Table of Contents
 
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 June 30, 2009	
 	
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	 	23-1722724	
(State of incorporation)	 	(I.R.S. Employer
Identification Number)	
 
1900 South Price Road
Chandler, AZ 85286
(Address of principal executive offices and zip code)
 
(480) 821-5000
(Registrant’s telephone number, including area 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  o      No  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  þ	 	     Accelerated filer o	 	          Non-accelerated filer o	 	Smaller reporting company o	
 	 	(Do not check if a smaller reporting company)	
 
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 July 31, 2009 was 183,048,266.

 
 
QUARTERLY REPORT ON FORM 10-Q
For the Quarter Ended June 30, 2009

TABLE OF CONTENTS

 	 	 	 	Page No.	
 	 	 	 	 	 	 	 	 	
 	 	 	 	PART I. Financial Information	 	 	 	 	
 	Item 1.	 	 	Financial Statements (unaudited)	 	 	3	 	
 	 	 	 	Consolidated Statements of Operations — Three and Six Months Ended June 30, 2009 and 2008	 	 	3	 	
 	 	 	 	Consolidated Balance Sheets — June 30, 2009 and December 31, 2008	 	 	4	 	
 	 	 	 	Condensed Consolidated Statements of Cash Flows — Six Months Ended June 30, 2009 and 2008	 	 	5	 	
 	 	 	 	Notes to Consolidated Financial Statements	 	 	6	 	
 	Item 2.	 	 	Management’s Discussion and Analysis of Financial Condition and Results of Operations	 	 	22	 	
 	Item 3.	 	 	Quantitative and Qualitative Disclosures About Market Risk	 	 	31	 	
 	Item 4.	 	 	Controls and Procedures	 	 	33	 	
 	 	 	 	 	 	 	 	 	
 	 	 	 	PART II. Other Information	 	 	 	 	
 	Item 1.	 	 	Legal Proceedings	 	 	34	 	
 	Item 1A.	 	 	Risk Factors	 	 	34	 	
 	Item 4.	 	 	Submission of Matters to a Vote of Security Holders	 	 	47	 	
 	Item 6.	 	 	Exhibits	 	 	47	 	
Signatures	 	 	48	 	
 EX-3.1	
 EX-31.1	
 EX-31.2	
 EX-32	

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PART I. FINANCIAL INFORMATION

Item 1.  	Financial Statements	
 
AMKOR TECHNOLOGY, INC.
 
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

 	 	For the Three
	 	 	For the Six
	 	
 	 	Months Ended
	 	 	Months Ended
	 	
 	 	June 30,	 	 	June 30,	 	
 	 	2009	 	 	2008	 	 	2009	 	 	2008	 	
 	 	(In thousands, except per share data)	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net sales	 	$	506,516	 	 	$	690,676	 	 	$	895,292	 	 	$	1,390,159	 	
Cost of sales	 	 	404,129	 	 	 	531,745	 	 	 	744,866	 	 	 	1,055,076	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	 	 	102,387	 	 	 	158,931	 	 	 	150,426	 	 	 	335,083	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Selling, general and administrative	 	 	52,445	 	 	 	67,441	 	 	 	102,513	 	 	 	132,890	 	
Research and development	 	 	10,035	 	 	 	15,095	 	 	 	20,182	 	 	 	28,951	 	
Gain on sale of real estate	 	 	—	 	 	 	(9,856	)	 	 	—	 	 	 	(9,856	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	 	 	62,480	 	 	 	72,680	 	 	 	122,695	 	 	 	151,985	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income	 	 	39,907	 	 	 	86,251	 	 	 	27,731	 	 	 	183,098	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other (income) expense:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest expense, net	 	 	26,826	 	 	 	26,314	 	 	 	52,971	 	 	 	53,747	 	
Interest expense, related party	 	 	3,812	 	 	 	1,562	 	 	 	5,374	 	 	 	3,125	 	
Foreign currency loss (gain)	 	 	5,970	 	 	 	(11,597	)	 	 	(6,098	)	 	 	(21,074	)	
Gain on debt retirement, net	 	 	(7,888	)	 	 	—	 	 	 	(16,884	)	 	 	—	 	
Other (income)expense, net	 	 	(10	)	 	 	107	 	 	 	49	 	 	 	(699	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total other expense, net	 	 	28,710	 	 	 	16,386	 	 	 	35,412	 	 	 	35,099	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) before income taxes	 	 	11,197	 	 	 	69,865	 	 	 	(7,681	)	 	 	147,999	 	
Income tax expense	 	 	1,833	 	 	 	4,298	 	 	 	4,914	 	 	 	10,238	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss)	 	 	9,364	 	 	 	65,567	 	 	 	(12,595	)	 	 	137,761	 	
Net income attributable to noncontrolling interests	 	 	141	 	 	 	335	 	 	 	274	 	 	 	533	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss) attributable to Amkor	 	$	9,223	 	 	$	65,232	 	 	$	(12,869	)	 	$	137,228	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss) attributable to Amkor per common share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	$	0.05	 	 	$	0.36	 	 	$	(0.07	)	 	$	0.75	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted	 	$	0.05	 	 	$	0.33	 	 	$	(0.07	)	 	$	0.68	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Shares used in computing per common share amounts:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	 	183,036	 	 	 	182,759	 	 	 	183,036	 	 	 	182,446	 	
Diluted	 	 	265,846	 	 	 	210,138	 	 	 	183,036	 	 	 	209,785	 	
 
The accompanying notes are an integral part of these statements.
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AMKOR TECHNOLOGY, INC.
 
CONSOLIDATED BALANCE SHEETS
(Unaudited)

 	 	June 30,
	 	 	December 31,
	 	
 	 	2009	 	 	2008	 	
 	 	(In thousands)	 	
 	 	 	 	 	 	 	 	 	
ASSETS	 	 	 	 	 	 	 	 	
Current assets:	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	455,294	 	 	$	424,316	 	
Restricted cash	 	 	2,678	 	 	 	4,880	 	
Accounts receivable:	 	 	 	 	 	 	 	 	
Trade, net of allowances	 	 	264,440	 	 	 	259,630	 	
Other	 	 	16,924	 	 	 	14,183	 	
Inventories	 	 	118,072	 	 	 	134,045	 	
Other current assets	 	 	25,483	 	 	 	23,862	 	
 	 	 	 	 	 	 	 	 	
Total current assets	 	 	882,891	 	 	 	860,916	 	
Property, plant and equipment, net	 	 	1,371,177	 	 	 	1,473,763	 	
Intangibles, net	 	 	12,970	 	 	 	11,546	 	
Restricted cash	 	 	1,001	 	 	 	1,696	 	
Other assets	 	 	39,700	 	 	 	36,072	 	
 	 	 	 	 	 	 	 	 	
Total assets	 	$	2,307,739	 	 	$	2,383,993	 	
 	 	 	 	 	 	 	 	 	
LIABILITIES AND EQUITY	 	 	 	 	 	 	 	 	
Current liabilities:	 	 	 	 	 	 	 	 	
Short-term borrowings and current portion of long-term debt	 	$	69,670	 	 	$	54,609	 	
Trade accounts payable	 	 	230,617	 	 	 	241,684	 	
Accrued expenses	 	 	137,914	 	 	 	258,449	 	
 	 	 	 	 	 	 	 	 	
Total current liabilities	 	 	438,201	 	 	 	554,742	 	
Long-term debt	 	 	1,234,505	 	 	 	1,338,751	 	
Long-term debt, related party	 	 	250,000	 	 	 	100,000	 	
Pension and severance obligations	 	 	126,217	 	 	 	116,789	 	
Other non-current liabilities	 	 	32,845	 	 	 	30,548	 	
 	 	 	 	 	 	 	 	 	
Total liabilities	 	 	2,081,768	 	 	 	2,140,830	 	
 	 	 	 	 	 	 	 	 	
Commitments and contingencies (see Note 13)	 	 	 	 	 	 	 	 	
Equity:	 	 	 	 	 	 	 	 	
Amkor 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 183,039 in 2009 and 183,035 in 2008	 	 	183	 	 	 	183	 	
Additional paid-in capital	 	 	1,498,331	 	 	 	1,496,976	 	
Accumulated deficit	 	 	(1,291,090	)	 	 	(1,278,221	)	
Accumulated other comprehensive income	 	 	12,231	 	 	 	18,201	 	
 	 	 	 	 	 	 	 	 	
Total Amkor stockholders’ equity	 	 	219,655	 	 	 	237,139	 	
Noncontrolling interests in subsidiaries	 	 	6,316	 	 	 	6,024	 	
 	 	 	 	 	 	 	 	 	
Total equity	 	 	225,971	 	 	 	243,163	 	
 	 	 	 	 	 	 	 	 	
Total liabilities and equity	 	$	2,307,739	 	 	$	2,383,993	 	

The accompanying notes are an integral part of these statements.
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AMKOR TECHNOLOGY, INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 	 	For the Six Months
	 	
 	 	Ended June 30,	 	
 	 	2009	 	 	2008	 	
 	 	(In thousands)	 	
 	 	 	 	 	 	 	 	 	
Cash flows from operating activities:	 	 	 	 	 	 	 	 	
Net (loss) income	 	$	(12,595	)	 	$	137,761	 	
Depreciation and amortization	 	 	156,507	 	 	 	150,543	 	
Gain on debt retirement, net	 	 	(16,884	)	 	 	—	 	
Other operating activities and non-cash items	 	 	5,407	 	 	 	7,694	 	
Changes in assets and liabilities	 	 	(99,077	)	 	 	(11,300	)	
 	 	 	 	 	 	 	 	 	
Net cash provided by operating activities	 	 	33,358	 	 	 	284,698	 	
 	 	 	 	 	 	 	 	 	
Cash flows from investing activities:	 	 	 	 	 	 	 	 	
Purchases of property, plant and equipment	 	 	(69,955	)	 	 	(190,870	)	
Proceeds from the sale of property, plant and equipment	 	 	687	 	 	 	14,968	 	
Proceeds from sale of investment	 	 	—	 	 	 	2,460	 	
Other investing activities	 	 	(3,086	)	 	 	(496	)	
 	 	 	 	 	 	 	 	 	
Net cash used in investing activities	 	 	(72,354	)	 	 	(173,938	)	
 	 	 	 	 	 	 	 	 	
Cash flows from financing activities:	 	 	 	 	 	 	 	 	
Borrowings under revolving credit facilities	 	 	—	 	 	 	619	 	
Payments under revolving credit facilities	 	 	—	 	 	 	(633	)	
Proceeds from issuance of short-term debt	 	 	15,000	 	 	 	—	 	
Proceeds from issuance of long-term debt	 	 	100,000	 	 	 	—	 	
Proceeds from issuance of long-term debt, related party	 	 	150,000	 	 	 	—	 	
Payments of long-term debt	 	 	(186,156	)	 	 	(124,074	)	
Payments for debt issuance costs	 	 	(8,539	)	 	 	—	 	
Proceeds from issuance of stock through stock compensation plans	 	 	15	 	 	 	9,776	 	
 	 	 	 	 	 	 	 	 	
Net cash provided by (used in) financing activities	 	 	70,320	 	 	 	(114,312	)	
 	 	 	 	 	 	 	 	 	
Effect of exchange rate fluctuations on cash and cash equivalents	 	 	(346	)	 	 	2,594	 	
 	 	 	 	 	 	 	 	 	
Net increase (decrease) in cash and cash equivalents	 	 	30,978	 	 	 	(958	)	
Cash and cash equivalents, beginning of period	 	 	424,316	 	 	 	410,070	 	
 	 	 	 	 	 	 	 	 	
Cash and cash equivalents, end of period	 	$	455,294	 	 	$	409,112	 	
 	 	 	 	 	 	 	 	 	
Supplemental disclosures of cash flow information:	 	 	 	 	 	 	 	 	
Cash paid during the period for:	 	 	 	 	 	 	 	 	
Interest	 	$	60,297	 	 	$	63,541	 	
Income taxes	 	$	1,327	 	 	$	13,194	 	
 
The accompanying notes are an integral part of these statements.
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AMKOR TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.  	Interim Financial Statements	
 
Basis of Presentation.  The Consolidated Financial Statements and related disclosures as of June 30, 2009 and for the three and six months ended June 30, 2009 and 2008 are unaudited, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The December 31, 2008 Consolidated Balance Sheet data was derived from audited financial statements (other than as it relates to the revised presentation of noncontrolling interests, previously referred to as minority interests, as described in Note 2), but does not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S.”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) 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 statement of the results for the interim periods. These financial statements should be read in conjunction with the financial statements included in our Annual Report for the year ended December 31, 2008 filed on Form 10-K with the SEC on February 24, 2009. The results of operations for the three and six months ended June 30, 2009 are not necessarily indicative of the results to be expected for the full year. All references to “Amkor,” “we,” “us,” “our” or the “company” are to Amkor Technology, Inc. and its subsidiaries.
 
Subsequent events have been evaluated up to and including August 5, 2009, which is the date these financial statements were issued.
 
Use of Estimates.  The Consolidated Financial Statements have been prepared in conformity with U.S. GAAP, 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.

2.  	New Accounting Standards	
 
Recently Adopted Standards
 
In May 2009, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 165,  Subsequent Events (“SFAS No. 165”). SFAS No. 165 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS No. 165 is effective for interim or annual periods ending after June 15, 2009 on a prospective basis.
 
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements an amendment of Accounting Research Bulletin (“ARB”) No. 51, Consolidated Financial Statements  (“SFAS No. 160”). SFAS No. 160 requires that (1) noncontrolling (minority) interests be reported as a component of stockholders’ equity, (2) net income attributable to the parent and to the noncontrolling interest be separately identified in the consolidated statement of operations, (3) changes in a parent’s ownership interest while the parent retains its controlling interest be accounted for as equity transactions, (4) any retained noncontrolling equity investment upon the deconsolidation of a subsidiary be initially measured at fair value and (5) sufficient disclosures are provided that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS No. 160 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. We adopted the provisions of SFAS No. 160 on January 1, 2009 and, as required, we have adjusted prior periods for comparative purposes. Minority interests reported in our December 31, 2008 Consolidated Balance Sheet were retrospectively adjusted to comply with SFAS No. 160 and are now reported as a component of equity identified as noncontrolling interests. The caption “Net income (loss)” in our Consolidated Statements of Operations represents the consolidated operating results for Amkor including noncontrolling interests. In addition, earnings or losses attributable to the minority interests are
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separately disclosed on the face of the Consolidated Statements of Operations for all periods presented in the manner prescribed by SFAS No. 160. See Note 6 for disclosure of the changes in equity and comprehensive (loss) income attributable to Amkor and our noncontrolling interests.
 
In April 2009, the FASB issued three FASB Staff Positions (“FSPs”) related to fair value measurements, disclosures and other-than-temporary impairments. FSP FAS 157-4,  Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly  (“FSP FAS 157-4”), provides additional guidance for estimating fair value when the volume and level of activity for an asset or liability have significantly decreased. FSP FAS 157-4 also includes guidance on identifying circumstances that indicate a transaction is not orderly. FSP FAS 115-2 and FAS 124-2,  Recognition and Presentation of Other-Than-Temporary Impairments  (“FSP FAS 115-2”), amends the other-than-temporary impairment guidance in U.S. GAAP to make the guidance more operational and to improve the presentation of other-than-temporary impairments in the financial statements. Finally, FSP FAS 107-1 and APB 28-1,  Interim Disclosures About Fair Value of Financial Instruments  (“FSP FAS 107-1”), amends SFAS No. 107,  Disclosures about Fair Value of Financial Instruments , to require disclosures about fair value of financial instruments in interim financial statements as well as in annual financial statements and also amends APB Opinion No. 28,  Interim Financial Reporting , to require those disclosures in all interim financial statements. The three FSPs are effective for periods ending after June 15, 2009 with early adoption permitted. We elected to early adopt all three FSPs for our March 31, 2009 interim financial statements. The adoption of FSP FAS 157-4 and FSP FAS 115-2 did not have any impact on our consolidated financial statements. The adoption of FSP FAS 107-1 is disclosure-only in nature (see Note 15).
 
Recently Issued Standards
 
In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162 (“SFAS No. 168”). SFAS No. 168 officially makes the Accounting Standards Codification (“ASC”) the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC and its staff are not included in the ASC but will continue to apply to SEC registrants. SFAS No. 168 is the final numbered standard to be issued by the FASB under the old numbering system. The ASC is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The adoption of the ASC will not have an effect on our financial position, results of operations or cash flows.
 
In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R) (“SFAS No. 167”), which amends the consolidation guidance applicable to variable interest entities. The amendments will significantly affect the overall consolidation analysis under FASB Interpretation No. 46(R). This statement is effective for fiscal years beginning after November 15, 2009. We are assessing the potential impact of adoption.
 
In June 2009, the FASB issued SFAS No. 166, Accounting for Transfers of Financial Assets, an amendment of FASB Statement No. 140  (“SFAS No. 166”), which amends the derecognition guidance in FASB Statement No. 140, eliminates the exemption from consolidation for qualifying special-purpose entities, and requires additional disclosures about a transferor’s continuing involvement in transferred financial assets. This statement is effective for fiscal years beginning after November 15, 2009, and applies to financial asset transfers occurring on or after the effective date. We are assessing the potential impact of adoption.
 
In December 2008, the FASB issued FSP FAS No. 132(R)-1, Employers’ Disclosures about Postretirement Benefit Plan Assets  (“FSP FAS No. 132(R)-1”). FSP FAS No. 132(R)-1 amends SFAS No. 132(R),  Employers’ Disclosures about Pensions and Other Postretirement Benefits an amendment of FASB Statements No. 87, 88, and 106 , to enhance the required disclosures regarding plan assets in an employer’s defined benefit pension or other postretirement plan, including investment allocation decisions, inputs and valuation techniques used to measure the fair value of plan assets and significant concentrations of risks within plan assets. The disclosure requirement under FSP FAS No. 132(R)-1 is effective for fiscal years ending after December 15, 2009. The adoption of FSP FAS No. 132(R)-1 will require additional disclosures in the financial statements related to the assets of our foreign defined benefit pension plans and will not impact our financial results.
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3.  	Stock Compensation Plans	
 
All of our share-based payments to employees, including grants of employee stock options, are measured at fair value and expensed over the service period (generally the vesting period).
 
