Amkor (Chandler, Ariz.) said it filed Friday an annual report for 2005 and a quarterly report for the period ending March 31, each containing restatements of financial results for 2003 through 2005 and the first quarter of 2006. The restatements contain addition stock-based compensation charges totaling $106 million for the period Jan 1, 1998 through June 30, 2006, Amkor said. Approximately $90 million of the charges relates to years 1998 to 2002, Amkor said.

The Wall Street Journal Friday reported that Amkor was threatening to file for Chapter 11 bankruptcy protection if the holders of Amkor debt tried to compel the company to pay off early due to failure to file its quarterly report with the SEC in a timely manner. Amkor is one of many companies that said it would the filing of quarterly reports with the SEC until concluding an internal company investigation into historical stock options granting practices.

Amkor said Friday's filing renders "consent solicitation" payments to holders of Amkor convertible debt unnecessary and that the company has terminated the offer of payment to these debt holders in exchange for more time to make the financial filings. According to the Friday Wall Street Journal report, Amkor had offered debt holders more than $28 million in consent solicitation payments.

"Consistent with the terms of the consent solicitation statements, Amkor will not accept any of the consents for payment and will not pay a consent fee to the holders of any series of notes," Amkor said.

Amkor said a special committee of its board of directors, assisted by independent counsel, found no manipulation of stock option pricing by any member of the company's existing management team. The company said the committee concluded that there was intentional manipulation of stock option pricing by one unnamed former executive, and that there is "some evidence" to suggest that two other former executives "may have been aware of, or participated in, this conduct."

Stock option grant practices were not recognized as a significant risk, and Amkor allowed its human resources department to control and administer the stock option grant process without adequate input or supervision from the compensation committee and the company's board of directors, the investigation concluded. The investigation further concluded that people involved in granting stock options did not have adequate training or supervision, and that the compensation committee's practices and procedures were inadequate.

Amkor said it remains the subject of an SEC investigation into its historical stock options granting practices and other matters. The company said it would continue to fully cooperate with the SEC.

In August, Amkor said it would likely restate its financial results for fiscal years 1998 through 2005, plus the first quarter of 2006. The company said at that time it had identified "a number of occasions on which the measurement date used for financial accounting and reporting purposes for option awards granted to certain Amkor employees was different from the actual grant date."

By: DocMemory
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