 31, 2006 and 2005, forfeited nonvested
accounts totaled $78,142 and $33,020, respectively, and are available to reduce the
future Employer matching contributions or pay administrative expenses. In 2006, the
Employer did not use any of the forfeited nonvested accounts to reduce its matching
contributions and used $29,511 of the forfeited nonvested accounts to pay administrative
expenses. In 2005, the Employer used $88,329 of forfeited nonvested accounts to reduce
its matching contributions and used $19,029 of forfeited nonvested accounts to pay
administrative expenses.
Contributions
Participant contributions are recognized in the period during which the Employer makes
the respective payroll deduction. Employer contributions are recognized as matched by
the Employer with the employee contributions.
Rollovers
Participants are allowed to rollover balances from other qualified plans into the Plan.
Payment of Benefits
On termination of service, a participant may generally elect to leave his or her account
balance in the Plan, or receive a lump-sum distribution of his or her vested account
balance. If a terminated participants vested account balance is between $1,001 and
$5,000 the sum is a rolled into a Vanguard IRA. If the terminated participants vested
account balance is less than $1,000, a lump sum distribution of the participants vested
account balance will automatically be made.
Investment Options
Assets of the Plan are held by Vanguard and are invested in the investment options
available under the Plan based on instructions received from participants. The Plan
offers a number of options for the investment of participants Plan accounts, including
various mutual funds, a common/collective trust, and an employer common stock fund.
Administrative Expenses
Administrative expenses are payable from Plan assets unless paid by the Employer, as
provided by the Plan document. During 2006 and 2005, administrative expenses incurred by
the Plan amounted to $32,389 and $28,479, respectively, while those paid by the employer
amounted to $41,000 and $38,500, respectively.
Assets Transferred Out To Other Plans
During 2005, Amkor sold its Wichita, Kansas based Test Services business to Integra
Technologies, LLC (Integra). After the sale, Plan assets totaling $3,788,808
applicable to the affected employees were transferred to a new plan established by
Integra.
2. SUMMARY OF ACCOUNTING POLICIES
Basis of Presentation
The financial statements of the Plan are presented on the accrual basis of accounting in
accordance with general accepted accounting principles.
Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted accounting
principles requires management to make significant estimates and assumptions that affect
the reported amounts of net assets available for benefits and changes therein.
Accordingly, actual results could differ from those estimates.
As described in Financial Accounting Standards Board Staff Position, FSP AAG INV-1 and
SOP 94-4-1, Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain
Investment Companies Subject to the AICPA Investment Company Guide and
Defined-Contribution Health and Welfare and Pension Plans (the FSP), investment
contracts held by a defined-contribution plan are required to be reported at fair value.
However, contract value is the relevant measurement attribute for that portion of the
net assets available for benefits of a defined-contribution plan attributable to fully
benefit-responsive investment contracts because contract value is the amount
participants would receive if they were to initiate permitted transactions under the
terms of the plan. As required by the FSP, the Statement of Net Assets Available for
Benefits presents the fair value of the investment contracts as well as the adjustment
of the fully benefit-responsive investment contracts from fair value to contract value.
The Statement of Changes in Net Assets Available for Benefits is prepared on a contract
value basis.
Investment Valuation and Income Recognition
The Plans investments are stated at fair value and contract value as of the last
business day of the year. Shares of Amkor Technology, Inc. common stock are valued at
quoted market prices. Shares of registered investment companies (mutual funds) are valued
at quoted market prices which represent the net asset value of shares held by the Plan at
year-end. Investments in a common/collective trust are valued at fair value and contract
value. Participant loans receivable are valued at their outstanding balances which
approximates fair value.
Purchases and sales of securities are recorded on a trade-date basis. Gain or loss on
sale of securities is based on average cost. Interest income is recorded on the accrual
basis. Dividends are recorded on the ex-dividend date.
Risks and Uncertainties
As described in Note 1, the Plan provides for various investment options such as stocks,
mutual funds, and other investment securities. Such investments are exposed to various
risks, such as interest rate, market and credit risks. Due to the level of risk
associated with certain investments and the level of uncertainty related to changes in
the value of certain investments, it is at least reasonably possible that changes in
risks in the near term would materially affect participants account balances and the
amounts reported in the statement of net assets available for benefits and the statement
of changes in net assets available for benefits.
Payment of Benefits
Benefits are recorded when paid. No amounts are owed at December 31, 2006 and 2005 to
participants who have elected to withdraw from the Plan, but have not been paid.
New Accounting Pronouncements
In September 2006, the Financial Accounting Standards Board issued Statement on Financial
Accounting Standards No. 157, Fair Value Measurements (SFAS No.157). This standard
establishes a single authoritative definition of fair value, sets out a framework for
measuring fair value and requires additional disclosures about fair value measurements.