The following table presents stock-based compensation expense included in the Consolidated Statements of Operations:

 	 	For the Three
	 	 	For the Six
	 	
 	 	Months Ended
	 	 	Months Ended
	 	
 	 	June 30,	 	 	June 30,	 	
 	 	2009	 	 	2008	 	 	2009	 	 	2008	 	
 	 	(In thousands)	 	 	(In thousands)	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cost of sales	 	$	38	 	 	$	224	 	 	$	94	 	 	$	520	 	
Selling, general, and administrative	 	 	438	 	 	 	777	 	 	 	1,045	 	 	 	1,643	 	
Research and development	 	 	83	 	 	 	170	 	 	 	199	 	 	 	361	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Stock-based compensation expense	 	$	559	 	 	$	1,171	 	 	$	1,338	 	 	$	2,524	 	

The following is a summary of all common stock option activity for the six months ended June 30, 2009:

 	 	 	 	 	 	 	 	Weighted
	 	 	 	 	
 	 	 	 	 	Weighted
	 	 	Average
	 	 	 	 	
 	 	 	 	 	Average
	 	 	Remaining
	 	 	Aggregate
	 	
 	 	Number of
	 	 	Exercise Price
	 	 	Contractual
	 	 	Intrinsic
	 	
 	 	Shares	 	 	Per Share	 	 	Term (Years)	 	 	Value	 	
 	 	(In thousands)	 	 	 	 	 	 	 	 	(In thousands)	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Outstanding at December 31, 2008	 	 	9,282	 	 	$	10.39	 	 	 	 	 	 	 	 	 	
Granted	 	 	120	 	 	 	4.07	 	 	 	 	 	 	 	 	 	
Exercised	 	 	(4	)	 	 	4.09	 	 	 	 	 	 	 	 	 	
Forfeited or expired	 	 	(502	)	 	 	10.01	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Outstanding at June 30, 2009	 	 	8,896	 	 	 	10.33	 	 	 	4.68	 	 	$	343	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Exercisable at June 30, 2009	 	 	7,359	 	 	 	10.58	 	 	 	3.86	 	 	$	265	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Fully vested and expected to vest at June 30, 2009	 	 	8,726	 	 	 	10.35	 	 	 	4.60	 	 	$	334	 	

The following assumptions were used in the Black-Scholes option pricing model to calculate weighted average fair values of the options granted for the three and six months ended June 30, 2009 and 2008.

 	 	For the Three
	 	For the Six
	
 	 	Months Ended
	 	Months Ended
	
 	 	June 30,	 	June 30,	
 	 	2009	 	2008	 	2009	 	2008	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Expected life (in years)	 	 	6.0	 	 	 	5.3	 	 	 	5.9	 	 	 	6.0	 	
Risk-free interest rate	 	 	2.3	%	 	 	3.3	%	 	 	2.3	%	 	 	3.3	%	
Volatility	 	 	74	%	 	 	71	%	 	 	76	%	 	 	77	%	
Dividend yield	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Weighted average grant date fair value per option granted	 	$	2.96	 	 	$	7.34	 	 	$	2.70	 	 	$	7.85	 	

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The intrinsic value of options exercised for the three and six months ended June 30, 2009 was negligible. The intrinsic value of options exercised for the three and six months ended June 30, 2008 was $1.0 million and $3.9 million, respectively.
 
Total unrecognized compensation expense from stock options, excluding any forfeiture estimate, was $7.7 million as of June 30, 2009, which is expected to be recognized over a weighted-average period of 3.0 years beginning July 1, 2009.
 
For the six months ended June 30, 2008, we received $9.8 million in cash under all share-based payment arrangements, while a nominal amount of cash was received in the six months ended June 30, 2009. There was no tax benefit realized. The related cash receipts are included in financing activities in the accompanying Condensed Consolidated Statements of Cash Flows.

4.  	Income Taxes	
 
Our income tax expense of $4.9 million for the six months ended June 30, 2009 reflects income taxes at certain of our profitable foreign operations, foreign withholding taxes, minimum taxes at certain of our operations, and changes in valuation allowances which offset the tax benefits generated on net losses incurred. At June 30, 2009, we had U.S. net operating loss carryforwards totaling $314.2 million, which expire at various times through 2029. Additionally, at June 30, 2009, we had $100.7 million of non-U.S. net operating loss carryforwards, which expire at various times through 2019.
 
We maintain a valuation allowance on all of our U.S. net deferred tax assets, including our net operating loss carryforwards. We also have valuation allowances on deferred tax assets in certain foreign jurisdictions. Such valuation allowances are released as the related tax benefits are realized on our tax returns or when sufficient net positive evidence exists to conclude it is more likely than not that the deferred tax assets will be realized.
 
Our gross unrecognized tax benefits increased from $20.9 million at December 31, 2008 to $22.9 million as of June 30, 2009 primarily because of changes to estimates related to tax positions taken in prior years. Of the June 30, 2009 balance, $9.5 million, if recognized, would affect the effective tax rate. It is reasonably possible that the total amount of unrecognized tax benefits will decrease by up to $2.6 million within the next twelve months due to the expiration of statutes of limitations related to revenue attribution as well as eligibility for certain tax incentives.
 
Our unrecognized tax benefits are subject to change as examinations of tax years are completed. Tax return examinations involve uncertainties and there can be no assurances regarding the outcome of examinations.
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5.  	Earnings Per Share	
 
Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) attributable to Amkor by the weighted average number of common shares outstanding during the period. Diluted EPS is computed on the basis of the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period. Dilutive potential common shares include outstanding employee stock options and convertible debt. The basic and diluted EPS amounts are the same for the six months ended June 30, 2009 as a result of the potentially dilutive securities being antidilutive due to a net loss. The following table summarizes the computation of basic and diluted EPS:

 	 	For the Three
	 	 	For the Six
	 	
 	 	Months Ended
	 	 	Months Ended
	 	
 	 	June 30,	 	 	June 30,	 	
 	 	2009	 	 	2008	 	 	2009	 	 	2008	 	
 	 	(In thousands)	 	 	(In thousands)	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss) attributable to Amkor — basic	 	$	9,223	 	 	$	65,232	 	 	$	(12,869	)	 	$	137,228	 	
Adjustment for dilutive securities on net income:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest on 2.5% convertible notes due 2011, net of tax	 	 	—	 	 	 	1,491	 	 	 	—	 	 	 	2,982	 	
Interest on 6.25% convertible notes due 2013, net of tax	 	 	—	 	 	 	1,593	 	 	 	—	 	 	 	3,185	 	
Interest on 6.0% convertible notes due 2014, net of tax	 	 	4,032	 	 	 	—	 	 	 	—	 	 	 	—	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss) attributable to Amkor — diluted	 	$	13,255	 	 	$	68,316	 	 	$	(12,869	)	 	$	143,395	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average shares outstanding — basic	 	 	183,036	 	 	 	182,759	 	 	 	183,036	 	 	 	182,446	 	
Effect of dilutive securities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Stock options	 	 	29	 	 	 	1,005	 	 	 	—	 	 	 	965	 	
2.5% convertible notes due 2011	 	 	—	 	 	 	13,023	 	 	 	—	 	 	 	13,023	 	
6.25% convertible notes due 2013	 	 	—	 	 	 	13,351	 	 	 	—	 	 	 	13,351	 	
6.0% convertible notes due 2014	 	 	82,781	 	 	 	—	 	 	 	—	 	 	 	—	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average shares outstanding — diluted	 	 	265,846	 	 	 	210,138	 	 	 	183,036	 	 	 	209,785	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss) attributable to Amkor per common share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	$	0.05	 	 	$	0.36	 	 	$	(0.07	)	 	$	0.75	 	
Diluted	 	 	0.05	 	 	 	0.33	 	 	 	(0.07	)	 	 	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
	 	For the Six
	
 	 	Months Ended
	 	Months Ended
	
 	 	June 30,	 	June 30,	
 	 	2009	 	2008	 	2009	 	2008	
 	 	(In thousands)	 	(In thousands)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Stock options	 	 	8,652	 	 	 	8,295	 	 	 	8,896	 	 	 	8,338	 	
2.5% convertible notes due 2011	 	 	4,355	 	 	 	—	 	 	 	6,142	 	 	 	—	 	
6.25% convertible notes due 2013	 	 	13,351	 	 	 	—	 	 	 	13,351	 	 	 	—	 	
6.0% convertible notes due 2014	 	 	—	 	 	 	—	 	 	 	41,620	 	 	 	—	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total potentially dilutive shares	 	 	26,358	 	 	 	8,295	 	 	 	70,009	 	 	 	8,338	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Stock options excluded from diluted EPS because the exercise price was greater than the average market price of the common shares	 	 	8,652	 	 	 	8,295	 	 	 	8,869	 	 	 	8,338	 	

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6.  	Equity and Comprehensive (Loss) Income	
 
The following table reflects the changes in equity and comprehensive (loss) income attributable to both Amkor and the noncontrolling interests:

 	 	 	 	 	Attributable to
	 	 	 	 	
 	 	Attributable to
	 	 	Noncontrolling
	 	 	 	 	
 	 	Amkor	 	 	Interests	 	 	Total	 	
 	 	 	 	 	(In thousands)	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Equity at December 31, 2008	 	$	237,139	 	 	$	6,024	 	 	$	243,163	 	
Comprehensive (loss) income:	 	 	 	 	 	 	 	 	 	 	 	 	
Net (loss) income	 	 	(12,869	)	 	 	274	 	 	 	(12,595	)	
Other comprehensive (loss) income:	 	 	 	 	 	 	 	 	 	 	 	 	
Pension liability adjustment, net of tax	 	 	(4,389	)	 	 	—	 	 	 	(4,389	)	
Cumulative translation adjustment	 	 	(1,581	)	 	 	18	 	 	 	(1,563	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total other comprehensive (loss) income	 	 	(5,970	)	 	 	18	 	 	 	(5,952	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive (loss) income	 	 	(18,839	)	 	 	292	 	 	 	(18,547	)	
Issuance of stock through stock options	 	 	15	 	 	 	—	 	 	 	15	 	
Stock compensation expense	 	 	1,340	 	 	 	—	 	 	 	1,340	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Equity at June 30, 2009	 	$	219,655	 	 	$	6,316	 	 	$	225,971	 	

Equity at December 31, 2007	 	$	654,619	 	 	$	7,022	 	 	$	661,641	 	
Comprehensive (loss) income:	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	 	137,228	 	 	 	533	 	 	 	137,761	 	
Other comprehensive income (loss):	 	 	 	 	 	 	 	 	 	 	 	 	
Unrealized loss on available for sale investments, net of tax	 	 	(80	)	 	 	—	 	 	 	(80	)	
Reclassification adjustment for losses included in income, net of tax	 	 	80	 	 	 	—	 	 	 	80	 	
Pension liability adjustment, net of tax	 	 	407	 	 	 	—	 	 	 	407	 	
Cumulative translation adjustment	 	 	23,766	 	 	 	639	 	 	 	24,405	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total other comprehensive income	 	 	24,173	 	 	 	639	 	 	 	24,812	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income	 	 	161,401	 	 	 	1,172	 	 	 	162,573	 	
Issuance of stock through stock options	 	 	9,776	 	 	 	—	 	 	 	9,776	 	
Stock compensation expense	 	 	2,524	 	 	 	—	 	 	 	2,524	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Equity at June 30, 2008	 	$	828,320	 	 	$	8,194	 	 	$	836,514	 	

 	 	
7.  	Inventories	
 
Inventories consist of the following:

 	 	June 30,
	 	 	December 31,
	 	
 	 	2009	 	 	2008	 	
 	 	(In thousands)	 	
 	 	 	 	 	 	 	 	 	
Raw materials and purchased components	 	$	90,715	 	 	$	110,713	 	
Work-in-process	 	 	27,357	 	 	 	23,332	 	
 	 	 	 	 	 	 	 	 	
Total inventories	 	$	118,072	 	 	$	134,045	 	

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8.  	Property, Plant and Equipment	
 
Property, plant and equipment consist of the following:

 	 	June 30,
	 	 	December 31,
	 	
 	 	2009	 	 	2008	 	
 	 	(In thousands)	 	
 	 	 	 	 	 	 	 	 	
Land	 	$	106,082	 	 	$	104,887	 	
Land use rights	 	 	19,945	 	 	 	19,945	 	
Buildings and improvements	 	 	838,599	 	 	 	828,108	 	
Machinery and equipment	 	 	2,380,169	 	 	 	2,384,342	 	
Software and computer equipment	 	 	152,559	 	 	 	150,349	 	
Furniture, fixtures and other equipment	 	 	26,981	 	 	 	28,385	 	
Construction in progress	 	 	16,690	 	 	 	29,503	 	
 	 	 	 	 	 	 	 	 	
 	 	 	3,541,025	 	 	 	3,545,519	 	
Less accumulated depreciation and amortization	 	 	(2,169,848	)	 	 	(2,071,756	)	
 	 	 	 	 	 	 	 	 	
Total property, plant and equipment, net	 	$	1,371,177	 	 	$	1,473,763	 	

The following table reconciles our activity related to property, plant and equipment purchases as presented on the Condensed Consolidated Statements of Cash Flows to property, plant and equipment additions reflected on the Consolidated Balance Sheets:

 	 	For the Six
	 	
 	 	Months Ended
	 	
 	 	June 30,	 	
 	 	2009	 	 	2008	 	
 	 	(In thousands)	 	
 	 	 	 	 	 	 	 	 	
Purchases of property, plant and equipment	 	$	69,955	 	 	$	190,870	 	
Net change in related accounts payable and deposits	 	 	(18,306	)	 	 	26,648	 	
 	 	 	 	 	 	 	 	 	
Property, plant and equipment additions	 	$	51,649	 	 	$	217,518	 	

 	 	
9.  	Intangible Assets	
 
Acquired intangibles as of June 30, 2009 consist of the following:

 	 	 	 	 	Accumulated
	 	 	 	 	
 	 	Gross	 	 	Amortization	 	 	Net	 	
 	 	 	 	 	(In thousands)	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Patents and technology rights	 	$	76,604	 	 	 	(70,358	)	 	$	6,246	 	
Supply agreements	 	 	14,483	 	 	 	(7,759	)	 	$	6,724	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total intangibles	 	$	91,087	 	 	$	(78,117	)	 	$	12,970	 	

In January 2009, we purchased from a customer certain machinery and equipment and entered into a three year supply agreement in exchange for $9.9 million in cash. The fair value assigned to the supply agreement was $5.6 million.
 
Acquired intangibles as of December 31, 2008 consist of the following:

 	 	 	 	 	Accumulated
	 	 	 	 	
 	 	Gross	 	 	Amortization	 	 	Net	 	
 	 	 	 	 	(In thousands)	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Patents and technology rights	 	$	76,246	 	 	$	(67,304	)	 	$	8,942	 	
Supply agreements	 	 	8,858	 	 	 	(6,254	)	 	 	2,604	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total intangibles	 	$	85,104	 	 	$	(73,558	)	 	$	11,546	 	

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Amortization of identifiable intangible assets for the three months ended June 30, 2009 and 2008 was $1.7 million and $2.5 million, respectively. Amortization of identifiable intangible assets for the six months ended June 30, 2009 and 2008 was $4.5 million and $4.9 million, respectively. Based on the amortizing assets recognized in our balance sheet at June 30, 2009, amortization for each of the next five years is estimated as follows:

 	 	(In thousands)	 	
 	 	 	 	 	
2009 Remaining	 	$	2,478	 	
2010	 	 	4,618	 	
2011	 	 	2,959	 	
2012	 	 	1,096	 	
2013	 	 	807	 	
Thereafter	 	 	1,012	 	
 	 	 	 	 	
Total amortization	 	$	12,970	 	

 	 	
10.  	Accrued Expenses	
 
Accrued expenses consist of the following:

 	 	June 30,
	 	 	December 31,
	 	
 	 	2009	 	 	2008	 	
 	 	(In thousands)	 	
 	 	 	 	 	 	 	 	 	
Payroll and benefits	 	$	37,201	 	 	$	70,897	 	
Customer advances and deferred revenue	 	 	25,040	 	 	 	28,672	 	
Accrued interest	 	 	17,208	 	 	 	17,033	 	
Income taxes payable	 	 	9,078	 	 	 	9,287	 	
Accrual for patent license dispute, including interest	 	 	—	 	 	 	64,702	 	
Accrued severance plan obligations (Note 12)	 	 	—	 	 	 	31,584	 	
Other accrued expenses	 	 	49,387	 	 	 	36,274	 	
 	 	 	 	 	 	 	 	 	
Total accrued expenses	 	$	137,914	 	 	$	258,449	 	

In February 2009, we paid $64.7 million in connection with the resolution of a patent license dispute.
 
In accordance with Korean severance plan regulations, employers may pay employees earned benefits prior to terminating their employment. As a result of a weakened global economy, we have made reductions in labor costs by lowering compensation and shortening work weeks. To mitigate the impact on our employees in Korea and reduce our long-term commitments, we paid $31.6 million of interim benefits in January 2009 using cash on hand (see Note 12).
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11.  	Debt	
 
Following is a summary of short-term borrowings and long-term debt:

 	 	June 30,
	 	 	December 31,
	 	
 	 	2009	 	 	2008	 	
 	 	(In thousands)	 	
 	 	 	 	 	 	 	 	 	
Debt of Amkor:	 	 	 	 	 	 	 	 	
Senior secured credit facilities:	 	 	 	 	 	 	 	 	
$100 million revolving credit facility, LIBOR plus 3.5% — 4.0%, due April 2013	 	$	—	 	 	$	—	 	
Senior notes:	 	 	 	 	 	 	 	 	
7.125% Senior notes due March 2011	 	 	101,709	 	 	 	209,641	 	
7.75% Senior notes due May 2013	 	 	422,000	 	 	 	422,000	 	
9.25% Senior notes due June 2016	 	 	390,000	 	 	 	390,000	 	
Senior subordinated notes:	 	 	 	 	 	 	 	 	
2.5% Convertible senior subordinated notes due May 2011	 	 	42,579	 	 	 	111,566	 	
6.0% Convertible senior subordinated notes due April 2014, $150 million related party	 	 	250,000	 	 	 	—	 	
Subordinated notes:	 	 	 	 	 	 	 	 	
6.25% Convertible subordinated notes due December 2013, related party	 	 	100,000	 	 	 	100,000	 	
Debt of subsidiaries:	 	 	 	 	 	 	 	 	
Secured term loans:	 	 	 	 	 	 	 	 	
Working capital term loan, LIBOR + 1.7%, due February-March 2010	 	 	15,000	 	 	 	—	 	
Term loan, Taiwan 90-Day Commercial Paper primary market rate plus 1.2%, due November 2010	 	 	16,770	 	 	 	22,310	 	
Term loan, bank base rate plus 0.5% due April 2014	 	 	214,280	 	 	 	235,708	 	
Secured equipment and property financing	 	 	1,837	 	 	 	2,135	 	
 	 	 	 	 	 	 	 	 	
 	 	 	1,554,175	 	 	 	1,493,360	 	
Less: Short-term borrowings and current portion of long-term debt	 	 	(69,670	)	 	 	(54,609	)	
 	 	 	 	 	 	 	 	 	
Long-term debt (including related party)	 	$	1,484,505	 	 	$	1,438,751	 	

In April 2009, we amended our $100.0 million first lien revolving credit facility and extended its term to April 2013. The facility has 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 2.0% to 2.5% for base rate revolving loans, or LIBOR plus 3.5% to 4.0% for LIBOR revolving loans. The LIBOR-based interest rate at June 30, 2009 was 3.8%. There have been no borrowings under this credit facility as of June 30, 2009. The borrowing base for the revolving credit facility is based on the amount of our eligible accounts receivable, which exceeded $100.0 million as of June 30, 2009. In connection with amending and extending our $100.0 million facility, we incurred $3.0 million of debt issuance costs in the three and six months ended June 30, 2009.
 
