UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

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

For the transition period from                      to                     

AMKOR TECHNOLOGY, INC.

Delaware (State of incorporation)		23-1722724 (I.R.S. Employer Identification Number)

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

March 31, 2006

TABLE OF CONTENTS

				Page
				No.
		PART I. Financial Information
Item 1.		Financial Statements (unaudited)
		Condensed Consolidated Statements of Operations – Three Months Ended March 31, 2006 and 2005			3
		Condensed Consolidated Balance Sheets – March 31, 2006 and December 31, 2005			4
		Condensed Consolidated Statements of Cash Flows – Three Months Ended March 31, 2006 and 2005			5
		Notes to Condensed Consolidated Financial Statements			6
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			31
Item 3.		Quantitative and Qualitative Disclosures About Market Risk			37
Item 4.		Controls and Procedures			39
		PART II. Other Information
Item 1.		Legal Proceedings			40
Item 1A.		Risk Factors			40
Item 2.		Unregistered Sales of Securities and Use of Proceeds			51
Item 6.		Exhibits			52
		Signatures			52

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
		(In thousands, except per share data)
Net sales		$	645,089			$	417,481
Cost of sales			490,071				374,086
Gross profit			155,018				43,395
Operating expenses:
Selling, general and administrative			60,251				60,466
Research and development			9,430				8,900
Provision for legal settlements and contingencies			1,000				50,000
Total operating expenses			70,681				119,366
Operating income (loss)			84,337				(75,971	)
Other (income) expense:
Interest expense, related party			1,788				—
Interest expense, net			41,157				40,513
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			38,400				(118,894	)
Income tax expense			3,612				1,187
Income (loss) before minority interest income (expense)			34,788				(120,081	)
Minority interest income (expense), net of tax			(115	)			1,011
Net income (loss)			34,673				(119,070	)
Net income (loss) per common share:
Basic		$	0.20			$	(0.68	)
Diluted		$	0.19			$	(0.68	)
Shares used in computing net income (loss) per common share:
Basic			176,801				175,718
Diluted			191,015				175,718

The accompanying notes are an integral part of these statements.

AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)

		March 31,				December 31,
		2006				2005
		(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			130,529				123,631
Total current liabilities			816,506				634,732
Long-term debt, related party			100,000				100,000
Long-term debt			1,678,801				1,856,247
Other non-current liabilities			150,576				135,861
Total liabilities			2,745,883				2,726,840
Commitments and contingencies (see Note 13)
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			1,328,119				1,326,426
Accumulated deficit			(1,071,288	)			(1,105,961	)
Accumulated other comprehensive income			3,389				3,658
Total stockholders’ equity			260,398				224,301
Total liabilities and stockholders’ equity		$	3,009,903			$	2,955,091

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
		(In thousands)
Cash flows from operating activities:
Net income (loss)		$	34,673			$	(119,070	)
Depreciation and amortization			66,061				60,858
Other non-cash items			14,773				1,382
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			$	—

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 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 $357.4 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.

     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.

AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

     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 155”), which amends SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”) and SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (“SFAS 140”). SFAS 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 155 also clarifies and amends certain other provisions of SFAS 133 and SFAS 140. SFAS 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 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 (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees (See Note 3 for further discussion).

     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. 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:

AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

		For the Three Months Ended
		March 31,
		2006				2005
		(In thousands, except per share data)
Net income (loss)		$	34,673			$	(119,070	)
Adjustment for dilutive securities on net income:
Interest on 6.25% convertible notes due 2013, net of tax			1,788				—
Net income (loss) — diluted		$	36,461			$	(119,070	)
Weighted average shares outstanding — basic			176,801				175,718
Effect of dilutive securities:
Stock options			251				—
Employee stock purchase plan			612				—
6.25% convertible notes due 2013			13,351				—
Weighted average shares outstanding — diluted			191,015				175,718
EPS:
Basic		$	0.20			$	(0.68	)
Diluted		$	0.19			$	(0.68	)

     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

AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

3. Stock Compensation Plans

     Effective January 1, 2006, we adopted SFAS No. 123R which revises SFAS No. 123 and supersedes APB Opinion No. 25. SFAS No. 123R 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. 123R 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. 123R 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. 123R. 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. 123R, we recognized incremental expense of $0.8 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. This charge is included in selling, general and administrative expenses.

