Edgar Filing: AMKOR TECHNOLOGY INC

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q/ A


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the Quarterly Period Ended March 31, 2006

or

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the transition period from to

Commission File Number 000-29472

AMKOR TECHNOLOGY, INC.

(Exact name of registrant as specified in its charter)


Delaware (State of incorporation)		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 registrant’s Common Stock as of April 30, 2006 was 176,981,486.

QUARTERLY REPORT ON FORM 10-Q/ A

March 31, 2006

TABLE OF CONTENTS


		Page No.

	Explanatory Note		3

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)		4
	Condensed Consolidated Statements of Operations — Three Months Ended March 31, 2006 and 2005 (as restated)		4
	Condensed Consolidated Balance Sheets — March 31, 2006 and December 31, 2005 (as restated)		5
	Condensed Consolidated Statements of Cash Flows — Three Months Ended March 31, 2006 and 2005 (as restated)		6
	Notes to Condensed Consolidated Financial Statements (as restated)		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		43
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		58
Item 4.	Controls and Procedures		60

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		62
Item 1A.	Risk Factors		62
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		76
Item 6.	Exhibits		76
Signatures			77
EX-12.1
EX-31.1
EX-31.2
EX-32

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 Company’s 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 “Management’s 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 “Management’s 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:



	Part I — Item 1 — Unaudited Financial Statements;



	Part I — Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations;



	Part I — Item 4 — Controls and Procedures;



	Part II — Item 1A — Risk Factors; and



	Part II — Item 6 — Exhibits

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.

PART I. FINANCIAL INFORMATION


ITEM 1.	*Financial Statements*

AMKOR TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


			For the Three Months Ended
			March 31,

			2006			2005
			(As restated)(1)			(As restated)(1)

			(In thousands, except per share data)
Net sales			$	645,089		$	417,481
Cost of sales				490,352			374,132

Gross profit				154,737			43,349

Operating expenses:
	Selling, general and administrative			60,204			60,513
	Research and development			9,430			8,900
	Provision for legal settlements and contingencies			1,000			50,000

		Total operating expenses		70,634			119,413

Operating income (loss)				84,103			(76,064	)

Other (income) expense:
	Interest expense, net			41,157			40,513
	Interest expense, related party			1,788			—
	Foreign currency loss			3,928			2,232
	Other (income) expense, net			(936	)		178

		Total other expense, net		45,937			42,923

Income (loss) before income taxes and minority interests				38,166			(118,987	)
Income tax expense				3,612			1,187

Income (loss) before minority interest income (expense)				34,554			(120,174	)
Minority interest income (expense), net of tax				(115	)		1,011

Net income (loss)			$	34,439		$	(119,163	)

Income (loss) per common share:
	Basic		$	0.19		$	(0.68	)

	Diluted		$	0.19		$	(0.68	)

Shares used in computing income (loss) per common share:
	Basic			176,801			175,718

	Diluted			190,764			175,718


(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.

AMKOR TECHNOLOGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


				March 31,			December 31,
				2006			2005
				(As restated)(1)			(As restated)(1)

				(In thousands)
ASSETS
Current assets:
	Cash and cash equivalents			$	226,243		$	206,575
	Accounts receivable:
		Trade, net of allowance for doubtful accounts of $4,995 and $4,947			381,011			381,495
		Other			9,600			5,089
	Inventories, net				148,253			138,109
	Other current assets				30,414			35,222

			Total current assets		795,521			766,490
	Property, plant and equipment, net				1,454,674			1,419,472
	Goodwill				672,007			653,717
	Intangibles, net				36,421			38,391
	Investments				6,350			9,668
	Other assets				44,930			67,353

			Total assets	$	3,009,903		$	2,955,091


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Short-term borrowings and current portion of long-term debt			$	339,146		$	184,389
	Trade accounts payable				346,831			326,712
	Accrued expenses				130,927			124,027

			Total current liabilities		816,904			635,128
	Long-term debt				1,678,801			1,856,247
	Long-term debt, related party				100,000			100,000
	Other non-current liabilities				150,576			135,861

			Total liabilities		2,746,281			2,727,236

Commitments and contingencies (see Note 14)
Minority interests					3,622			3,950

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 176,905 in 2006 and 176,733 in 2005				178			178
	Additional paid-in capital				1,433,468			1,431,543
	Accumulated deficit				(1,177,035	)		(1,211,474	)
	Accumulated other comprehensive income				3,389			3,658

			Total stockholders’ equity		260,000			223,905

			Total liabilities and stockholders’ equity	$	3,009,903		$	2,955,091


(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.