In April 2009, we issued $250.0 million of our 6.0% Convertible Senior Subordinated Notes due April 2014 (the “2014 Notes”). The 2014 Notes are convertible at any time prior to the maturity date into our common stock at a price of $3.02 per share, subject to adjustment. The 2014 Notes are subordinated to the prior payment in full of all of our senior debt. The 2014 Notes were purchased by certain qualified institutional buyers and Mr. James J. Kim, Amkor’s Chairman and Chief Executive Officer and largest shareholder, and an entity controlled by Mr. Kim. Mr. Kim and his affiliate purchased $150.0 million of the 2014 Notes. The net proceeds received of $244.5 million are being used to reduce debt and for general corporate purposes. In connection with the issuance of the 2014 Notes, we incurred $2.9 million and $5.5 million of debt issuance costs in the three and six months ended June 30, 2009, respectively.
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In the three and six months ended June 30, 2009, we repurchased in open market transactions $76.2 million and $108.3 million, respectively, in aggregate principal amount of our 7.125% senior notes due March 2011. We recorded a gain on extinguishment of $0.1 million and $8.9 million during the three and six months ended June 30, 2009, respectively, which was partially offset by the write-off of a proportionate amount of our deferred debt issuance costs of $0.4 million and $0.7 million, respectively.
 
In the three and six months ended June 30, 2009, we repurchased in open market transactions $68.0 million and $69.0 million, respectively, in aggregate principal amount of our 2.5% convertible senior subordinated notes due May 2011. We recorded a gain on extinguishment of $9.1 million and $9.5 million during the three and six months ended June 30, 2009, respectively, which was partially offset during the three and six months ended June 30, 2009, by the write-off of a proportionate amount of our deferred debt issuance costs of $0.9 million.
 
In January 2009, Amkor Assembly & Test (Shanghai) Co, Ltd., a Chinese subsidiary, entered into a $50.0 million U.S. dollar denominated working capital facility agreement with a Chinese bank maturing in January 2011. Principal amounts borrowed must be repaid within twelve months of the drawdown date and may be prepaid at any time without penalty. All principal and interest must be repaid by January 2011. The working capital facility bears interest at LIBOR plus 1.7% (3.43% as of June 30, 2009), which is payable in semi-annual payments. The facility is collateralized with certain real property and buildings in China.
 
Interest expense related to short-term borrowings and long-term debt is presented net of interest income in the accompanying Consolidated Statements of Operations. Interest income for the three months ended June 30, 2009 and 2008 was $0.6 million and $2.0 million, respectively. Interest income for the six months ended June 30, 2009 and 2008 was $1.0 million and $4.8 million, respectively.

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 actuarial analyses. The components of net periodic pension cost for these defined benefit plans are as follows:

 	 	For the Three
	 	 	For the Six
	 	
 	 	Months Ended
	 	 	Months Ended
	 	
 	 	June 30,	 	 	June 30,	 	
 	 	2009	 	 	2008	 	 	2009	 	 	2008	 	
 	 	(In thousands)	 	 	(In thousands)	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Components of net periodic pension cost:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Service cost	 	$	1,069	 	 	$	1,921	 	 	$	2,190	 	 	$	3,875	 	
Interest cost	 	 	724	 	 	 	1,134	 	 	 	1,498	 	 	 	2,310	 	
Expected return on plan assets	 	 	(322	)	 	 	(750	)	 	 	(701	)	 	 	(1,529	)	
Amortization of transitional obligation	 	 	17	 	 	 	19	 	 	 	34	 	 	 	37	 	
Amortization of prior service cost	 	 	16	 	 	 	17	 	 	 	32	 	 	 	35	 	
Recognized actuarial (gain) loss	 	 	—	 	 	 	183	 	 	 	(23	)	 	 	365	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net periodic pension cost	 	 	1,504	 	 	 	2,524	 	 	 	3,030	 	 	 	5,093	 	
Curtailment gain	 	 	—	 	 	 	—	 	 	 	(1,109	)	 	 	—	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total pension expense	 	$	1,504	 	 	$	2,524	 	 	$	1,921	 	 	$	5,093	 	

During the three months ended March 31, 2009, we recognized a curtailment gain of $1.1 million related to the remeasurement of two defined benefit plans due to reductions in force programs (see Note 16). Due to the reduction in our workforce, our service cost and interest cost recognized in the three and six months ended June 30, 2009 has decreased when compared to the three and six months ended June 30, 2008.
 
For the three and six months ended June 30, 2009, we contributed $0.1 million and $0.2 million to the pension plans, respectively, and we expect to contribute an additional $6.8 million during 2009.
 
Our Korean subsidiary participates in an accrued severance plan that covers employees and directors with at least one year of service. Eligible employees are entitled to receive a lump-sum payment upon termination of
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employment, based on their length of service, seniority and average monthly wages at the time of termination. In addition and in accordance with Korean severance plan regulations, employers may pay employees earned benefits prior to terminating their employment. Accrued severance benefits are estimated assuming all eligible employees were to terminate their employment at the balance sheet date. The provision recorded for severance benefits for the three months ended June 30, 2009 and 2008 was $4.6 million and $3.4 million, respectively. The provision recorded for severance benefits for the six months ended June 30, 2009 and 2008 was $6.9 million. The balance recorded in long-term pension and severance obligations for accrued severance at our Korean subsidiary was $103.2 million and $99.6 million at June 30, 2009 and December 31, 2008, respectively. At December 31, 2008, there was an additional $31.6 million classified in current liabilities for voluntary interim accrued severance plan benefits that were paid out in January 2009 to approximately 750 eligible employees. As a result of a weakened global economy, we have made reductions in labor costs by lowering compensation and shortening work weeks. The interim accrued severance plan benefit payments were intended to help mitigate the impact of reduced compensation on our employees and lower our long-term commitments.

13.  	Commitments and Contingencies	
 
In April 2009, we amended our $100.0 million first lien revolving credit facility and extended the term to April 2013. The facility has a letter of credit sub-limit of $25.0 million. As of June 30, 2009, we have outstanding $0.4 million of standby letters of credit and have available an additional $24.6 million for letters of credit. Such standby letters of credit are used in the ordinary course of our business and are collateralized by our cash balances.
 
We generally warrant that our services will be performed in a professional and workmanlike manner and in compliance with our customers’ specifications. We accrue costs for known warranty issues. Historically, our warranty costs have been immaterial.
 
Legal Proceedings
 
We are involved in claims and legal proceedings and we may become involved in other legal matters arising in the ordinary course of our business. We evaluate these claims and legal matters on a case-by-case basis to make a determination as to the impact, if any, on our business, liquidity, results of operations, financial condition or cash flows. Except as indicated below, we currently believe that the ultimate outcome of these claims and proceedings, individually and in the aggregate, will not have a material adverse impact to us. Our evaluation of the potential impact of these claims and legal proceedings on our business, liquidity, results of operations, financial condition or cash flows could change in the future. We currently are party to the legal proceedings described below. Attorney fees related to legal matters are expensed as incurred.
 
Tessera, Inc. v. Amkor Technology, Inc.
 
On March 2, 2006, Tessera, Inc. filed a Request for Arbitration (the “Request”) with the International Court of Arbitration of the International Chamber of Commerce, captioned  Tessera, Inc. v. Amkor Technology, Inc.  The subject matter of the arbitration was a license agreement (“Agreement”) entered into between Tessera and our predecessor in 1996.
 
On October 27, 2008, an Arbitration Panel (the “Panel”) issued an interim order in this matter. While the Panel found that most of the packages accused by Tessera were not subject to the patent royalty provisions of the Agreement, the Panel did find that past royalties were due to Tessera as damages for some infringing packages. The Panel also denied Tessera’s request to terminate the Agreement.
 
On January 9, 2009, the Panel issued the final damage award in this matter awarding Tessera $60.6 million in damages for past royalties due under the Agreement. The award is for the period March 2, 2002 through December 1, 2008. The final award, plus interest, and the royalties for December 2008, were paid when due in February 2009.
 
We are calculating royalties under the Agreement for periods subsequent to December 1, 2008 using the same methodology specified in the Panel’s interim order for calculating damages for past royalties. Although our royalty payment for the six month period ended June 30, 2009 is not due until August 14, 2009, Tessera has recently advised
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us that Tessera believes we are in breach of the royalty provisions of the Agreement. Tessera has requested an audit pursuant to the Agreement which is not yet scheduled. We have informed Tessera that we are in full compliance with the Agreement and that we intend to make the royalty payments when due under the Agreement.
 
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. The plaintiffs amended the complaint to add additional officer, director and former director defendants and alleged improprieties in certain option grants. The amended complaint further alleged that defendants improperly recorded and accounted for the 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 requested 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. On December 28, 2006, pursuant to motion by defendants, the U.S. District Court for the Eastern District of Pennsylvania transferred this action to the U.S. District Court for the District of Arizona.
 
On September 25, 2007, the U.S. District Court for the District of Arizona dismissed this case with prejudice. On October 23, 2007, plaintiffs filed an appeal from the dismissal to the U.S. Court of Appeals for the Ninth Circuit.
 
On December 10, 2008, the parties entered into a memorandum of understanding to settle this case. Under the terms of the proposed settlement, Amkor and the other defendants will receive a full and complete release of all claims in the litigation in exchange for payment of an aggregate amount of $11.3 million. Our directors and officers liability insurance carrier will pay $9.0 million of the settlement amount and we will pay $2.3 million. The full amounts of the proposed settlement and insurance recovery were accrued as of December 31, 2008. The parties have finalized and filed formal settlement documentation with the court. The settlement is subject to review and approval by the court.
 
We do not expect the outcome in this case to have a material adverse affect on our liquidity, results of operations, financial condition or cash flows. We caution, however, that due to the inherent uncertainty of any litigation, if the court does not approve the settlement, an adverse outcome in this matter could result in material liabilities and could have a material adverse effect on our liquidity, results of operations, financial condition and cash flows.
 
Securities and Exchange Commission Investigation
 
In August 2005, the SEC issued a formal order of investigation regarding certain activities with respect to Amkor securities. The investigation related initially to transactions in our securities and was later expanded to include our historical stock option practices. While the SEC’s investigation continues and we cannot predict the outcome, we believe that the investigation is now limited to certain securities trading by a former non-executive employee. We have fully cooperated with the SEC throughout this investigation, and intend to continue to do so.
 
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 6,630,728 (collectively the “Amkor Patents”) and seeking, under Section 337 of the Tariff Act of 1930, an exclusionary order barring the importation by Carsem of infringing products. 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 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
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our MicroLeadFrame package technology, that some of our 21 asserted patent claims are valid, that we have a domestic industry in our patents, and that all of our asserted patent claims are enforceable. However, the ALJ did not find a statutory violation of Section 337 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. On November 9, 2005, the ALJ issued an Initial Determination on remand finding that Carsem infringed some of our patent claims and that Carsem had violated Section 337 of the Tariff Act.
 
On remand, the ITC had also authorized the ALJ to reopen the record on certain discovery issues related to a subpoena of documents from a third party. Following findings by the ALJ, on November 17, 2005, the Commission filed a second petition in the United States District Court for the District of Columbia to enforce the subpoena issued to the third party. On February 9, 2006, the ITC ordered a delay in issuance of the Final Determination pending resolution of that enforcement action. An order by the District Court enforcing the subpoena became final on January 9, 2009, and the third party has now produced documents pursuant to the subpoena.
 
On January 28, 2009, the Commission extended the target date for completion of the investigation to May 1, 2009. On April 20, 2009, Carsem filed a renewed motion to extend the target date and to remand the investigation. On April 28, 2009, the Commission extended the target date to July 1, 2009 for completion of the investigation. On July 1, 2009, the Commission remanded the investigation for a second time to the ALJ to reopen the record to admit into evidence documents and related discovery obtained from the enforcement of the above-referenced third-party subpoena. On July 23, 2009, the ALJ issued the procedural schedule, which includes a two-day hearing that starts on September 10, 2009 and sets the deadline for the issuance of the ALJ’s Initial Determination on this second remand for November 2, 2009. The ALJ also extended the target date to February 2, 2010 for completion of the investigation.
 
In November 2003, 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, compensatory damages, treble damages due to willful infringement plus interest, costs and attorney’s fees. This District Court action has been stayed pending resolution of the ITC case.

14.  	Business Segments	
 
We have two reportable segments, packaging and test. Packaging and test are integral parts of the process of manufacturing semiconductor devices and our customers will engage with us for both packaging and test services, or just packaging or test services. The packaging process creates an electrical interconnect between the semiconductor chip and the system board. In packaging, fabricated semiconductor wafers are separated into individual chips. These chips are typically attached through wire bond or wafer bump technologies to a substrate or leadframe and then encased in a protective material. In the case of an advanced wafer level package, the package is assembled on the surface of a wafer. The packaged chips are then tested using sophisticated equipment to ensure that each packaged chip meets its design and performance specifications.
 
The accounting policies for segment reporting are the same as those for our Consolidated Financial Statements. We evaluate our operating segments based on gross margin and gross property, plant and equipment. We do not specifically identify and allocate total assets by operating segment. Summarized financial information concerning reportable segments is shown in the following table. The “other” column reflects other corporate adjustments to net sales and gross profit and the property, plant and equipment of our sales and corporate offices. For
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the three and six months ended June 30, 2009, “other” gross profit includes exit costs associated with contractual obligations for the Singapore land and building leases as well as abandoned leasehold improvements (see Note 16).

 	 	Packaging	 	Test	 	Other	 	Total	
 	 	(In thousands)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Three Months Ended June 30, 2009	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net sales	 	$	448,335	 	 	 	58,152	 	 	 	29	 	 	$	506,516	 	
Gross profit	 	$	94,161	 	 	 	13,456	 	 	 	(5,230	)	 	$	102,387	 	
Three Months Ended June 30, 2008	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net sales	 	$	608,611	 	 	 	81,686	 	 	 	379	 	 	$	690,676	 	
Gross profit	 	$	134,315	 	 	 	24,495	 	 	 	121	 	 	$	158,931	 	
Six Months Ended June 30, 2009	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net sales	 	$	787,274	 	 	 	108,027	 	 	 	(9	)	 	$	895,292	 	
Gross profit	 	$	138,030	 	 	 	17,837	 	 	 	(5,441	)	 	$	150,426	 	
Six Months Ended June 30, 2008	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net sales	 	$	1,226,555	 	 	 	162,941	 	 	 	663	 	 	$	1,390,159	 	
Gross profit	 	 	283,651	 	 	 	51,174	 	 	 	258	 	 	$	335,083	 	
Gross Property, Plant and Equipment	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
June 30, 2009	 	$	2,686,141	 	 	 	717,728	 	 	 	137,156	 	 	$	3,541,025	 	
December 31, 2008	 	$	2,664,712	 	 	 	741,860	 	 	 	138,947	 	 	$	3,545,519	 	

15.  	Fair Value of Financial Instruments	
 
The accounting framework for determining fair value includes a hierarchy for ranking the quality and reliability of the information used to measure fair value, which enables the reader of the financial statements to assess the inputs used to develop those measurements. The fair value hierarchy consists of three tiers as follows: Level 1, defined as quoted market prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, model-based valuation techniques for which all significant assumptions are observable in the market, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and Level 3, defined as unobservable inputs that are not corroborated by market data.
 
Our financial assets and liabilities recorded at fair value on a recurring basis include cash and cash equivalents and restricted cash. Cash and cash equivalents and restricted cash are invested in U.S. money market funds and various U.S. and foreign bank operating and time deposit accounts, which are due on demand or carry a maturity date of less than three months when purchased. No restrictions have been imposed on us regarding withdrawal of balances with respect to our cash and cash equivalents as a result of liquidity or other credit market issues affecting the money market funds we invest in or the counterparty financial institutions holding our deposits. Money market funds and restricted cash are fair valued at quoted market prices in active markets for identical assets as summarized in the following table:

 	 	Quoted Prices
	 	 	 	 	 	 	
 	 	in Active
	 	Significant
	 	 	 	 	
 	 	Markets for
	 	Other
	 	Significant
	 	 	
 	 	Identical
	 	Observable
	 	Unobservable
	 	 	
 	 	Assets
	 	Inputs
	 	Inputs
	 	 	
 	 	(Level 1)	 	(Level 2)	 	(Level 3)	 	Total	
 	 	(In thousands)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash equivalent money market funds	 	$	186,754	 	 	$	—	 	 	$	—	 	 	$	186,754	 	
Restricted cash	 	 	2,678	 	 	 	—	 	 	 	—	 	 	 	2,678	 	

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The following table presents the financial instruments that are not recorded at fair value but which require fair value disclosure as of June 30, 2009 and December 31, 2008:

 	 	June 30,
	 	 	December 31,
	 	
 	 	2009	 	 	2008	 	
 	 	(In thousands)	 	
 	 	 	 	 	 	 	 	 	
Carrying value of debt	 	$	1,554,175	 	 	$	1,493,360	 	
 	 	 	 	 	 	 	 	 	
Fair value of debt:	 	 	 	 	 	 	 	 	
Publicly quoted trading prices	 	$	1,293,937	 	 	$	730,175	 	
Market based assumptions	 	 	334,940	 	 	 	176,483	 	
 	 	 	 	 	 	 	 	 	
Total fair value of debt	 	$	1,628,877	 	 	$	906,658	 	

Publicly quoted trading prices are based on the prices reported on June 30, 2009 and December 31, 2008, respectively. Market based assumptions include current borrowing rates for similar types of borrowing arrangements adjusted for duration, optionality, and risk profile.