SFAS No. 157 applies to fair value measurements already required or permitted by existing
standards. SFAS No. 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007 and interim periods within those fiscal years. The
changes to current generally accepted accounting principles from the application of this
Statement relate to the definition of fair value, the methods used to measure fair value,
and the expanded disclosures about fair value measurements. As of December 31, 2006, the
Plan does not believe the adoption of SFAS No. 157 will impact the financial statement
amounts, however, additional disclosures may be required about the inputs used to develop
the measurements and the effect of certain of the measurements on changes in net assets
for the period.
In
September 2006, the Securities and Exchange Commission
(SEC) issued Staff Accounting Bulletin No. 108,
Considering the Effects of Prior Year Misstatements when
Quantifying Misstatements in Current Year Financial Statements (SAB 108). SAB 108 provides interpretive
guidance on how the effects of the carryover or reversal of prior
year misstatements should be considered in quantifying a current year
misstatement. The SEC staff believes that registrants should quantify
errors using both a balance sheet and an income statement approach
and evaluate whether either approach results in quantifying a
misstatement that, when all relevant quantitative and qualitative
factors are considered, is material. SAB 108 is effective for
the Plans fiscal year ended December 31, 2006. The
adoption of SAB 108 did not have a material effect on the
Plans financial statements.
3. PARTICIPANT LOANS RECEIVABLE
Participants may borrow from their accounts a minimum of $1,000 up to a maximum equal to
the lesser of $50,000 (less their highest outstanding loan balance during the prior 12
months) or 50% of their vested account balance. Loan terms range from 1-5 years or up to
10 years for the purchase of a primary residence. The loans are secured by the balance in
the participants account and bear interest at a rate commensurate with local prevailing
market rates. Outstanding loans at December 31, 2006 carry interest rates ranging from 5%
to 10.5%. Principal and interest are paid ratably through
6
monthly payroll deductions. Loans are due, payable in full within 90 days of a
participants termination of employment.
4. EMPLOYER CONTRIBUTION RECEIVABLE
The Employer inadvertently excluded a limited group of expatriates and foreign nationals
from participating in the Plan who were eligible under the terms of the Plan. In
accordance with published guidance from the Internal Revenue Service, the Employer will
correct the inadvertent exclusion of these individuals by making corrective contributions
to the Plan on their behalf. The receivable reflects the aggregate of the corrective
contributions to be made to the Plan on behalf of the excluded individuals.
5. PLAN TERMINATION
Although it has not expressed any interest to do so, the Employer has the right under the
Plan to terminate or modify the Plan at any time and for any reason subject to the
provisions of ERISA. In the event of plan termination, participants will become 100%
vested in their accounts.
6. TAX STATUS
The Plan obtained its latest determination letter dated August 22, 2001, in which the
Internal Revenue Service stated that the Plan, as then designed was in compliance with
the applicable requirements of the IRC. The Plan administrator believes that the amended
Plan continues to be designed and is being operated in compliance with the applicable
requirements of the IRC in order to maintain its tax-exempt status. Therefore, a
provision for income taxes has not been included in the Plans financial statements.
7. INVESTMENTS
Investments that represent 5% or more of the Plans net assets as of December 31, 2006 and
2005 are separately identified as follows:
|
|
|
|
|
|
|
|
|
|
|
2006 |
|
|
2005 |
|
Fidelity Low-Priced Stock Fund |
|
$ |
4,190,190 |
|
|
$ |
4,357,859 |
|
Neuberger Berman Genesis Trust |
|
|
* |
|
|
|
3,192,709 |
|
Vanguard 500 Index Fund Investor Shares |
|
|
6,677,584 |
|
|
|
6,025,569 |
|
Vanguard Equity Income Fund |
|
|
4,513,430 |
|
|
|
3,460,545 |
|
Vanguard Mid-Cap Index Fund |
|
|
4,856,535 |
|
|
|
3,416,655 |
|
Vanguard Total Bond Market Index Fund |
|
|
4,576,301 |
|
|
|
4,829,814 |
|
Vanguard Total International Stock Index Fund |
|
|
5,621,261 |
|
|
|
3,461,579 |
|
Vanguard Total Stock Market Index Fund Investor Shares |
|
|
3,531,521 |
|
|
|
3,282,341 |
|
Vanguard Retirement Savings Trust |
|
|
4,756,343 |
|
|
|
2,904,521 |
|
Amkor Tech Stock Fund |
|
|
5,697,886 |
|
|
|
5,625,263 |
|
Vanguard Wellington Fund Investor Shares |
|
|
3,508,127 |
|
|
|
* |
|
|
|
|
* |
|
Investment is under 5% of the Plans net assets for respective year. |
For the years ended December 31, 2006 and 2005, the Plans investments (including gains
and losses on investments bought and sold as well as held during the year) appreciated
(depreciated) as follows:
|
|
|
|
|
|
|
|
|
|
|
2006 |
|
|
2005 |
|
Amkor Tech Stock Fund |
|
$ |
4,233,299 |
|
|
$ |
(134,792 |
) |
Shares of registered investment companies |
|
|
4,368,588 |
|
|
|
2,019,016 |
|
|
|
|
|
|
|
|
|
|
$ |
8,601,887 |
|
|
$ |
1,884,224 |
|
|
|
|
|
|
|
|
8. RELATED PARTY TRANSACTIONS
Certain Plan investments are managed by Vanguard, the Plans trustee in 2006 and 2005,
and, therefore, these transactions qualify as party-in-interest. Such transactions are
permitted under the provisions of the Plan and are exempt from the prohibition of
party-in-interest transactions under ERISA.