AMKOR TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


			For the Three Months Ended
			March 31,

			2006			2005
			(As restated)(1)			(As restated)(1)

			(In thousands)
Cash flows from operating activities:
	Net income (loss)		$	34,439		$	(119,163	)
	Depreciation and amortization			66,061			60,858
	Other non-cash items			15,007			1,475
	Changes in assets and liabilities, excluding effects of acquisitions			3,462			50,388

		Net cash provided by (used in) operating activities		118,969			(6,442	)

Cash flows from investing activities:
	Payments for property, plant and equipment			(79,098	)		(66,712	)
	Proceeds from the sale of property, plant and equipment			923			156

		Net cash used in investing activities		(78,175	)		(66,556	)

Cash flows from financing activities:
	Net change in bank overdrafts			—			(102	)
	Borrowings under revolving credit facilities			63,092			55,603
	Payments under revolving credit facilities			(52,628	)		(63,813	)
	Payments for debt issuance costs			(485	)		—
	Payments on long-term debt			(32,742	)		(3,504	)
	Proceeds from issuance of stock through stock compensation plans			832			—

		Net cash used in financing activities		(21,931	)		(11,816	)

Effect of exchange rate fluctuations on cash and cash equivalents				805			(710	)

Net increase (decrease) in cash and cash equivalents				19,668			(85,524	)
Cash and cash equivalents, beginning of period				206,575			372,284

Cash and cash equivalents, end of period			$	226,243		$	286,760

Supplemental disclosures of cash flow information:
	Cash paid during the period for:
		Interest	$	40,400		$	40,170
		Income taxes	$	1,508		$	2,733
	Non cash investing and financing activities:
		Application of deposit upon closing of acquisition of minority interest	$	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.

AMKOR TECHNOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


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 management’s 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.

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).

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

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.”

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 employee’s 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.

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

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

AMKOR TECHNOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


		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

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

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.


3.	Earnings Per Share

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	)

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 employee’s 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.

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.

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.

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	)


6.	Inventories

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

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.

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


9.	Investments

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.

AMKOR TECHNOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


10.	Accrued Expenses

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


11.	Debt

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

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.*


	Credit Facilities

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

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

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.


	*Debt of Subsidiaries*


	Secured Term Loans

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 subsidiary’s 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

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

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.


	*Covenants*

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.

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

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.


	*Legal Proceedings*

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 Bakelite’s epoxy mold compound in assembling Maxim’s semiconductor packages. We denied all liability and asserted cross-claims against Sumitomo Bakelite for indemnification.

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.


	*Other Litigation*


	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 Citizen’s 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 Motorola’s motion for summary judgment. Motorola filed an appeal in the Supreme Court of Delaware. In May 2004, the Supreme Court reversed the Superior Court’s 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

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 attorney’s 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 ALJ’s 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 Amkor’s 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

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 Amkor’s 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 Amkor’s 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.


	*Other Legal Matters*


	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 Company’s 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 Amkor’s 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 Amkor’s common stock and are subordinated to the prior payment in full of all of Amkor’s 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

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. Kim’s 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 parent’s 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.

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

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	)

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

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

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

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


17.	Subsequent Events

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.

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)


	*Events of Default*

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 Nasdaq’s 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, Amkor’s securities are subject to delisting. On August 21, 2006, we appealed the Staff’s 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

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 Panel’s 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.


ITEM 2.	*Management’s Discussion and Analysis of Financial Condition and Results of Operations*

MANAGEMENT’S 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

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

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).

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.

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 Management’s 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 “Management’s 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.


			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

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


		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


				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

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


		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