16.  	Exit Activities and Reductions in Force	
 
As part of our ongoing efforts to improve our manufacturing operations and manage costs, we regularly evaluate our staffing levels and facility requirements compared to current business needs. The following table summarizes our exit activities and reduction in force initiatives associated with these activities as of June 30, 2009. “Charges” represents the initial charge related to the exit activity. “Adjustments” represent revisions of estimates. “Cash payments” and “non-cash amounts” consist of the utilization of the charge.

 	 	Accrual at
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Accrual at
	 	
 	 	December 31,
	 	 	 	 	 	 	 	 	Cash
	 	 	Non-Cash
	 	 	June 30,
	 	
 	 	2008	 	 	Charges	 	 	Adjustments	 	 	Payments	 	 	Amounts	 	 	2009	 	
 	 	(In thousands)	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Singapore manufacturing operation:(1)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Employee separation costs	 	$	—	 	 	$	1,771	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	1,771	 	
Contractual obligations	 	 	—	 	 	 	4,668	 	 	 	—	 	 	 	(197	)	 	 	—	 	 	 	4,471	 	
Asset impairments	 	 	—	 	 	 	556	 	 	 	—	 	 	 	—	 	 	 	(556	)	 	 	—	 	
Other	 	 	—	 	 	 	186	 	 	 	—	 	 	 	—	 	 	 	(186	)	 	 	—	 	
Reduction in force:(2)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Employee separation costs, net of curtailment gain	 	 	—	 	 	 	6,331	 	 	 	—	 	 	 	(7,436	)	 	 	1,105	 	 	 	—	 	
North Carolina manufacturing operation:(3)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Employee separation costs	 	 	782	 	 	 	1,060	 	 	 	(135	)	 	 	(1,623	)	 	 	—	 	 	 	84	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	 	$	782	 	 	$	14,572	 	 	$	(135	)	 	$	(9,256	)	 	$	363	 	 	$	6,326	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Current portion	 	$	782	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	4,090	 	
Long-term portion	 	 	—	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2,236	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	 	$	782	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	6,326	 	

 
 	 	 	
(1)	 	In June 2009, we communicated to our employees the decision to wind-down and exit our manufacturing operations in Singapore. We expect to exit before the end of 2010. This affects approximately 600 employees and enables us to improve our cost structure by consolidating factories. Machinery and equipment will be relocated to and utilized in other factories. Employee separation costs recognized as a liability at June 30, 2009 consist primarily of contractual involuntary termination benefits for all employees to be separated and one-time termination benefits for those employees that have separated in July 2009 within the minimum retention period. Approximately $1.3 million and $0.5 million of the employee separation costs are included in cost of goods sold and selling, general and administrative expenses, respectively. No payments of employee separation costs	

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 	 	will be made until the employees are terminated, which began in July 2009. Contractual obligation costs, asset impairments and other costs are included in costs of goods sold. Contractual obligation costs represent the estimated fair value of remaining obligations under land and building leases on a facility which was vacated in June 2009. Asset impairments relate primarily to abandoned building improvements at the leased facility.

 	 	The liability for one-time involuntary termination benefits for employees that will provide service beyond a minimum retention period will be recognized over the future service period. As of June 30, 2009, we expect to incur approximately $5.4 million of additional employee separation costs over the next twelve months.	
 	 	 	
(2)	 	During the three months ended March 31, 2009, we reduced our headcount through reductions-in-force programs by 1,750 employees in certain foreign locations. We recorded a charge for one-time and contractual termination benefits, net of a pension curtailment gain, of which $5.8 million and $0.5 million were charged to cost of sales and selling, general and administrative expenses, respectively. All amounts were paid prior to March 31, 2009.	
 	 	 	
(3)	 	During 2007, we commenced a phased transition of all wafer level processing production from our wafer bumping facility in North Carolina to our facility in Taiwan. All wafer level processing production ceased at our North Carolina facility in the three months ended June 30, 2009, and the North Carolina facility is now used for research and development activities. During the six months ended June 30, 2009, we recorded charges for termination benefits of $1.1 million, of which $0.9 million and $0.2 million were charges to cost of sales and selling, general, and administrative expenses, respectively. No additional charges related to termination benefits are expected to be recognized.	
 
2008 Activities
 
During April 2008, we implemented an early voluntary retirement program with one-time termination benefits to employees at our Korean subsidiary. The offer was accepted by 62 employees. We recorded a charge in the three months ended June 30, 2008 for the one-time termination benefits of $2.3 million, including $2.0 million charged to cost of sales and $0.3 million charged to selling, general and administrative expenses. All amounts were paid prior to September 30, 2008.
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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
 
This report contains forward-looking statements within the meaning of the federal securities laws, including but not limited to statements regarding: (1) our plan to exit manufacturing operations in Singapore, (2) the focus of our expected capital additions on customer requirements, investments in technology advancements and cost reduction programs, (3) the release of valuation allowances related to taxes in the future, (4) our ability to fund our operating activities, working capital, capital expenditures and debt service requirements for the next twelve months, (5) the expected use of cash flows, if any in the future, (6) expected workforce reductions and related severance charges, (7) our repurchase of outstanding debt in the future, (8) payment of dividends, (9) compliance with our covenants, (10) expected contributions to defined benefit pension plans, (11) expectations regarding liability for unrecognized tax benefits, (12) the effect of foreign currency exchange rate exposure on our financial results, and (13) 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 Part II, Item 1A “Risk Factors” of this Quarterly Report. The following discussion provides information and analysis of our results of operations for the three and six months ended June 30, 2009 and our liquidity and capital resources. You should read the following discussion in conjunction with Item 1, “Financial Statements” in this Quarterly Report as well as other reports we file with the Securities and Exchange Commission (“SEC”).
 
Overview
 
Amkor is one of the world’s leading subcontractors of semiconductor packaging and test services. Packaging and test are integral steps in the process of manufacturing semiconductor devices. The manufacturing process begins with silicon wafers and involves the fabrication of electronic circuitry into complex patterns, thus creating large numbers of individual chips on the wafers. The fabricated wafers are then probe tested to ensure the individual devices meet electrical specifications. The packaging process creates an electrical interconnect between the semiconductor chip and the system board. In packaging, fabricated semiconductor wafers are separated into individual chips. These chips are typically attached through wire bond or wafer bump technologies to a substrate or leadframe and then encased in a protective material. In the case of an advanced wafer level package, the package is assembled on the surface of a wafer.
 
Our packages are designed for application specific body size and electrical connection requirements to provide optimal electrical connectivity and thermal performance. The packaged chips are then tested using sophisticated equipment to ensure that each packaged chip meets its design and performance specifications. Increasingly, packages are custom designed for specific chips and specific end-market applications. We are able to provide turnkey assembly and test solutions including semiconductor wafer bump, wafer probe, wafer backgrind, package design, assembly, test and drop shipment services.
 
The semiconductor industry is experiencing a significant cyclical downturn. Despite the challenging global economy and weakness in consumer demand, we were profitable in the three months ended June 30, 2009, and unit demand and utilization increased during the three months ended June 30, 2009 compared to the previous quarter, although lower than the prior year comparable period.
 
Our net sales for the three months ended June 30, 2009 and 2008 were $506.5 million and $690.7 million, respectively. In the three months ended June 30, 2009, sales decreased $184.2 million, or 26.7%, from the three months ended June 30, 2008 primarily due to the general decline in demand and inventory management efforts by our customers as a result of the global economic recession and weakness in consumer spending. The downturn in demand has resulted in declines in our operating results and cash flows as our capacity utilization rates have declined.
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Gross margin for the three months ended June 30, 2009 and 2008 was 20.2% and 23.0%, respectively. We experienced a decline in gross margin for the three months ended June 30, 2009 primarily due to the lower levels of demand, which have significantly decreased our capacity utilization rates. In addition, cost of sales for the three months ended June 30, 2009 included a charge of $6.7 million for termination benefits, contractual obligations and other exit costs related to management’s decision to wind-down and exit manufacturing operations in Singapore. Gross margin for the three months ended June 30, 2009 benefitted from other cost reduction initiatives and the strength of the U.S. dollar against certain foreign currencies.
 
Amkor’s net income for the three months ended June 30, 2009 was $9.2 million, or $0.05 per diluted share, compared with Amkor’s net income of $65.2 million, or $0.33 per diluted share, for the three months ended June 30, 2008. The net income for the three months ended June 30, 2009 includes a $6.0 million net foreign currency loss from the remeasurement of certain subsidiaries’ balance sheet items compared to an $11.6 million net foreign currency gain in the three months ended June 30, 2008. The net income for the three months ended June 30, 2009 also includes a gain of $7.9 million related to the repurchase of an aggregate $76.2 million principal amount of our 7.125% senior notes and $68.0 million principal amount of our 2.5% convertible senior subordinated notes due in 2011. Also reflected in the net income for the three months ended June 30, 2009 is a $7.2 million charge in connection with the plan to exit manufacturing operations in Singapore.
 
Our capital additions totaled $27.4 million in the three months ended June 30, 2009. Because of the significantly reduced level of consumer demand, capital additions are focused on specific customer requirements, technology advancements and cost reduction programs.
 
As part of our focus on generating cash flow and driving greater factory and administrative efficiencies, beginning in 2008 and continuing into 2009, we have implemented cost reduction measures that include lowering executive and certain other employee compensation, reducing employee and contractor headcount, and shortening work weeks. Some costs previously reduced through cost reduction measures have increased as demand increased in the three months ended June 30, 2009. We have also reduced our expected levels of capital additions in 2009 to an estimated $150 million, which is below our 2008 levels. We generated $69.4 million of free cash flow in the three months ended June 30, 2009, but we experienced negative free cash flow in the six months ended June 30, 2009 primarily as a result of approximately $103.8 million of payments made in the three months ended March 31, 2009 relating to the resolution of a patent license dispute and employee benefit and separation payments. Cash provided by operating activities was $33.4 million for the six months ended June 30, 2009, as compared with $284.7 million for the six months ended June 30, 2008. We define free cash flow as net cash provided by operating activities less investing activities related to the acquisition of property, plant and equipment. Free cash flow is not defined by U.S. generally accepted accounting principles (“U.S. GAAP”) and a reconciliation of free cash flow to net cash provided by operating activities is set forth under the caption “Cash Flows” below. Please see “Liquidity and Capital Resources” and “Cash Flows” below for a further analysis of the change in our balance sheet and cash flows during the first six months of 2009.
 
We believe our financial position and liquidity are sufficient to fund our operating activities for at least the next twelve months. In April 2009, we amended our $100.0 million first lien revolving credit facility which, among other things, extended the maturity date from November 2009 to April 2013. Also, in April 2009, we issued $250.0 million of our 6.0% convertible senior subordinated notes due April 2014 (the “2014 Notes”). In the six months ended June 30, 2009, we repurchased in open market transactions $108.3 million in aggregate principal amount of our 7.125% senior notes due March 2011, and $69.0 million in aggregate principal amount of our 2.5% convertible senior subordinated notes due May 2011 using $158.8 million of cash on hand. At June 30, 2009, our cash and cash equivalents totaled approximately $455.3 million with an aggregate of $97.0 million of debt due through the end of 2010. In 2011, the remaining $144.3 million aggregate amount of our 2.5% convertible senior subordinated notes and 7.125% senior notes mature.
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Results of Operations
 
The following table sets forth certain operating data as a percentage of net sales for the periods indicated:

 	 	For the Three
	 	For the Six
	
 	 	Months Ended
	 	Months Ended
	
 	 	June 30,	 	June 30,	
 	 	2009	 	2008	 	2009	 	2008	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net sales	 	 	100.0	%	 	 	100.0	%	 	 	100.0	%	 	 	100.0	%	
Gross profit	 	 	20.2	%	 	 	23.0	%	 	 	16.8	%	 	 	24.1	%	
Depreciation and amortization	 	 	15.1	%	 	 	11.2	%	 	 	17.5	%	 	 	10.8	%	
Operating income	 	 	7.9	%	 	 	12.5	%	 	 	3.1	%	 	 	13.2	%	
Income (loss) before income taxes	 	 	2.2	%	 	 	10.1	%	 	 	(0.9	)%	 	 	10.6	%	
Net income (loss)	 	 	1.8	%	 	 	9.5	%	 	 	(1.4	)%	 	 	9.9	%	
Net income (loss) attributable to Amkor	 	 	1.8	%	 	 	9.4	%	 	 	(1.4	)%	 	 	9.9	%	
 
Three Months Ended June 30, 2009 Compared to Three Months Ended June 30, 2008
 
Net Sales.  Net sales decreased $184.2 million, or 26.7%, to $506.5 million in the three months ended June 30, 2009 from $690.7 million in the three months ended June 30, 2008. This decline in net sales was due to the general decline in demand and inventory management efforts by our customers as a result of the global economic recession and weakness in consumer spending. As a result, we experienced a broad-based decline in product demand across our packaging and test businesses.
 
Packaging Net Sales.  Packaging net sales decreased $160.3 million, or 26.3%, to $448.3 million in the three months ended June 30, 2009 from $608.6 million in the three months ended June 30, 2008 because of the broad-based decline in product demand across our package offerings. Packaging unit volume decreased in the three months ended June 30, 2009 to 1.7 billion units compared to 2.1 billion units in the three months ended June 30, 2008.
 
Test Net Sales.  Test net sales decreased $23.5 million, or 28.8%, to $58.2 million in the three months ended June 30, 2009 from $81.7 million in the three months ended June 30, 2008 due to the overall decline in demand due to the global economic recession.
 
Cost of Sales.  Our cost of sales consists principally of materials, labor, depreciation and manufacturing overhead. Since a substantial portion of the costs at our factories is fixed, relatively modest increases or decreases in our capacity utilization rates can have a significant effect on our gross margin.
 
Material costs as a percentage of net sales increased from 39.1% for the three months ended June 30, 2008 to 40.4% for the three months ended June 30, 2009 due to a change in product mix to packages with higher material content as a percentage of net sales.
 
As a percentage of net sales, labor costs decreased to 13.1% in the three months ended June 30, 2009 compared to 15.5% in the three months ended June 30, 2008. Labor costs benefitted by a favorable foreign currency effect resulting from the depreciation of the Korean won and other currencies and savings realized from our workforce reduction and other cost savings initiatives. Labor costs include $1.7 million and $2.0 million of termination benefits related to workforce reductions in the three months ended June 30, 2009 and 2008, respectively.
 
As a percentage of net sales, other manufacturing costs increased to 26.3% in the three months ended June 30, 2009 from 22.4% in the three months ended June 30, 2008. Other manufacturing costs in absolute dollars decreased due to reduced costs associated with lower volumes, including utilities and supplies. Other manufacturing costs also benefitted by a favorable foreign currency effect resulting from the depreciation of the Korean won and other currencies. These savings are partially offset by $5.2 million related to the wind-down and exit of manufacturing operations in Singapore.
 
Gross Profit.  Gross profit decreased $56.5 million to $102.4 million, or 20.2% of net sales, in the three months ended June 30, 2009 from $158.9 million, or 23.0% of net sales, in the three months ended June 30, 2008. We experienced a decline in gross margin in the three months ended June 30, 2009 primarily due to the lower levels
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of demand, which have significantly decreased our capacity utilization rates. In addition, included in our cost of sales in the three months ended June 30, 2009 is a charge of $7.1 million for exit activities primarily related to the wind-down and exit of manufacturing operations in Singapore. The decrease in gross profit and gross margin was partially offset by improved factory performance due to cost reduction initiatives and the favorable foreign currency effect on labor costs due to the depreciation of the Korean won and other currencies.
 
Packaging Gross Profit.  Gross profit for packaging decreased $40.1 million to $94.2 million, or 21.0% of packaging net sales, in the three months ended June 30, 2009 from $134.3 million, or 22.1% of packaging net sales, in the three months ended June 30, 2008. The decrease in gross margin is primarily attributable to lower capacity utilization rates. The decrease was partially offset by improved factory performance due to cost reduction initiatives and a favorable foreign currency effect on labor costs due to the depreciation of the Korean won.
 
Test Gross Profit.  Gross profit for test in the three months ended June 30, 2009 decreased $11.0 million to $13.5 million, 23.2% of test net sales, from $24.5 million, or 30.0% of test net sales, in the three months ended June 30, 2008. The decrease in gross margin is primarily attributable to lower capacity utilization rates and higher depreciation costs as a result of our capital additions. In addition, we recorded a charge in the three months ended June 30, 2009 for termination benefits.
 
Selling, General and Administrative Expenses.  Selling, general and administrative expenses decreased $15.0 million, or 22.2%, to $52.4 million in the three months ended June 30, 2009, from $67.4 million in the three months ended June 30, 2008. The decrease was primarily due to lower salaries and benefits in our corporate and sales offices and professional fees. These reductions were partially offset by enterprise resource planning implementation costs.
 
Gain on Sale of Real Estate.  In the three months ended June 30, 2008, we sold land and a warehouse in Korea for $14.3 million in cash and reported a gain of $9.9 million, with no net tax effect.
 
Research and Development.  Despite the global economic recession, during the three months ended June 30, 2009 we continued to invest in research and development activities, focusing on advanced laminate, flip chip and wafer level packaging services. Research and development expenses decreased $5.1 million to $10.0 million, or 2.0% of net sales in the three months ended June 30, 2009 from $15.1 million, or 2.2% of net sales in the three months ended June 30, 2008. The decrease in our research and development expenses was primarily due to lower salaries and benefits.
 