During 2006 and 2005, the Plan paid $35,195 and $19,792 respectively to Vanguard for
administrative expenses. As of
7
December 31, 2006, the Plan owes $5,880 to Vanguard
related to administrative expenses.
As allowed by the Plan, participants may elect to invest a portion of their accounts in
Amkor Tech Stock Fund. See Note 10 for subsequent changes to this provision. The shares
of Amkor Technology, Inc. common stock are traded in the open market on the NASDAQ
Exchange. In 2006, participants purchased 126,485 shares at a cost of $898,037 and sold
520,945 shares with a market value of $5,058,713. In 2005, participants purchased
841,438 shares at a cost of $3,501,515 and sold 458,848 shares with a market value of
$1,895,891.
9. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of investments per the financial statements to the Form
5500.
|
|
|
|
|
Total Investments Per Financial Statements |
|
$ |
67,107,840 |
|
Adjustment from fair value to contract value
for common/collective trust |
|
|
45,174 |
|
|
|
|
|
|
|
|
|
|
Total investments per Form 5500 |
|
$ |
67,153,014 |
|
|
|
|
|
The Plan adopted Financial Accounting Standards Board Staff Position AAG INV -1 and SOP
94-4-1, Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain
Investment Companies Subject to the AICPA Investment Company Guide and
Defined-Contribution Health and Welfare and Pension Plans as required for financial
statements for annual periods after December 15, 2006.
10. SUBSEQUENT EVENTS
In November of 2006, the Board of Directors of Amkor Technology, Inc., voted to restrict
participant investment in, and ultimately liquidate the Amkor Tech Stock Fund. These
plan changes were announced to be phased in as follows:
|
|
|
As announced on March 26, 2007, Plan participants were no longer able to
direct new contributions or company matching funds into the Amkor Tech Stock
Fund after 4:00PM Eastern Standard Time on April 30, 2007. Transfer of assets
from other plan funds into the Amkor Tech Stock Fund was also restricted after
this cut-off date, and the Fund was closed to all new investment assets from
any source at that time. |
|
|
|
|
As announced on April 30, 2007, the Amkor Tech Stock Fund will close at 1:00PM
Eastern Standard Time on November 30, 2007. Any participant assets remaining in
the Fund after this closing date will be liquidated through numerous
transactions, with proceeds based upon the average sale price being reinvested in
the Vanguard Retirement Savings Trust. |
8
AMKOR TECHNOLOGY, INC. 401(K) PLAN
SCHEDULE H, PART 4(I) SCHEDULE OF ASSETS (HELD AT END OF YEAR) ***
DECEMBER 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
(b) IDENTITY OF ISSUE |
|
(c) DESCRIPTION OF INVESTMENT |
|
(d) COST ** |
|
|
(e) CURRENT VALUE |
|
* |
|
Brandywine Blue Fund |
|
Registered Investment Company |
|
|
|
|
|
$ |
911,297 |
|
* |
|
Fidelity Low-Priced Stock Fund |
|
Registered Investment Company |
|
|
|
|
|
|
4,190,190 |
|
* |
|
Neuberger Berman Genesis Trust |
|
Registered Investment Company |
|
|
|
|
|
|
3,221,875 |
|
* |
|
Oppenheimer Global Fund, Class A Shares |
|
Registered Investment Company |
|
|
|
|
|
|
2,056,052 |
|
* |
|
Vanguard 500 Index Fund Investor Shares |
|
Registered Investment Company |
|
|
|
|
|
|
6,677,584 |
|
* |
|
Vanguard Equity Income Fund |
|
Registered Investment Company |
|
|
|
|
|
|
4,513,430 |
|
* |
|
Vanguard Growth and Income Fund Investor Shares |
|
Registered Investment Company |
|
|
|
|
|
|
199,446 |
|
* |
|
Vanguard Long-Term Investment Grade Invest Share |
|
Registered Investment Company |