     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. 123R. 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.

AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

     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
		(In thousands, except per
		share data)
Net loss:
Net loss, as reported		$	(119,070	)
Deduct: Total stock-based employee compensation determined under fair value based method, net of tax			(544	)
Net loss, pro forma		$	(119,614	)
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.

     Stock Option Plans. Stock options are granted with an exercise price equal to the market price of the stock at the date of grant. 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 for the year ended December 31, 2005.

Stock Option Plans

1998 Director Option Plan

1998 Stock 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:

AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

		For the Three Months Ended
		March 31,
		2006				2005
Expected life (in years)			5.8				4.0
Risk-free interest rate			4.5	%			3.8	%
Volatility			90	%			96	%
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 $5.26 per common share and $3.40 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 million, respectively. Total unrecognized compensation expense from stock options was $7.7 million as of March 31, 2006, which is expected to be recognized over a weighted-average period of 2.5 years.

     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.

AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

4. Comprehensive Income (Loss)

     The components of comprehensive income (loss) are summarized below:

		For the Three Months Ended
		March 31,
		2006				2005
		(In thousands)
Net income (loss)		$	34,673			$	(119,070	)
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)		$	34,404			$	(122,561	)

5. 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

6. 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:

AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

		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

7. 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.

     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.

AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

     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

8. 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.

9. Accrued Expenses

     Accrued expenses consist of the following:

		March 31,				December 31,
		2006				2005
		(In thousands)
Accrued interest		$	35,001			$	34,545
Accrued payroll			26,788				25,943
Customer advances			8,969				2,526
Accrued income taxes			4,557				2,776
Other accrued expenses			55,214				57,841
		$	130,529			$	123,631

AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

10. 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
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

AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

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 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 15 “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.

AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

     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 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 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.

AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

     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.

11. 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

AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

12. 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.

13. Commitments and Contingencies

AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

     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.

     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.

AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

     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 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 MicroLeadFrame® 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, 1nc.

     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 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.

AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

     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.

14. 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 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

AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

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.

15. Subsidiary Guarantors

     As of March 31, 2006, payment obligations under our senior and senior subordinated notes (see Note 10), 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)
(unaudited)

Condensed Consolidating Statement of Operations
For the three months ended March 31, 2006

						Guarantor				Non-Guarantor
		Parent				Subsidiaries				Subsidiaries				Eliminations				Consolidated
										(In thousands)
Net sales		$	528,274			$	85,770			$	322,578			$	(291,533	)		$	645,089
Cost of sales			445,202				73,667				259,569				(288,367	)			490,071
Gross profit			83,072				12,103				63,009				(3,166	)			155,018
Operating expenses:
Selling, general and administrative			33,360				7,045				23,012				(3,166	)			60,251
Research and development			423				1,482				7,525				—				9,430
Provision for legal settlements and contingencies			1,000				—				—				—				1,000
Total operating expenses			34,783				8,527				30,537				(3,166	)			70,681
Operating income			48,289				3,576				32,472				—				84,337
Other (income) expense:
Interest expense, related party			1,788				—				—				—				1,788
Interest expense, net			21,711				2,447				16,999				—				41,157
Foreign currency (gain) loss			(2,065	)			1,263				4,730				—				3,928
Other (income) expense, net			(8,856	)			(10,176	)			(2,094	)			20,190				(936	)
Total other expense, net			12,578				(6,466	)			19,635				20,190				45,937
Income (loss) before income taxes and minority interests			35,711				10,042				12,837				(20,190	)			38,400
Income tax expense			1,038				1,512				1,062				—				3,612
Income (loss) before minority interest income (expense)			34,673				8,530				11,775				(20,190	)			34,788
Minority interest income (expense), net of tax			—				—				(115	)			—				(115	)
Net income (loss)		$	34,673			$	8,530			$	11,660			$	(20,190	)		$	34,673

AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

Condensed Consolidating Statement of Operations
For the three months ended March 31, 2005

						Guarantor				Non-Guarantor
		Parent				Subsidiaries				Subsidiaries				Eliminations				Consolidated
										(In thousands)
Net sales		$	280,912			$	111,445			$	229,021			$	(203,897	)		$	417,481
Cost of sales			249,396				113,323				212,472				(201,105	)			374,086
Gross profit (loss)			31,516				(1,878	)			16,549				(2,792	)			43,395
Operating expenses:
Selling, general and administrative			30,961				11,699				20,598				(2,792	)			60,466
Research and development			1,068				1,869				5,963				—				8,900
Provision for legal settlements and contingencies			50,000				—				—				—				50,000
Total operating expenses			82,029				13,568				26,561				(2,792	)			119,366
Operating loss			(50,513	)			(15,446	)			(10,012	)			—				(75,971	)
Other (income) expense:
Interest expense, related party			—				—				—				—				—
Interest expense, net			24,543				1,019				14,951				—				40,513
Foreign currency loss			650				820				762				—				2,232
Other (income) expense, net			43,055				17,661				13,788				(74,326	)			178
Total other expense, net			68,248				19,500				29,501				(74,326	)			42,923
Income (loss) before income taxes and minority interests			(118,761	)			(34,946	)			(39,513	)			74,326				(118,894	)
Income tax expense (benefit)			309				(26	)			904				—				1,187
Income (loss) before minority interest income (expense)			(119,070	)			(34,920	)			(40,417	)			74,326				(120,081	)
Minority interest income (expense), net of tax			—				—				1,011				—				1,011
Net income (loss)		$	(119,070	)		$	(34,920	)		$	(39,406	)		$	74,326			$	(119,070	)

AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

Condensed Consolidating Balance Sheet
March 31, 2006

						Guarantor				Non-Guarantor
		Parent				Subsidiaries				Subsidiaries				Eliminations				Consolidated
										(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			677,687				368,253				828,240				(1,867,830	)			6,350
Other assets			24,944				5,744				14,242				—				44,930
Total assets			2,462,078				602,663				1,812,992				(1,867,830	)			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			204,508				52,795				220,057				—				477,360
Total current liabilities			482,930				57,795				275,781				—				816,506
Long-term debt, related party			100,000				—				—				—				100,000
Long-term debt			1,614,211				—				64,590				—				1,678,801
Other noncurrent liabilities			4,539				13,127				132,910				—				150,576
Total liabilities			2,201,680				70,922				473,281				—				2,745,883
Commitments and contingencies
Minority interests			—				—				3,622				—				3,622
Total stockholders’ equity			260,398				531,741				1,336,089				(1,867,830	)			260,398
Total liabilities and stockholders’ equity		$	2,462,078			$	602,663			$	1,812,992			$	(1,867,830	)		$	3,009,903

AMKOR TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

Condensed Consolidating Balance Sheet
December 31, 2005

						Guarantor				Non-Guarantor
		Parent				Subsidiaries				Subsidiaries				Eliminations				Consolidated
										(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			629,943				338,801				845,900				(1,804,976	)			9,668
Other assets			45,624				(190	)			21,919				—				67,353
Total assets			2,456,227				584,998				1,718,842				(1,804,976	)			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			206,527				46,470				197,346				—				450,343
Total current liabilities			340,350				51,772				242,610				—				634,732
Long-term debt, related party			100,000				—				—				—				100,000
Long-term debt			1,790,579				—				65,668				—				1,856,247
Other noncurrent liabilities			997				11,771				123,093				—				135,861
Total liabilities			2,231,926				63,543				431,371				—				2,726,840
Commitments and contingencies
Minority interests			—				—				3,950				—				3,950
Total stockholders’ equity			224,301				521,455				1,283,521				(1,804,976	)			224,301
Total liabilities and stockholders’ equity		$	2,456,227			$	584,998			$	1,718,842			$	(1,804,976	)		$	2,955,091