Other (Income) Expense, Net.  Other expense, net increased $12.3 million to $28.7 million, or 5.7% of net sales, in the three months ended June 30, 2009 from $16.4 million, or 2.4% of net sales in the three months ended June 30, 2008. This increase was driven by a $6.0 million foreign currency loss in the three months ended June 30, 2009 compared to an $11.6 million foreign currency gain in the three months ended June 30, 2008. The fluctuation in foreign currency is primarily due to the change in the Korean won and the remeasurement of the Korean won denominated severance plan obligation. In addition, there was a $2.8 million increase in net interest expense due to increased debt. The increase was partially offset by a net gain of $7.9 million related to the repurchase of an aggregate $144.2 million principal amount of our 7.125% senior notes and 2.5% convertible senior subordinated notes due in 2011.
 
Income Tax Expense.  In the three months ended June 30, 2009, we recorded income tax expense of $1.8 million as compared to income tax expense of $4.3 million in the three months ended June 30, 2008. The decrease in income tax expense is primarily attributable to a decline in profits in our taxable foreign jurisdictions. Our income tax expense for the three months ended June 30, 2009 is attributable to income taxes in certain profitable foreign jurisdictions, foreign withholding taxes, minimum taxes of our operations incurring losses, and changes in valuation allowances.
 
At June 30, 2009, we had U.S. net operating loss carryforwards totaling $314.2 million, which expire at various times through 2029. Additionally, at June 30, 2009, we had $100.7 million of non-U.S. net operating loss carryforwards, which expire at various times through 2019. We maintain a valuation allowance on all of our U.S. net deferred tax assets, including our net operating loss carryforwards. We also have valuation allowances on deferred tax assets in certain foreign jurisdictions. We will release such valuation allowances as the related tax benefits are
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realized on our tax returns or when sufficient net positive evidence exists to conclude that it is more likely than not that the deferred tax assets will be realized.
 
Six Months Ended June 30, 2009 Compared to Six Months Ended June 30, 2008
 
Net Sales.  Net sales decreased $494.9 million, or 35.6%, to $895.3 million in the six months ended June 30, 2009 from $1,390.2 million in the six months ended June 30, 2008. This decline in net sales was due to the general decline in demand and inventory management efforts by our customers as a result of the global economic recession and weakness in consumer spending. As a result, we experienced a broad-based decline in product demand across our packaging and test businesses.
 
Packaging Net Sales.  Packaging net sales decreased $439.3 million, or 35.8%, to $787.3 million in the six months ended June 30, 2009 from $1,226.7 million in the six months ended June 30, 2008 because of the broad-based decline in product demand across our package offerings. Packaging unit volume decreased in the six months ended June 30, 2009 to 2.9 billion units compared to 4.3 billion units in the six months ended June 30, 2008.
 
Test Net Sales.  Test net sales decreased $54.9 million, or 33.7%, to $108.0 million in the six months ended June 30, 2009 from $162.9 million in the six months ended June 30, 2008 due to the overall decline in demand due to the global economic recession.
 
Cost of Sales.  Our cost of sales consists principally of materials, labor, depreciation and manufacturing overhead. Since a substantial portion of the costs at our factories is fixed, relatively modest increases or decreases in our capacity utilization rates can have a significant effect on our gross margin.
 
Material costs as a percentage of net sales increased from 38.1% for the six months ended June 30, 2008 to 39.9% for the six months ended June 30, 2009 due to a change in product mix to packages with higher material content as a percentage of net sales.
 
As a percentage of net sales, labor costs decreased to 14.6% in the six months ended June 30, 2009 compared to 15.6% in the six months ended June 30, 2008. Labor costs benefitted by a favorable foreign currency effect on labor costs resulting from the depreciation of the Korean won and other currencies and savings realized from our workforce reduction and other cost savings initiatives. These savings are partially offset by $8.0 million of termination benefits, net of a pension curtailment gain of $1.0 million, incurred in the six months ended June 30, 2009 due to workforce reductions. The six months ended June 30, 2008 include $2.0 million in termination benefits related to workforce reductions.
 
As a percentage of net sales, other manufacturing costs increased to 28.7% in the six months ended June 30, 2009 from 22.2% in the six months ended June 30, 2008. Other manufacturing costs in absolute dollars decreased due to reduced costs associated with lower volumes, including utilities and supplies. Other manufacturing costs include $5.2 million related to the wind-down and exit of manufacturing operations in Singapore.
 
Gross Profit.  Gross profit decreased $184.7 million to $150.4 million, or 16.8% of net sales, in the six months ended June 30, 2009 from $335.1 million, or 24.1% of net sales, in the six months ended June 30, 2008. We experienced a decline in gross margin in the six months ended June 30, 2009 primarily due to the lower levels of demand, which have significantly decreased our capacity utilization rates. In addition, included in our cost of sales in the six months ended June 30, 2009 is a net charge of $13.4 million, related to workforce reduction programs and the exit of manufacturing operations in Singapore. The decrease in gross profit and gross margin was partially offset by improved factory performance due to cost reduction initiatives and the favorable foreign currency effect on labor costs due to the depreciation of the Korean won.
 
Packaging Gross Profit.  Gross profit for packaging decreased $145.7 million to $138.0 million, or 17.5% of packaging net sales, in the six months ended June 30, 2009 from $283.7 million, or 23.1% of packaging net sales, in the six months ended June 30, 2008. The decrease in gross margin is primarily attributable to lower capacity utilization rates. In addition, cost of sales for the six months ended June 30, 2009 included a charge for termination benefits that were partially offset by a pension curtailment gain. The decrease in gross margin was partially offset by improved factory performance due to cost reduction initiatives and a favorable foreign currency effect on labor costs due to the depreciation of the Korean won.
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Test Gross Profit.  Gross profit for test in the six months ended June 30, 2009 decreased $33.4 million to $17.8 million, or 16.5% of test net sales, from $51.2 million, or 31.4% of test net sales, in the six months ended June 30, 2008. The decrease in gross margin is primarily attributable to lower capacity utilization rates and higher depreciation costs as a result of our capital additions. In addition, we recorded a charge in the six months ended June 30, 2009 for termination benefits which was partially offset by a pension curtailment gain attributable to our test business.
 
Selling, General and Administrative Expenses.  Selling, general and administrative expenses decreased $30.4 million, or 22.9%, to $102.5 million in the six months ended June 30, 2009, from $132.9 million in the six months ended June 30, 2008. The decrease was primarily due to lower salaries and benefits in our corporate and sales offices and professional fees. These reductions were partially offset by enterprise resource planning implementation costs and termination benefits.
 
Gain on Sale of Real Estate.  In the six months ended June 30, 2008, we sold land and a warehouse in Korea for $14.3 million in cash and reported a gain of $9.9 million, with no net tax effect.
 
Research and Development.  Despite the global economic recession, during the six months ended June 30, 2009 we continued to invest in research and development activities, focusing on advanced laminate, flip chip and wafer level packaging services. Research and development expenses decreased $8.8 million to $20.2 million, or 2.3% of net sales in the six months ended June 30, 2009 from $29.0 million, or 2.1% of net sales in the six months ended June 30, 2008. The decrease in our research and development expenses was primarily due to lower salaries and benefits.
 
Other (Income) Expense, Net.  Other expense, net increased $0.3 million to $35.4 million, or 4.0% of net sales, in the six months ended June 30, 2009 from $35.1 million, or 2.5% of net sales in the six months ended June 30, 2008. This increase was driven by a decrease of $15.0 million in net foreign currency gains primarily due to the fluctuation of the Korean won and the remeasurement of the Korean won denominated severance plan obligation. In addition, there was a $2.2 million increase in related party interest expense due to increased debt. The increase was partially offset by a net gain of $16.9 million related to the repurchase of an aggregate $177.3 million principal amount of our 7.125% senior notes and 2.5% convertible senior subordinated notes due in 2011.
 
Income Tax Expense.  In the six months ended June 30, 2009, we recorded income tax expense of $4.9 million as compared to income tax expense of $10.2 million in the six months ended June 30, 2008. The decrease in income tax expense is primarily attributable to a decline in profits in our taxable foreign jurisdictions. Our income tax expense for the six months ended June 30, 2009 is attributable to income taxes in certain profitable foreign jurisdictions, foreign withholding taxes, minimum taxes of our operations incurring losses, and changes in valuation allowances, all of which offset the tax benefits generated on the net losses incurred for the period.
 
Liquidity and Capital Resources
 
We assess our liquidity based on our current expectations regarding sales, operating expenses, capital spending and debt service requirements. Based on this assessment, we believe that our cash flow from operating activities together with existing cash and cash equivalents and availability under our revolving credit facility will be sufficient to fund our working capital, capital expenditure and debt service requirements for at least the next twelve months. Thereafter, our liquidity will continue to be affected by, among other things, volatility in the global economy and credit markets, the performance of our business, our capital expenditure levels and our ability to either repay debt out of operating cash flow or refinance debt at or prior to maturity with the proceeds of debt or equity offerings. There is no assurance that we will generate the necessary net income or operating cash flows to meet the funding needs of our business beyond the next twelve months due to a variety of factors, including the cyclical nature of the semiconductor industry and the other factors discussed in Part II, Item 1A “Risk Factors.”
 
Our primary source of cash and the source of funds for our operations, including making capital expenditures and servicing principal and interest obligations with respect to our debt, are cash flows from our operations, current cash and cash equivalents, borrowings under available debt facilities, or proceeds from any additional debt or equity financings. As of June 30, 2009, we had cash and cash equivalents of $455.3 million and availability of $99.6 million
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under our $100.0 million first lien senior secured revolving credit facility. We expect cash flows to be used in the operation and expansion of our business, the repayment or repurchase of debt and for other corporate purposes.
 
As part of our focus on generating cash flow and driving greater factory and administrative efficiencies, we have implemented cost reduction measures that include lowering executive and other employee compensation, reducing employee and contractor headcount, and shortening work weeks. In the six months ended June 30, 2009, we reduced our work force by approximately 1,750 employees. We expect to reduce our workforce by an additional 600 employees in connection with the plan to wind-down and exit our manufacturing operations in Singapore, which will require approximately $7 million in termination benefit payouts over the next twelve months. As part of our ongoing efforts to improve performance and manage costs, we continue to evaluate our staffing levels compared to current business needs.
 
In response to the lower levels of demand and to preserve cash, we have reduced our expected levels of capital additions in 2009 to an estimated $150 million, compared to our 2008 capital additions of $341.7 million. During the first six months of 2009, we had capital additions of $51.6 million compared to $217.5 million in the six months ended June 30, 2008. We operate in a capital intensive industry. Servicing our current and future customers requires that we incur significant operating expenses and make significant capital expenditures, which are generally made in advance of the related revenues and without any firm customer commitments. Our capital additions are focused on specific customer requirements, technology advancements and cost reduction programs.
 
We have a significant level of debt, with $1,554.2 million outstanding at June 30, 2009, of which $69.7 million is current. In April 2009, we issued $250.0 million of our 6.0% convertible senior subordinated notes due April 2014, and amended our $100.0 million first lien revolving credit facility and extended the term to April 2013. We have used $135.0 million of the $244.5 million of net proceeds to reduce other indebtedness and expect to use the remaining proceeds to further reduce other indebtedness and for general corporate purposes.
 
In the six months ended June 30, 2009, we repurchased in open market transactions $108.3 million in aggregate principal amount of our 7.125% senior notes due March 2011, and $69.0 million in aggregate principal amount of our 2.5% convertible senior subordinated notes due May 2011, using $158.8 million of cash on hand and proceeds from the issuance of the 2014 Notes. At June 30, 2009, we have an aggregate of $97.0 million of debt coming due through the end of 2010, and in 2011 the remaining $144.3 million 2.5% convertible senior subordinated notes and 7.125% senior notes mature.
 
In order to reduce leverage and future cash interest payments, we may from time to time repurchase our outstanding notes for cash or exchange shares of our common stock for our outstanding notes. Any such transactions are subject to the terms of our indentures and other debt agreements, market conditions and other factors.
 
The interest payments required on our debt are substantial. For example, we paid $60.3 million of interest in the six months ended June 30, 2009. (See “Capital Additions and Contractual Obligations” below for a summary of principal and interest payments.)
 
Many of our debt agreements have restrictions on dividend payments and the repurchase of stock and subordinated securities, including our convertible notes. These restrictions are determined by defined calculations which include net income. The $671.1 million write-off of our goodwill at December 31, 2008 impacted these restrictions, which has reduced our ability to pay dividends and repurchase stock and subordinated securities, including our convertible notes. We have never paid a dividend to our stockholders, and we do not currently anticipate doing so.
 
We were in compliance with all debt covenants at June 30, 2009 and expect to remain in compliance with these covenants for at least the next twelve months.
 
Cash Flows
 
Cash provided by operating activities was $33.4 million for the six months ended June 30, 2009 compared to $284.7 million for the six months ended June 30, 2008. We experienced negative free cash flow of $36.6 million for the six months ended June 30, 2009 primarily as a result of the $64.7 million payment made in February 2009 in
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connection with the resolution of a patent license dispute and $39.1 million in other employee benefit and separation payments. In comparison, free cash flow for the six months ended June 30, 2008 was $93.8 million.
 
Net cash provided by (used in) operating, investing and financing activities for the six months ended June 30, 2009 and 2008 were as follows:

 	 	For the Six
	
 	 	Months Ended
	
 	 	June 30,	
 	 	2009	 	2008	
 	 	(In thousands)	
 	 	 	 	 	 	 	 	 	
Operating activities	 	$	33,358	 	 	$	284,698	 	
Investing activities	 	 	(72,354	)	 	 	(173,938	)	
Financing activities	 	 	70,320	 	 	 	(114,312	)	
 
Operating activities:  Our cash flow from operating activities for the six months ended June 30, 2009 decreased by $251.3 million. Operating income for the six months ended June 30, 2009 adjusted for depreciation and amortization, other operating activities and non-cash items decreased $151.7 million which is largely attributable to decreased net sales and the related decrease in net income. Net interest expense for the six months ended June 30, 2009 increased by $1.5 million, as compared with the six months ended June 30, 2008 as a result of increased interest rates on debt.
 
Changes in assets and liabilities decreased operating cash flow principally due to the $64.7 million payment made in February 2009 in connection with the resolution of a patent license dispute and $39.1 million in other employee benefit and separation payments for the six months ended June 30, 2009. Inventory has decreased more in the six months ended June 30, 2009 compared to the comparable period in 2008 reflecting lower demand due to the economic recession.
 
Investing activities:  Our cash flows used in investing activities for the six months ended June 30, 2009 were lower by $101.6 million. This decrease was primarily due to reduced levels of capital additions in 2009 and the $120.9 million decrease in payments for property, plant and equipment.
 
Financing activities:  Our net cash provided by financing activities for the six months ended June 30, 2009 was $70.3 million, compared with net cash used of $114.3 million for the six months ended June 30, 2008. The net cash provided by financing activities for the six months ended June 30, 2009 was primarily due to the issuance of the $250.0 million 6.0% convertible senior subordinated notes due April 2014 and $15.0 million received from our working capital facility in China. We used $158.8 million in cash, $135.0 million of which was from debt proceeds, to repurchase an aggregate $177.3 million principal amount of our 7.125% senior notes and 2.5% convertible senior subordinated notes due 2011. In the six months ended June 30, 2009 we also incurred $8.5 million in debt issuance costs related to the issuance of convertible notes and the amendment and extension of our $100.0 million first lien revolving credit facility to April 2013. In February 2008, we repaid the remaining $88.2 million of our 9.25% senior notes at maturity. We received $9.8 million in proceeds from the issuance of stock through our stock compensation plans in the six months ended June 30, 2008.
 
We provide the following supplemental data to assist our investors and analysts in understanding our liquidity and capital resources. We define free cash flow as net cash provided by operating activities less investing activities related to the acquisition of property, plant and equipment. Free cash flow is not defined by U.S. GAAP and our definition of free cash flow may not be comparable to similar companies and should not be considered a substitute for cash flow measures in accordance with U.S. GAAP. We believe free cash flow provides our investors and analysts useful information to analyze our liquidity and capital resources.
 
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 	 	For the Six
	 	
 	 	Months Ended
	 	
 	 	June 30,	 	
 	 	2009	 	 	2008	 	
 	 	(In thousands)	 	
 	 	 	 	 	 	 	 	 	
Net cash provided by operating activities	 	$	33,358	 	 	$	284,698	 	
Purchases of property, plant and equipment	 	 	(69,955	)	 	 	(190,870	)	
 	 	 	 	 	 	 	 	 	
Free cash flow	 	$	(36,597	)	 	$	93,828	 	

Capital Additions and Contractual Obligations
 
Our capital additions for the six months ended June 30, 2009 were $51.6 million. We expect that our full year 2009 capital additions will be approximately $150 million, as discussed above in the “Overview.” Ultimately, the amount of our 2009 capital additions will depend on several factors including, among others, the performance of our business, the need for additional capacity to service customer demand and the availability of suitable cash flow from operations or financing. The following table reconciles our activity related to property, plant and equipment purchases as presented on the Condensed Consolidated Statements of Cash Flows to property, plant and equipment additions reflected on the Consolidated Balance Sheets:

 	 	For the Six
	 	
 	 	Months Ended
	 	
 	 	June 30,	 	
 	 	2009	 	 	2008	 	
 	 	(In thousands)	 	
 	 	 	 	 	 	 	 	 	
Purchases of property, plant, and equipment	 	$	69,955	 	 	$	190,870	 	
Net change in related accounts payable and deposits	 	 	(18,306	)	 	 	26,648	 	
 	 	 	 	 	 	 	 	 	
Property, plant and equipment additions	 	$	51,649	 	 	$	217,518	 	

The following table summarizes our contractual obligations at June 30, 2009, and the effect such obligations are expected to have on our liquidity and cash flow in future periods:

 	 	 	 	 	Payments Due For Year Ending December 31,	 	
 	 	Total	 	 	2009 — Remaining	 	 	2010	 	 	2011	 	 	2012	 	 	2013	 	 	Thereafter	 	
 	 	(In thousands)	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total debt(1)	 	$	1,554,175	 	 	$	27,318	 	 	$	69,684	 	 	$	187,848	 	 	$	43,041	 	 	$	564,856	 	 	$	661,428	 	
Scheduled interest payment obligations(2)	 	 	524,883	 	 	 	58,935	 	 	 	108,839	 	 	 	99,595	 	 	 	95,211	 	 	 	70,443	 	 	 	91,860	 	
Purchase obligations(3)	 	 	26,192	 	 	 	26,192	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Operating lease obligations	 	 	48,677	 	 	 	5,272	 	 	 	9,704	 	 	 	6,959	 	 	 	5,282	 	 	 	5,396	 	 	 	16,064	 	
Severance obligations(4)	 	 	103,194	 	 	 	3,726	 	 	 	7,260	 	 	 	7,405	 	 	 	7,553	 	 	 	7,704	 	 	 	69,546	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total contractual obligations	 	$	2,257,121	 	 	$	121,443	 	 	$	195,487	 	 	$	301,807	 	 	$	151,087	 	 	$	648,399	 	 	$	838,898	 	

 
 	 	 	
(1)	 	The increase in our total debt from the Annual Report on Form 10-K as of December 31, 2008, is primarily due to the issuance of $250.0 million of our 6.0% convertible senior subordinated notes in April 2009, which is partially offset by the repurchase of an aggregate $177.3 million principal amount due of our 7.125% senior notes and 2.5% convertible senior subordinated notes due 2011 and the repayment of $27.2 million of annual amortizing debt.	
 	 	 	