|
|
|
|
|
|
454,852 |
|
* |
|
Vanguard Mid-Cap Index Fund |
|
Registered Investment Company |
|
|
|
|
|
|
4,856,535 |
|
* |
|
Vanguard Morgan Growth Fund Investor Shares |
|
Registered Investment Company |
|
|
|
|
|
|
216,037 |
|
* |
|
Vanguard Selected Value Fund |
|
Registered Investment Company |
|
|
|
|
|
|
1,342,430 |
|
* |
|
Vanguard Strategic Equity Fund |
|
Registered Investment Company |
|
|
|
|
|
|
2,675,915 |
|
* |
|
Vanguard Target Retirement 2005 Fund |
|
Registered Investment Company |
|
|
|
|
|
|
626,314 |
|
* |
|
Vanguard Target Retirement 2010 Fund |
|
Registered Investment Company |
|
|
|
|
|
|
19,139 |
|
* |
|
Vanguard Target Retirement 2015 Fund |
|
Registered Investment Company |
|
|
|
|
|
|
987,321 |
|
* |
|
Vanguard Target Retirement 2020 Fund |
|
Registered Investment Company |
|
|
|
|
|
|
17,482 |
|
* |
|
Vanguard Target Retirement 2025 Fund |
|
Registered Investment Company |
|
|
|
|
|
|
2,638,867 |
|
* |
|
Vanguard Target Retirement 2030 Fund |
|
Registered Investment Company |
|
|
|
|
|
|
11,187 |
|
* |
|
Vanguard Target Retirement 2035 Fund |
|
Registered Investment Company |
|
|
|
|
|
|
2,483,830 |
|
* |
|
Vanguard Target Retirement 2040 Fund |
|
Registered Investment Company |
|
|
|
|
|
|
904 |
|
* |
|
Vanguard Target Retirement 2045 Fund |
|
Registered Investment Company |
|
|
|
|
|
|
439,376 |
|
* |
|
Vanguard Target Retirement 2050 Fund |
|
Registered Investment Company |
|
|
|
|
|
|
75,392 |
|
* |
|
Vanguard Target Retirement Income |
|
Registered Investment Company |
|
|
|
|
|
|
147,626 |
|
* |
|
Vanguard Total Bond Market Index Fund |
|
Registered Investment Company |
|
|
|
|
|
|
4,576,301 |
|
* |
|
Vanguard Total International Stock Index Fund |
|
Registered Investment Company |
|
|
|
|
|
|
5,621,261 |
|
* |
|
Vanguard
Total Stock Market Index Fund Investor Shares |
|
Registered Investment Company |
|
|
|
|
|
|
3,531,521 |
|
* |
|
Vanguard U.S. Value Fund |
|
Registered Investment Company |
|
|
|
|
|
|
234,230 |
|
* |
|
Vanguard Wellington Fund Investor Shares |
|
Registered Investment Company |
|
|
|
|
|
|
3,508,127 |
|
* |
|
Vanguard Retirement Savings Trust |
|
Common/Collective Trust |
|
|
|
|
|
|
4,711,169 |
|
* |
|
Amkor Tech Stock Fund |
|
Common stock of the Plans sponsor |
|
|
|
|
|
|
5,697,886 |
|
* |
|
Loan Fund |
|
Loans, interest rates 5% 10.5% |
|
|
|
|
|
|
464,266 |
|
|
|
|
|
Maturing January 2007 through April 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments |
|
|
|
|
|
|
|
$ |
67,107,840 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Represents a party-in-interest for which a statutory exemption exists. |
|
** |
|
All investments are participant directed therefore disclosure of cost is not required. |
|
*** |
|
Under ERISA, an asset held for investment purposes is any asset held by the Plan on
the last business day of the Plans fiscal year or acquired at any time during the Plan
fiscal year and disposed of at any time before the last day of the Plans fiscal year,
with certain exceptions. |
Refer to the Report of Independent Registered Public Accounting Firm
9
SIGNATURE
The Plan. Pursuant to the requirements of the Securities and Exchange Act of
1934, the trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
|
|
|
|
|
|
|
|
|
Amkor Technology, Inc. 401(k) Plan |
|
|
|
|
|
|
|
|
|
Date: June 27, 2007
|
|
By:
|
|
/s/ Kenneth T. Joyce |
|
|
|
|
|
|
|
|
|
|
|
Name: Kenneth T. Joyce |
|
|
|
|
Title: Executive Vice President & |
|
|
|
|
Chief Financial Officer |
|
|
|
|
Amkor Technology, Inc. |
|
|
10