(2)	 	Scheduled interest payment obligations were calculated using stated coupon rates for fixed rate debt and interest rates applicable at June 30, 2009 for variable rate debt.	
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(3)	 	Represents capital-related purchase obligations in addition to accounts payable outstanding at June 30, 2009 for capital additions.	
 	 	 	
(4)	 	Represents estimated benefit payments for our Korean subsidiary severance plan.	
 
In addition to the obligations identified in the table above, other non-current liabilities recorded in our Consolidated Balance Sheet at June 30, 2009 include:

 	• 	$23.0 million of foreign pension plan obligations for which the timing and actual amount of funding required is uncertain. We expect to contribute $6.8 million to the defined benefit pension plans during the remainder of 2009.	
 	 	 	
 	• 	$13.9 million of customer advances which relate to supply agreements with customers that commit to capacity in exchange for customer prepayment of services. Generally, customers forfeit the prepayment if our capacity is not utilized per contract terms.	
 	 	 	
 	• 	$11.7 million net liability associated with $22.9 million of gross unrecognized tax benefits, which does not generally represent future cash payments because of the interaction with other available tax attributes, such as net operating loss or tax credit carryforwards. Due to the high degree of uncertainty regarding the amount and the timing of any future cash outflows associated with our unrecognized tax benefits, we are unable to reasonably estimate the amount and period of ultimate settlement, if any, with the various taxing authorities.	
 
Off-Balance Sheet Arrangements
 
As of June 30, 2009, we had no off-balance sheet guarantees or other off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of SEC Regulation S-K, other than our operating leases. During the six months ended June 30, 2009, there have been no significant changes in our lease commitments as reported in our 2008 Annual Report on Form 10-K.
 
Contingencies, Indemnifications and Guarantees
 
We refer you to Note 13 “Commitments and Contingencies” to our Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report for a discussion of our contingencies related to our securities litigation and other litigation and legal matters. If an unfavorable ruling were to occur in these matters, there exists the possibility of a material adverse impact on our business, liquidity, results of operations, financial position and cash flows in the period in which the ruling occurs. The potential impact from legal proceedings on our business, liquidity, results of operations, financial position and cash flows, could change in the future.
 
Critical Accounting Policies
 
Our critical accounting policies are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2008. During the six months ended June 30, 2009, there have been no significant changes in our critical accounting policies as reported in our 2008 Annual Report on Form 10-K.
 
New Accounting Pronouncements
 
For information regarding recent accounting pronouncements, see Note 2 to the Consolidated Financial Statements included within Part I, Item 1 of this Quarterly Report.

Item 3.  	Quantitative and Qualitative Disclosures about Market Risk	
 
Market Risk Sensitivity
 
We are exposed to market risks, primarily related to foreign currency and interest rate fluctuations. In the normal course of business, we employ established policies and procedures to manage the exposure to fluctuations in foreign currency values and changes in interest rates. Our use of derivative instruments, including forward exchange contracts, has been historically insignificant; however, we continue to evaluate the use of hedge instruments to manage currency and other risk. We have not entered into any derivative transactions in the six months ended June 30, 2009 and have no outstanding contracts as of June 30, 2009.
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Foreign Currency Risks
 
We currently do not have forward contracts or other instruments to reduce our exposure to foreign currency gains and losses. To the extent possible, we have managed our foreign currency exposures by using natural hedging techniques to minimize the foreign currency rate risk.
 
The U.S. dollar is our reporting currency and the functional currency for the majority of our foreign subsidiaries including our largest subsidiaries in Korea and the Philippines and also our subsidiaries in China and Singapore. For our subsidiaries in Japan and Taiwan, the local currency is the functional currency. We have foreign currency exchange rate risk associated with the remeasurement of monetary assets and monetary liabilities on our Consolidated Balance Sheet that are denominated in currencies other than the functional currency. The most significant foreign denominated monetary asset or liability is our Korean severance obligation which represents approximately 76% of the net monetary exposure. We performed a sensitivity analysis of our foreign currency exposure as of June 30, 2009, to assess the potential impact of fluctuations in exchange rates for all foreign denominated assets and liabilities. Assuming a 10% adverse movement for all currencies against the U.S. dollar as of June 30, 2009, our loss before income taxes would have been approximately $15.2 million higher.
 
In addition, we have foreign currency exchange rate exposure on our results of operations. For the six months ended June 30, 2009, approximately 73% of our net sales were denominated in U.S. dollars. Our remaining net sales were principally denominated in Japanese yen, Korean won and Taiwanese dollars for local country sales. For the six months ended June 30, 2009, approximately 53% of our cost of sales and operating expenses were denominated in U.S. dollars and were largely for raw materials and factory supplies. The remaining portion of our cost of sales and operating expenses was principally denominated in the Asian currency where our production facilities are located and was largely for labor and utilities. To the extent that the U.S. dollar weakens against these Asian-based currencies, similar foreign currency denominated transactions in the future will result in higher sales and higher operating expenses. Similarly, our sales and operating expenses will decrease if the U.S. dollar strengthens against these foreign currencies. We performed a sensitivity analysis of our foreign currency exposure as of June 30, 2009 to assess the potential impact of fluctuations in exchange rates for all foreign denominated sales and expenses. Assuming a 10% adverse movement from the six months ended June 30, 2009 exchange rates of the U.S. dollar compared to all of these Asian-based currencies as of June 30, 2009, our operating loss would have been approximately $24.6 million higher.
 
We have foreign currency exchange rate exposure on our stockholders’ equity as a result of the translation of our subsidiaries in Japan and Taiwan where the local currency is the functional currency. To the extent the U.S. dollar strengthens against the Japanese yen and the Taiwanese dollar, the translation of these foreign currency denominated transactions will result in reduced sales, operating expenses, assets and liabilities. Similarly, our sales, operating expenses, assets and liabilities will increase if the U.S. dollar weakens against the Japanese yen and the Taiwanese dollar. The effect of foreign exchange rate translation on our Consolidated Balance Sheet for the six months ended June 30, 2009 and 2008 was a net foreign translation loss of $1.6 million and a gain of $23.8 million, respectively, and was recognized as an adjustment to equity through other comprehensive (loss) income.
 
There are inherent limitations in the sensitivity analysis presented, primarily due to the assumption that foreign exchange rate movements across multiple jurisdictions are similar and would be linear and instantaneous. As a result, the analysis is unable to reflect the potential effects of more complex market or other changes that could arise which may positively or negatively affect our results of operations.
 
Interest Rate Risks
 
We have interest rate risk with respect to our long-term debt. As of June 30, 2009, we had a total of $1,544.2 million of debt of which 84.1% was fixed rate debt and 15.9% was variable rate debt. Our variable rate debt principally relates to our foreign borrowings and any amounts outstanding under our $100.0 million revolving line of credit, of which no amounts were drawn as of June 30, 2009. The fixed rate debt consists of senior notes, senior subordinated notes and subordinated notes. As of December 31, 2008, we had a total of $1,493.4 million of debt of which 82.6% was fixed rate debt and 17.4% was variable rate debt.
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The table below presents the interest rates and maturities of our fixed and variable rate debt as of June 30, 2009:

 	 	2009 - Remaining	 	2010	 	2011	 	2012	 	2013	 	Thereafter	 	Total	 	Fair Value	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Long term debt:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Fixed rate debt (In thousands)	 	$	—	 	 	$	—	 	 	$	144,288	 	 	$	—	 	 	$	522,000	 	 	$	640,000	 	 	$	1,306,288	 	 	$	1,388,937	 	
Average interest rate	 	 	0.0	%	 	 	0.0	%	 	 	5.8	%	 	 	0.0	%	 	 	7.5	%	 	 	8.0	%	 	 	7.5	%	 	 	 	 	
Variable rate debt (In thousands)	 	$	27,318	 	 	$	69,684	 	 	$	43,560	 	 	$	43,041	 	 	$	42,856	 	 	$	21,428	 	 	$	247,887	 	 	$	239,940	 	
Average interest rate	 	 	5.1	%	 	 	4.7	%	 	 	5.7	%	 	 	5.7	%	 	 	5.7	%	 	 	5.7	%	 	 	5.3	%	 	 	 	 	
 
For information regarding the fair value of our long-term debt, see Note 15 to the Consolidated Financial Statements included within Part I, Item 1 of this Quarterly Report.
 
Equity Price Risks
 
We have convertible notes that are convertible into our common stock. We currently intend to repay our remaining convertible notes upon maturity, unless converted, repurchased or refinanced. If investors were to decide to convert their notes to common stock, our future earnings would benefit from a reduction in interest expense and our common stock outstanding would increase. If we paid a premium to induce such conversion, our earnings could include an additional charge.
 
Further, the trading price of our common stock has been and is likely to continue to be highly volatile and could be subject to wide fluctuations. Such fluctuations could impact our decision or ability to utilize the equity markets as a potential source of our funding needs in the future.

Item 4.  	Controls and Procedures	
 
Evaluation of Disclosure Controls and Procedures
 
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic reports to the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure, based on the definition of “disclosure controls and procedures” in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended. In designing and evaluating the disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.
 
We carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2009 and concluded those disclosure controls and procedures were effective as of that date.
 
Changes in Internal Control Over Financial Reporting
 
There were no changes in our internal control over financial reporting that occurred during the three months ended June 30, 2009 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.
 
As previously reported, we are implementing a new enterprise resource planning (“ERP”) system in a multi-year program on a company-wide basis. We do not expect to have any changes in our internal control over financial reporting with respect to this ERP implementation until 2010 when the next phase of modules will be implemented.
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PART II. OTHER INFORMATION

Item 1.  	Legal Proceedings	
 
Information about legal proceedings is set forth in Note 13 to the Consolidated Financial Statements included in this Quarterly Report.

Item 1A.  	Risk Factors	
 
The factors discussed below are cautionary statements that identify important factors and risks that could cause actual results to differ materially from those anticipated by the forward-looking statements contained in this report. For more information regarding the forward-looking statements contained in this report, see the introductory paragraph to Part I, Item 2 of this Quarterly Report. You should carefully consider the risks and uncertainties described below, together with all of the other information included in this report, in considering our business and prospects. The risks and uncertainties described below are not the only ones facing Amkor. Additional risks and uncertainties not presently known to us also may impair our business operations. The occurrence of any of the following risks could affect our business, liquidity, results of operations, financial condition or cash flows.
 
Dependence on the Highly Cyclical Semiconductor and Electronic Products Industries — We Operate in Volatile Industries and Industry Downturns and Declines in Global Economic and Financial Conditions Could Harm Our Performance.
 
Our business reflects the market conditions in the semiconductor industry, which is cyclical by nature. The semiconductor industry has experienced significant and sometimes prolonged downturns in the past, and the recent financial crisis and adverse conditions in the global economy have resulted in a downturn in the semiconductor industry. Reduced economic activity due to the global recession and decreased consumer spending, reduced corporate profits and capital spending, adverse business conditions and liquidity and concerns about inflation and deflation are adversely impacting demand for our services, creating downward pressure on prices and have made it more difficult for us to accurately forecast and plan future business activities.
 
As a result of the current weak global economic conditions and uncertainty in the credit markets, our customers and suppliers may face liquidity issues and difficulty gaining timely access to sufficient credit, which could impair our customers’ ability to make timely payments to us and could cause key suppliers to delay shipments and face serious risks of insolvency.
 
Since our business is, and will continue to be, dependent on the requirements of semiconductor companies for subcontracted packaging and test services, any significant downturn in the semiconductor industry or any other industry that uses a significant number of semiconductor devices, such as consumer electronic products, telecommunication devices, or computing devices, could have a material adverse effect on our business and operating results. It is difficult to predict the timing, strength or duration of any economic slowdown or subsequent economic recovery, and if industry conditions deteriorate further, we could suffer significant losses, as we have in the past, which could materially and adversely impact our business, liquidity, results of operations, financial condition and cash flows.
 
Fluctuations in Operating Results and Cash Flows — Our Operating Results and Cash Flows Have Varied and May Vary Significantly as a Result of Factors That We Cannot Control.
 
Many factors, including the impact of current adverse economic conditions, could materially and adversely affect our net sales, gross profit, operating results and cash flows, or lead to significant variability of quarterly or annual operating results. Our profitability and ability to generate cash from operations is principally dependent upon demand for semiconductors, the utilization of our capacity, semiconductor package mix, the average selling price of our services, our ability to manage our capital expenditures in response to market conditions and control our costs including labor, material, overhead and financing costs. The recent downturn in demand for semiconductors has resulted in declines in our operating results and cash flows as our capacity utilization rates have declined.
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Our operating results and cash flows have varied significantly from period to period. Our net sales, gross margins, operating income and cash flows have historically fluctuated significantly as a result of many of the following factors, over which we have little or no control and which we expect to continue to impact our business:

 	• 	fluctuation in demand for semiconductors and conditions in the semiconductor industry;	
 	 	 	
 	• 	changes in our capacity utilization rates;	
 	 	 	
 	• 	changes in average selling prices;	
 	 	 	
 	• 	changes in the mix of semiconductor packages;	
 	 	 	
 	• 	evolving package and test technology;	
 	 	 	
 	• 	absence of backlog and the short-term nature of our customers’ commitments and the impact of these factors on the timing and volume of orders relative to our production capacity;	
 	 	 	
 	• 	changes in costs, availability and delivery times of raw materials and components;	
 	 	 	
 	• 	changes in labor costs to perform our services;	
 	 	 	
 	• 	wage and commodity price inflation;	
 	 	 	
 	• 	the timing of expenditures in anticipation of future orders;	
 	 	 	
 	• 	changes in effective tax rates;	
 	 	 	
 	• 	the availability and cost of financing;	
 	 	 	
 	• 	intellectual property transactions and disputes;	
 	 	 	
 	• 	high leverage and restrictive covenants;	
 	 	 	
 	• 	warranty and product liability claims and the impact of quality excursions and customer disputes and returns;	
 	 	 	
 	• 	costs associated with litigation judgments, indemnification claims and settlements;	
 	 	 	
 	• 	international events, political instability, civil disturbances or environmental or natural events, such as earthquakes, that impact our operations;	
 	 	 	
 	• 	labor force impact and travel restrictions resulting from pandemic illnesses;	
 	 	 	
 	• 	difficulties integrating acquisitions;	
 	 	 	
 	• 	our ability to attract and retain qualified employees to support our global operations and loss of key personnel or the shortage of available skilled workers;	
 	 	 	
 	• 	fluctuations in foreign exchange rates;	
 	 	 	
 	• 	delay, rescheduling and cancellation of large orders; and	
 	 	 	
 	• 	fluctuations in our manufacturing yields.	
 
It is often difficult to predict the impact of these factors upon our results for a particular period. The downturn in the global economy and the semiconductor industry has increased the risks associated with the foregoing factors as customer forecasts have become more volatile, and there is less visibility regarding future demand and significantly increased uncertainty regarding the economy, credit markets, and consumer demand. Although we are seeing signs of recovery in recent increases in customer demand and capacity utilization, it is uncertain whether these increases will be sustained. These factors may materially and adversely affect our business, liquidity, results of operations, financial condition and cash flows, or lead to significant variability of quarterly or annual operating results. In addition, these factors may adversely affect our credit ratings which could make it more difficult and expensive for us to raise capital and could adversely affect the price of our securities.
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High Fixed Costs — Due to Our High Percentage of Fixed Costs, We Will Be Unable to Maintain Our Gross Margin at Past Levels if We Are Unable to Achieve Relatively High Capacity Utilization Rates.
 
Our operations are characterized by relatively high fixed costs. Our profitability depends in part not only on pricing levels for our packaging and test services, but also on the utilization rates for our packaging and test equipment, commonly referred to as “capacity utilization rates.” In particular, increases or decreases in our capacity utilization rates can significantly affect gross margins since the unit cost of packaging and test services generally decreases as fixed costs are allocated over a larger number of units. In periods of low demand, we experience relatively low capacity utilization rates in our operations, which lead to reduced margins during that period. We have recently experienced lower than optimum utilization rates in our operations due to a decline in world-wide demand for our packaging and test services which have reduced our gross margin. Although our capacity utilization rates at times have been strong, we cannot assure that we will be able to achieve consistently high capacity utilization rates, and if we fail to do so, our gross margin may decrease. If our gross margin decreases, our business, liquidity, results of operations, financial condition and cash flows could be materially and adversely affected. The lower levels of demand we have experienced in the current recession have significantly lowered utilization rates in our manufacturing operations and reduced our gross margin.
 
In addition, our fixed operating costs have increased in recent years in part as a result of our efforts to expand our capacity through significant capital additions. Forecasted customer demand for which we have made capital investments may not materialize. As a result, our sales may not adequately cover our substantial fixed costs resulting in reduced profit levels or causing significant losses, both of which may adversely impact our liquidity, results of operations, financial condition and cash flows. Additionally, we could suffer significant losses if industry conditions deteriorate further, which could materially and adversely impact our business, liquidity, results of operations, financial position and cash flows.
 
Guidance — Our Failure to Meet Our Guidance or Analyst Projections Could Adversely Impact the Trading Prices of Our Securities.
 
We periodically provide guidance to investors with respect to certain financial information for future periods. Securities analysts also periodically publish their own projections with respect to our future operating results. As discussed above under “Fluctuations in Operating Results and Cash Flows — Our Operating Results and Cash Flows Have Varied and May Vary Significantly as a Result of Factors That We Cannot Control,” our operating results and cash flows vary significantly and are difficult to accurately predict. To the extent we fail to meet or exceed our own guidance or the analyst projections for any reason, the trading prices of our securities may be adversely impacted. Moreover, even if we do meet or exceed that guidance or those projections, the analysts and investors may not react favorably, and the trading prices of our securities may be adversely impacted.
 
Declining Average Selling Prices — The Semiconductor Industry Places Downward Pressure on the Prices of Our Packaging and Test Services.
 
Prices for packaging and test services have generally declined over time. Historically, we have been able to partially offset the effect of price declines by successfully developing and marketing new packages with higher prices, such as advanced leadframe and laminate packages, by negotiating lower prices with our material vendors, recovering material cost increases from our customers, and by driving engineering and technological changes in our packaging and test processes which resulted in reduced manufacturing costs. We are experiencing general downward pressure on average selling prices for our packaging and test services. If we are unable to offset a decline in average selling prices, including developing and marketing new packages with higher prices, reducing our purchasing costs, recovering more of our material cost increases from our customers and reducing our manufacturing costs, our business, liquidity, results of operations, financial condition and cash flows could be materially and adversely affected.
 
Decisions by Our IDM Customers to Curtail Outsourcing May Adversely Affect Our Business.
 
Historically, we have been dependent on the trend in outsourcing of packaging and test services by integrated device manufacturers (“IDM”). Our IDM customers continually evaluate the outsourced services against their own
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in-house packaging and test services. As a result, at any time and for a variety of reasons, IDMs may decide to shift some or all of their outsourced packaging and test services to internally sourced capacity.
 
The reasons IDMs may shift their internal capacity include:

 	• 	their desire to realize higher utilization of their existing test and packaging capacity, especially during downturns in the semiconductor industry;	
 	 	 	
 	• 	their unwillingness to disclose proprietary technology;	
 	 	 	
 	• 	their possession of more advanced packaging and test technologies; and	
 	 	 	
 	• 	the guaranteed availability of their own packaging and test capacity.	
 
Furthermore, to the extent we limit capacity commitments for certain customers, these customers may begin to increase their level of in-house packaging and test capabilities, which could adversely impact our sales and profitability and make it more difficult for us to regain their business when we have available capacity. Any shift or a slowdown in this trend of outsourcing packaging and test services is likely to adversely affect our business, liquidity, results of operations, financial condition and cash flows.
 
In a downturn in the semiconductor industry, IDMs could respond by shifting some outsourced packaging and test services to internally serviced capacity on a short term basis. During the current recession we have experienced some lower demand from IDMs. If we experience a significant loss of IDM business as a result of a prolonged industry downturn, it could have a material adverse effect on our business, liquidity, results of operations, financial condition and cash flows especially during a prolonged industry downturn.
 
Our Substantial Indebtedness Could Adversely Affect Our Financial Condition and Prevent Us from Fulfilling Our Obligations.
 
We now have, and for the foreseeable future will continue to have, a significant amount of indebtedness. As of June 30, 2009, our total debt balance was $1,554.2 million, of which $69.7 million was classified as a current liability. In addition, despite current debt levels, the terms of the indentures governing our indebtedness allow us or our subsidiaries to incur more debt, subject to certain limitations. If new debt is added to our consolidated debt level, the related risks that we now face could intensify.
 
Our substantial indebtedness could:

 	• 	make it more difficult for us to satisfy our obligations with respect to our indebtedness, including our obligations under our indentures to purchase notes tendered as a result of a change in control of Amkor;	
 	 	 	
 	• 	increase our vulnerability to general adverse economic and industry conditions;	
 	 	 	
 	• 	limit our ability to fund future working capital, capital expenditures, research and development and other general corporate requirements;	
 	 	 	
 	• 	require us to dedicate a substantial portion of our cash flow from operations to service payments on our debt;	
 	 	 	
 	• 	limit our flexibility to react to changes in our business and the industry in which we operate;	
 	 	 	
 	• 	place us at a competitive disadvantage to any of our competitors that have less debt; and	
 	 	 	
 	• 	limit, along with the financial and other restrictive covenants in our indebtedness, among other things, our ability to borrow additional funds.	
 
Ability to Fund Liquidity Needs.
 
We operate in a capital intensive industry. Servicing our current and future customers requires that we incur significant operating expenses and continue to make significant capital expenditures, which are generally made in advance of the related revenues and without any firm customer commitments. During the six months ended June 30, 2009, we had capital additions of $51.6 million and for the full year 2009 we expect to make capital additions of approximately $150 million.
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In addition, we have a significant level of debt, with $1,554.2 million outstanding at June 30, 2009, $69.7 million of which is current. The terms of such debt require significant scheduled principal payments in the coming years, including $27.3 million due during the remainder of 2009, $69.7 million due in 2010, $187.9 million due in 2011, $43.0 million due in 2012, $564.9 million due in 2013 and $661.4 million due thereafter. The interest payments required on our debt are also substantial. For example, in the six months ended June 30, 2009, we paid $60.3 million of interest. The source of funding for our operations, including making capital expenditures and servicing principal and interest obligations with respect to our debt, are cash flows from our operations, current cash and cash equivalents, borrowings under available debt facilities, or proceeds from any additional debt or equity financing. As of June 30, 2009, we had cash and cash equivalents of $455.3 million and $99.6 million available under our senior secured revolving credit facility.
 
We assess our liquidity based on our current expectations regarding sales, operating expenses, capital spending and debt service requirements. Based on this assessment, we believe that our cash flow from operating activities together with existing cash and cash equivalents will be sufficient to fund our working capital, capital expenditure and debt service requirements for at least the next twelve months. Thereafter, our liquidity will continue to be affected by, among other things, the performance of our business, our capital expenditure levels and our ability to repay debt out of our operating cash flow or refinance the debt with the proceeds of debt or equity offerings at or prior to maturity. Moreover, a global economic recession has adversely affected the worldwide banking system and financial markets and resulted in uncertainty in the credit markets, a low level of liquidity in financial markets, and volatility in fixed income, credit and equity markets which could make it difficult for us to maintain our existing credit facilities or refinance our debt. If our performance or access to the capital markets differs materially from our expectations, our liquidity may be adversely impacted.
 
In addition, if we fail to generate the necessary net income or operating cash flows to meet the funding needs of our business beyond the next twelve months due to a variety of factors, including the cyclical nature of the semiconductor industry, the current economic recession and the other factors discussed in this “Risk Factors” section, our liquidity would be adversely affected.
 
Our Ability To Draw On Our Current Loan Facilities May Be Adversely Affected by Conditions in the U.S. and International Capital Markets.
 
If financial institutions that have extended credit commitments to us are adversely affected by the conditions of the U.S. and international capital markets, they may become unable to fund borrowings under their credit commitments to us. For example, we currently have a $100.0 million revolving credit facility with three banks in the U.S. and a $50.0 million working capital facility with a Chinese bank. If any of these banks are adversely affected by capital market conditions and are unable to make loans to us when requested, there could be a corresponding adverse impact on our financial condition and our ability to borrow additional funds, if needed, for working capital, capital expenditures, acquisitions, research and development and other corporate purposes.
 
Restrictive Covenants in the Indentures and Agreements Governing Our Current and Future Indebtedness Could Restrict Our Operating Flexibility.
 
The indentures and agreements governing our existing debt, and debt we may incur in the future, contain, or may contain, affirmative and negative covenants that materially limit our ability to take certain actions, including our ability to incur debt, pay dividends and repurchase stock, make certain investments and other payments, enter into certain mergers and consolidations, engage in sale leaseback transactions and encumber and dispose of assets. The $671.1 million write-off of our goodwill at December 31, 2008 has significantly reduced our ability to pay dividends and repurchase stock and subordinated securities, including our convertible notes, due to defined calculations which include net income. In addition, our future debt agreements may contain financial covenants and ratios.
 
The breach of any of these covenants by us or the failure by us to meet any of these ratios or conditions could result in a default under any or all of such indebtedness. If a default occurs under any such indebtedness, all of the outstanding obligations thereunder could become immediately due and payable, which could result in a default under our other outstanding debt and could lead to an acceleration of obligations related to other outstanding debt.
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The existence of such a default or event of default could also preclude us from borrowing funds under our revolving credit facilities. Our ability to comply with the provisions of the indentures, credit facilities and other agreements governing our outstanding debt and indebtedness we may incur in the future can be affected by events beyond our control and a default under any debt instrument, if not cured or waived, could have a material adverse effect on us.
 
We Have Significant Severance Plan Obligations Associated With Our Manufacturing Operations in Korea Which Could Reduce Our Cash Flow and Negatively Impact Our Financial Condition.
 
We sponsor an accrued severance plan in our Korean subsidiary. Under the Korean plan, eligible employees are entitled to receive a lump sum payment upon termination of their employment based on their length of service, seniority and rate of pay at the time of termination. In addition, and in accordance with severance plan regulations in Korea, employers may pay employees earned benefits prior to terminating their employment with us. In January 2009, we paid $31.6 million of such interim benefits using cash on hand. Our severance plan obligation is significant and in the event of a reduction in force or other termination of employment in our Korean facilities, payments under the plan could have a material adverse effect on our liquidity, financial condition and cash flows. See Note 12 to our Consolidated Financial Statements included in this Quarterly Report.
 
If We Fail to Maintain an Effective System of Internal Controls, We May Not be Able to Accurately Report Financial Results or Prevent Fraud.
 
Effective internal controls are necessary to provide reliable financial reports and to assist in the effective prevention of fraud. Any inability to provide reliable financial reports or prevent fraud could harm our business. We must annually evaluate our internal procedures to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which requires management and auditors to assess the effectiveness of internal control over financial reporting. If we fail to remedy or maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we could be subject to regulatory scrutiny, civil or criminal penalties or shareholder litigation.
 
In addition, failure to maintain adequate internal controls could result in financial statements that do not accurately reflect our operating results or financial condition.
 
We Face Product Return and Liability Risks, the Risk of Economic Damage Claims and the Risk of Negative Publicity if Our Packages Fail .
 
Our packages are incorporated into a number of end products, and our business is exposed to product return and liability risks, the risk of economic damage claims and the risk of negative publicity if our packages fail.
 
In addition, we are exposed to the product and economic liability risks and the risk of negative publicity affecting our customers. Our sales may decline if any of our customers are sued on a product liability claim. We also may suffer a decline in sales from the negative publicity associated with such a lawsuit or with adverse public perceptions in general regarding our customers’ products. Further, if our packages are delivered with impurities or defects, we could incur additional development, repair or replacement costs, suffer other economic losses and our credibility and the market’s acceptance of our packages could be harmed.
 
Absence of Backlog — The Lack of Contractually Committed Customer Demand May Adversely Affect Our Sales.
 
Our packaging and test business does not typically operate with any material backlog. Our quarterly net sales from packaging and test services are substantially dependent upon our customers’ demand in that quarter. None of our customers have committed to purchase any significant amount of packaging or test services or to provide us with binding forecasts of demand for packaging and test services for any future period, in any material amount. In addition, our customers often reduce, cancel or delay their purchases of packaging and test services for a variety of reasons including industry-wide, customer-specific and Amkor-related reasons. Since a large portion of our costs is fixed and our expense levels are based in part on our expectations of future revenues, we may not be able to adjust costs in a timely manner to compensate for any sales shortfall. If we are unable to do so, it would adversely affect our margins, operating results, financial condition and cash flows. If the decline in customer demand continues, our
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business, liquidity, results of operations, financial condition and cash flows will be materially and adversely affected.
 
Risks Associated With International Operations — We Depend on Our Factories and Operations in China, Japan, Korea, the Philippines, Singapore and Taiwan. Many of Our Customers’ and Vendors’ Operations Are Also Located Outside of the U.S.
 
We provide packaging and test services through our factories and other operations located in China, Japan, Korea, the Philippines, Singapore and Taiwan. Although we do not derive any revenue from, nor sell any packages in North Korea, any future increase in tensions between South Korea and North Korea which may occur, for example, an outbreak of military hostilities, could adversely affect our business, liquidity, results of operations, financial condition and cash flows. Moreover, many of our customers’ and vendors’ operations are located outside the U.S. The following are some of the risks inherent in doing business internationally:

 	• 	changes in consumer demand resulting from deteriorating conditions in local economies;	
 	 	 	
 	• 	regulatory limitations imposed by foreign governments, including limitations or taxes imposed on the payment of dividends and other payments by non-U.S. subsidiaries;	
 	 	 	
 	• 	fluctuations in currency exchange rates;	
 	 	 	
 	• 	political, military, civil unrest and terrorist risks;	
 	 	 	
 	• 	disruptions or delays in shipments caused by customs brokers or government agencies;	
 	 	 	
 	• 	changes in regulatory requirements, tariffs, customs, duties and other restrictive trade barriers or policies;	
 	 	 	
 	• 	difficulties in staffing and managing foreign operations; and	
 	 	 	
 	• 	potentially adverse tax consequences resulting from changes in tax laws.	
 
Changes in the U.S. Tax Law Regarding Earnings of Our Subsidiaries Located Outside of the U.S. Could Materially Affect Our Future Results.
 
There have been proposals to change U.S. tax laws that would significantly impact how U.S. corporations are taxed on foreign earnings. We earn a substantial portion of our income in foreign countries. Although we cannot predict whether or in what form this proposed legislation will pass, if enacted it could have a material adverse impact on our liquidity, results of operations, financial condition and cash flows.
 
Our Management Information Systems May Prove Inadequate — We Face Risks in Connection With Our Current Project to Install a New Enterprise Resource Planning System For Our Business.
 
We depend on our management information systems for many aspects of our business. Some of our key software has been developed by our own programmers, and this software may not be easily integrated with other software and systems. We are implementing a new enterprise resource planning system to replace many of our existing systems at significant locations. We face risks in connection with our current project to install a new enterprise resource system for our business. These risks include:

 	• 	we may face delays in the design and implementation of the system;	
 	 	 	
 	• 	the cost of the system may exceed our plans and expectations; and	
 	 	 	
 	• 	disruptions resulting from the implementation of the system may damage our ability to process transactions and delay shipments to customers, impact our results of operations or financial condition, or harm our control environment.	
 
Our business could be materially and adversely affected if our management information systems are disrupted or if we are unable to improve, upgrade, integrate or expand upon our systems, particularly in light of our intention to continue to implement a new enterprise resource planning system over a multi-year program on a company-wide basis.
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We Face Risks Trying to Attract and Retain Qualified Employees to Support Our Operations.
 
Our success depends to a significant extent upon the continued service of our key senior management and technical personnel, any of whom may be difficult to replace. Competition for qualified employees is intense, and our business could be adversely affected by the loss of the services of any of our existing key personnel, including senior management, as a result of competition or for any other reason. We evaluate our management team and engage in long-term succession planning in order to ensure orderly replacement of key personnel. We do not have employment agreements with our key employees, including senior management or other contracts that would prevent our key employees from working for our competitors in the event they cease working for us. We cannot assure you that we will be successful in these efforts or in hiring and properly training sufficient numbers of qualified personnel and in effectively managing our growth. Our inability to attract, retain, motivate and train qualified new personnel could have a material adverse effect on our business.
 
Difficulties Consolidating and Evolving Our Operational Capabilities — We Face Challenges as We Integrate Diverse Operations.
 
We have experienced, and expect to continue to experience, change in the scope and complexity of our operations primarily through facility consolidations, strategic acquisitions, joint ventures and other partnering arrangements and may continue to engage in such transactions in the future. For example, each business we have acquired had, at the time of acquisition, multiple systems for managing its own production, sales, inventory and other operations. Migrating these businesses to our systems typically is a slow, expensive process requiring us to divert significant amounts of resources from multiple aspects of our operations. These changes have strained our managerial, financial, plant operations and other resources. Future consolidations and expansions may result in inefficiencies as we integrate operations and manage geographically diverse operations.
 
Dependence on Materials and Equipment Suppliers — Our Business May Suffer If the Cost, Quality or Supply of Materials or Equipment Changes Adversely.
 
We obtain from various vendors the materials and equipment required for the packaging and test services performed by our factories. We source most of our materials, including critical materials such as leadframes, laminate substrates and gold wire, from a limited group of suppliers. Furthermore, we purchase the majority of our materials on a purchase order basis. From time to time, we enter into supply agreements, generally up to one year in duration, to guarantee supply to meet projected demand. Our business may be harmed if we cannot obtain materials and other supplies from our vendors in a timely manner, in sufficient quantities, in acceptable quality or at competitive prices.
 
We purchase new packaging and test equipment to maintain and expand our operations. From time to time, increased demand for new equipment may cause lead times to extend beyond those normally required by equipment vendors. For example, in the past, increased demand for equipment caused some equipment suppliers to only partially satisfy our equipment orders in the normal time frame or to increase prices during market upturns for the semiconductor industry. The unavailability of equipment or failures to deliver equipment could delay or impair our ability to meet customer orders. If we are unable to meet customer orders, we could lose potential and existing customers. Generally, we do not enter into binding, long-term equipment purchase agreements and we acquire our equipment on a purchase order basis, which exposes us to substantial risks. For example, changes in foreign currency exchange rates could result in increased prices for equipment purchased by us, which could have a material adverse effect on our results of operations.
 
We are a large buyer of gold and other commodity materials including substrates and copper. The prices of gold and other commodities used in our business fluctuate. Historically, we have been able to partially offset the effect of commodity price increases through price adjustments to some customers and changes in our product designs. Significant price increases may adversely impact our gross margin in future quarters to the extent we are unable to pass along past or future commodity price increases to our customers.
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Loss of Customers — The Loss of Certain Customers or Reduced Orders From Certain Customers May Have a Significant Adverse Effect on Our Operations and Financial Results.
 
The loss of a large customer or disruption of our strategic partnerships or other commercial arrangements may result in a decline in our sales and profitability. Although we have over 200 customers, we have derived and expect to continue to derive a large portion of our revenues from a small group of customers during any particular period due in part to the concentration of market share in the semiconductor industry. Our ten largest customers together accounted for approximately 52.2%, 49.8% and 47.0% of our net sales in the six months ended June 30, 2009, and the years ended December 31, 2008 and 2007, respectively. In addition, a single customer accounted for greater than 10% of our net sales for the six months ended June 30, 2009.
 
The demand for our services from each customer is directly dependent upon that customer’s level of business activity, which could vary significantly from year to year. Our key customers typically operate in the cyclical semiconductor business and, in the past, order levels have varied significantly from period to period based on a number of factors. Our business is likely to remain subject to this variability in order levels, and we cannot assure you that these key customers or any other customers will continue to place orders with us in the future at the same levels as in past periods.
 
The loss of a one or more of our significant customers, or reduced orders by any one of them and our inability to replace these customers or make up for such orders could reduce our profitability. For example, our facility in Iwate, Japan, is primarily dedicated to a single customer, Toshiba Corporation. If we were to lose Toshiba as a customer or if it were to materially reduce its business with us, it could be difficult for us to find one or more new customers to utilize the capacity which could have a material adverse effect on our operations and financial results. In addition, we have a long term supply agreement that expires in December 2010 with IBM. If we were to lose IBM as a customer, this could have a material adverse effect on our business, liquidity, results of operations, financial condition and cash flows. Some of our customers may be impacted by reduced orders as a result of the automotive industry downturn, which could have a material adverse effect on our operations and financial results.
 
Capital Additions — We Make Substantial Capital Additions To Support the Demand Of Our Customers, Which May Adversely Affect Our Business If the Demand Of Our Customers Does Not Develop As We Expect or Is Adversely Affected.
 
We make significant capital additions in order to service the demand of our customers. The amount of capital additions will depend on several factors, including the performance of our business, our assessment of future industry and customer demand, our capacity utilization rates and availability, our liquidity position and the availability of financing. Our ongoing capital addition requirements may strain our cash and short-term asset balances, and, in periods when we are expanding our capital base, we expect that depreciation expense and factory operating expenses associated with our capital additions to increase production capacity will put downward pressure on our gross margin, at least over the near term.
 
Furthermore, if we cannot generate or raise additional funds to pay for capital additions, particularly in some of the advanced packaging and bumping areas, as well as research and development activities, our growth prospects and future profitability may be adversely affected. Our ability to obtain external financing in the future is subject to a variety of uncertainties, including:

 	• 	our future financial condition, results of operations and cash flows;	
 	 	 	
 	• 	general market conditions for financing activities by semiconductor companies;	
 	 	 	
 	• 	the recent financial crisis affecting the worldwide banking system and financial markets and the going concern threats to investment banks and other financial institutions that have resulted in uncertainty in the credit markets, a low level of liquidity in many financial markets, and volatility in fixed income, credit and equity markets; and	
 	 	 	
 	• 	economic, political and other global conditions.	
 
The lead time needed to order, install and put into service various capital additions is often significant, and as a result we often need to commit to capital additions in advance of our receipt of firm orders or advance deposits
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based on our view of anticipated future demand with only very limited visibility. Although we seek to limit our exposure in this regard, in the past we have from time to time expended significant capital for additions for which the anticipated demand did not materialize for a variety of reasons, many of which were outside of our control. To the extent this occurs in the future, our business, liquidity, results of operations, financial condition and cash flows could be materially and adversely affected.
 
Impairment Charges — Any Impairment Charges Required Under U.S. GAAP May Have a Material Adverse Effect on Our Net Income.
 
Under U.S. GAAP, we review our long-lived assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Factors we consider include significant under-performance relative to expected historical or projected future operating results, significant negative industry or economic trends and our market capitalization relative to net book value. We may be required in the future to record a significant charge to earnings in our financial statements during the period in which any impairment of our long-lived assets is determined. Such charges have had and could have a significant adverse impact on our results of operations.
 
The Matters Relating to an SEC Investigation, Our Historical Stock Option Granting Practices and the Resultant Restatement of Our Consolidated Financial Statements Resulted in Litigation and Regulatory Proceedings Against Us, Which Could Have a Material Adverse Effect on Us.
 
In August 2005, the SEC issued a formal order of investigation regarding certain activities with respect to Amkor securities. The investigation related initially to transactions in our securities and later to our historical stock option practices. While the SEC’s investigation continues and we cannot predict the ultimate scope or final outcome, we believe that the investigation is now limited to certain securities trading by a former non-executive employee. We intend to continue to cooperate with the SEC.
 
These matters have exposed us to greater risks associated with litigation and regulatory proceedings as described in Note 13 to our Consolidated Financial Statements in this Quarterly Report which, if adversely determined, could have a material adverse effect on our business, liquidity, results of operations, financial condition and cash flows.
 
Litigation Incident to Our Business Could Adversely Affect Us.
 
We have been a party to various legal proceedings, including those described in Note 13 to the Consolidated Financial Statements included in this Quarterly Report, and may be a party to litigation in the future. If an unfavorable ruling or outcome were to occur in current or future litigation, there could be a material adverse impact on our business, liquidity, results of operations, financial condition, cash flows and the trading price of our securities.
 
We Could Suffer Adverse Tax and Other Financial Consequences if Taxing Authorities Do Not Agree with Our Interpretation of Applicable Tax Laws.
 
Our corporate structure and operations are based, in part, on interpretations of various tax laws, including withholding tax, compliance with tax holiday requirements, application of changes in tax law to our operations and other relevant laws of applicable taxing jurisdictions. From time to time, the taxing authorities of the relevant jurisdictions may conduct examinations of our income tax returns and other regulatory filings. We cannot assure you that the taxing authorities will agree with our interpretations. To the extent they do not agree, we may seek to enter into settlements with the taxing authorities which require significant payments or otherwise adversely affect our results of operations or financial condition. We may also appeal the taxing authorities’ determinations to the appropriate governmental authorities, but we can not be sure we will prevail. If we do not prevail, we may have to make significant payments or otherwise record charges (or reduce tax assets) that adversely affect our results of operations, financial condition and cash flows.
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Rapid Technological Change — Our Business Will Suffer If We Cannot Keep Up With Technological Advances in Our Industry.
 
The complexity and breadth of semiconductor packaging and test services are rapidly increasing. As a result, we expect that we will need to offer more advanced package designs in order to respond to competitive industry conditions and customer requirements. Our success depends upon our ability to acquire, develop and implement new manufacturing processes and package design technologies and tools. The need to develop and maintain advanced packaging capabilities and equipment could require significant research and development and capital expenditures and acquisitions in future years. In addition, converting to new package designs or process methodologies could result in delays in producing new package types, which could adversely affect our ability to meet customer orders and adversely impact our business.
 
Technological advances also typically lead to rapid and significant price erosion and may make our existing packages less competitive or our existing inventories obsolete. If we cannot achieve advances in package design or obtain access to advanced package designs developed by others, our business could suffer.
 
Packaging and Test — Packaging and Test Processes Are Complex and Our Production Yields and Customer Relationships May Suffer from Defects in the Services We Provide.
 
Semiconductor packaging and test services are complex processes that require significant technological and process expertise. The packaging process is complex and involves a number of precise steps. Defective packages primarily result from:

 	• 	contaminants in the manufacturing environment;	
 	 	 	
 	• 	human error;	
 	 	 	
 	• 	equipment malfunction;	
 	 	 	
 	• 	changing processes to address environmental requirements;	
 	 	 	
 	• 	defective raw materials; or	
 	 	 	
 	• 	defective plating services.	
 
Testing is also complex and involves sophisticated equipment and software. Similar to most software programs, these software programs are complex and may contain programming errors or “bugs.” The testing equipment is also subject to malfunction. In addition, the testing process is subject to operator error.
 
These and other factors have, from time to time, contributed to lower production yields. They may also do so in the future, particularly as we adjust our capacity or change our processing steps. In addition, we must continue to expand our offering of packages to be competitive. Our production yields on new packages typically are significantly lower than our production yields on our more established packages.
 
Our failure to maintain high standards or acceptable production yields, if significant and prolonged, could result in loss of customers, increased costs of production, delays, substantial amounts of returned goods and claims by customers relating thereto. Any of these problems could have a material adverse effect on our business, liquidity, results of operations, financial condition and cash flows.
 
In addition, in line with industry practice, new customers usually require us to pass a lengthy and rigorous qualification process that may take several months. If we fail to qualify packages with potential customers or customers, our business, results of operations, financial condition and cash flows could be adversely affected.
 
Competition — We Compete Against Established Competitors in the Packaging and Test Business as Well as Internal Customer Capabilities.
 
The subcontracted semiconductor packaging and test market is very competitive. We face substantial competition from established packaging and test service providers primarily located in Asia, including companies with significant processing capacity, financial resources, research and development operations, marketing and other capabilities. These companies also have established relationships with many large semiconductor companies that
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are our current or potential customers. We also face competition from the internal capabilities and capacity of many of our current and potential IDM customers. In addition, we may in the future have to compete with companies (including semiconductor foundries) that may enter the market or offer new or emerging technologies that compete with our packages and services.
 
We cannot assure you that we will be able to compete successfully in the future against our existing or potential competitors or that our customers will not rely on internal sources for packaging and test services, or that our business, liquidity, results of operations, financial condition and cash flows will not be adversely affected by such increased competition.
 
Environmental Regulations — Future Environmental Regulations Could Place Additional Burdens on Our Manufacturing Operations.
 
The semiconductor packaging process uses chemicals, materials and gases and generates byproducts that are subject to extensive governmental regulations. For example, at our foreign facilities we produce liquid waste when semiconductor wafers are diced into chips with the aid of diamond saws, then cooled with running water. In addition, semiconductor packages have historically utilized metallic alloys containing lead (Pb) within the interconnect terminals typically referred to as leads, pins or balls. Federal, state and local regulations in the U.S., as well as international environmental regulations, impose various controls on the storage, handling, discharge and disposal of chemicals used in our production processes and on the factories we occupy and are increasingly imposing restrictions on the materials contained in semiconductor products.
 
Public attention has focused on the environmental impact of semiconductor operations and the risk to neighbors of chemical releases from such operations and to the materials contained in semiconductor products. For example, the European Union’s Restriction of Use of Certain Hazardous Substances Directive (“RoHS”) imposes strict restrictions on the use of lead and other hazardous substances in electrical and electronic equipment. In response to this directive, and similar laws and developing legislation in countries like China, Japan and Korea, we have implemented changes in a number of our manufacturing processes in an effort to achieve compliance across all of our package types. Complying with existing and future environmental regulations may impose upon us the need for additional capital equipment or other process requirements, restrict our ability to expand our operations, disrupt our operations, subject us to liability or cause us to curtail our operations.
 
Intellectual Property — We May Become Involved in Intellectual Property Litigation.
 
We maintain an active program to protect and derive value from our investment in technology and the associated intellectual property rights. Intellectual property rights that apply to our various packages and services include patents, copyrights, trade secrets and trademarks. We have filed and obtained a number of patents in the U.S. and abroad the duration of which varies depending on the jurisdiction in which the patent is filed. While our patents are an important element of our intellectual property strategy, as a whole, we are not materially dependent on any one patent or any one technology. The process of seeking patent protection takes a long time and is expensive. There can be no assurance that patents will issue from pending or future applications or that, if patents issue, the rights granted under the patents will provide us with meaningful protection or any commercial advantage. Any patents we do obtain may be challenged, invalidated or circumvented and may not provide meaningful protection or other commercial advantage to us.
 
The semiconductor industry is characterized by frequent claims regarding patent and other intellectual property rights. If any third party makes an enforceable infringement claim against us or our customers, we could be required to:

 	• 	discontinue the use of certain processes;	
 	 	 	
 	• 	cease to provide the services at issue;	
 	 	 	
 	• 	pay substantial damages;	
 	 	 	
 	• 	develop non-infringing technologies; or	
 	 	 	
 	• 	acquire licenses to the technology we had allegedly infringed.	

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Some of our technologies are not covered by any patent or patent application. The confidentiality agreements on which we rely to protect these technologies may be breached and may not be adequate to protect our proprietary technologies. There can be no assurance that other countries in which we market our services will protect our intellectual property rights to the same extent as the U.S.
 
Our competitors may develop, patent or gain access to know-how and technology similar to our own. In addition, many of our patents are subject to cross licenses, several of which are with our competitors.
 
We may need to enforce our patents or other intellectual property rights, including our rights under patent and intellectual property licenses with third parties, or defend ourselves against claimed infringement of the rights of others through litigation, which could result in substantial cost and diversion of our resources. Furthermore, if we fail to obtain necessary licenses, our business could suffer. We have been involved in legal proceedings involving the acquisition and license of intellectual property rights, the enforcement of our existing intellectual property rights or the enforcement of the intellectual property rights of others. Unfavorable outcomes in any litigation matters involving intellectual property could result in significant liabilities and could have a material adverse effect on our business, liquidity, results of operations, financial condition and cash flows. The potential impact from the legal proceedings referred to in this report on our results of operations, financial condition and cash flows could change in the future.
 
Fire, Flood or Other Calamity — With Our Operations Conducted in a Limited Number of Facilities, a Fire, Flood or Other Calamity at one of Our Facilities Could Adversely Affect Us.
 
We conduct our packaging and test operations at a limited number of facilities. Significant damage or other impediments to any of these facilities, whether as a result of fire, weather, the outbreak of infectious diseases (such as SARS or the flu), civil strife, industrial strikes, breakdowns of equipment, difficulties or delays in obtaining materials and equipment, natural disasters, terrorist incidents, industrial accidents or other causes could temporarily disrupt or even shut down our operations, which would have a material adverse effect on our business, financial condition and results of operations. In the event of such a disruption or shutdown, we may be unable to reallocate production to other facilities in a timely or cost-effective manner (if at all) and may not have sufficient capacity to service customer demands in our other facilities. For example, our operations in Asia are vulnerable to regional typhoons that can bring with them destructive winds and torrential rains, which could in turn cause plant closures and transportation interruptions. In addition, some of the processes that we utilize in our operations place us at risk of fire and other damage. For example, highly flammable gases are used in the preparation of wafers holding semiconductor devices for flip chip packaging. While we maintain insurance policies for various types of property, casualty and other risks, we do not carry insurance for all the above referred risks and with regard to the insurance we do maintain, we cannot assure you that it would be sufficient to cover all of our potential losses.
 
Continued Control By Existing Stockholders — Mr. James J. Kim and Members of His Family Can Substantially Control The Outcome of All Matters Requiring Stockholder Approval.
 
As of June 30, 2009, Mr. James J. Kim, our Chief Executive Officer and Chairman of the Board, members of Mr. Kim’s immediate family and affiliates beneficially owned approximately 56% of our outstanding common stock. This percentage includes beneficial ownership of the securities underlying $100.0 million of our 6.25% convertible subordinated notes due 2013 and $150 million of our 6.0% convertible senior subordinated notes due 2014. Subject to certain requirements imposed by voting agreements that the Kim family vote in a neutral manner any shares issued upon conversion of their convertible notes, Mr. James J. Kim and his family and affiliates, acting together, have the ability to effectively determine matters (other than interested party transactions) submitted for approval by our stockholders by voting their shares, including the election of all of the members of our Board of Directors. There is also the potential, through the election of members of our Board of Directors, that Mr. Kim’s family could substantially influence matters decided upon by the Board of Directors. This concentration of ownership may also have the effect of impeding a merger, consolidation, takeover or other business consolidation involving us, or discouraging a potential acquirer from making a tender offer for our shares, and could also negatively affect our stock’s market price or decrease any premium over market price that an acquirer might otherwise pay.
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Table of Contents
 	 	
Item 4.  	Submission of Matters to a Vote of Security Holders	
 
At our Annual Meeting of Stockholders held on May 4, 2009, the following proposals were adopted by the margins indicated.
 
1. Election of a Board of Directors to hold office until the next Annual Meeting of Stockholders or until their respective successors have been elected or appointed.

 	 	Number of Shares	
 	 	Voted for	 	Withheld	
 	 	 	 	 	 	 	 	 	
James J. Kim	 	 	165,990,635	 	 	 	2,592,015	 	
Roger A. Carolin	 	 	146,970,912	 	 	 	21,611,738	 	
Winston J. Churchill	 	 	164,995,646	 	 	 	3,587,004	 	
John T. Kim	 	 	166,581,301	 	 	 	2,001,349	 	
John F. Osborne	 	 	147,016,759	 	 	 	21,565,891	 	
Stephen G. Newberry	 	 	167,138,131	 	 	 	1,444,519	 	
James W. Zug	 	 	166,439,952	 	 	 	2,142,698	 	
 
2. Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2009. Votes totaled 167,917,779 for, 568,535 against, and 96,336 abstaining.

Item 6.  	Exhibits	
 
The exhibits required by Item 601 of Regulation S-K which are filed with this report are set forth in the Exhibit Index.
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Table of Contents
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
AMKOR TECHNOLOGY, INC.

 	By: 	/s/  JOANNE SOLOMON	
Joanne Solomon
Corporate Vice President and Chief
Financial Officer
(Principal Financial Officer, Chief
Accounting Officer
and Duly Authorized Officer)
 
Date: August 5, 2009
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Table of Contents
EXHIBIT INDEX

Exhibit
	 	 	
Number	 	Description of Exhibit	
 	 	 	 	 	
 	3	.1	 	Restated Bylaws, as amended on June 25, 2009.	
 	4	.1	 	Indenture, dated as of April 1, 2009, between Amkor Technology, Inc. and U.S. Bank National Association, as trustee.(1)	
 	4	.2	 	Form of Note for Amkor Technology, Inc.’s 6.00% Convertible Senior Subordinated Notes due 2014.(1)	
 	10	.1	 	2009 Voting Agreement, dated as of March 26, 2009, between Amkor Technology, Inc., James J. Kim and 915 Investments, LP.(1)	
 	10	.2	 	Letter Agreement, dated March 26, 2009, between Amkor Technology, Inc., James J. Kim and 915 Investments, LP.(1)	
 	10	.3	 	Amended and Restated Loan and Security Agreement, dated as of April 16, 2009, among Amkor Technology, Inc., its subsidiaries from time to time party thereto, the lending institutions from time to time party thereto and Bank of America, N.A., as administrative agent.(2)	
 	31	.1	 	Certification of James J. Kim, Chief Executive Officer of Amkor Technology, Inc., pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	
 	31	.2	 	Certification of Joanne Solomon, Corporate Vice President and Chief Financial Officer of Amkor Technology, Inc., pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	
 	32	 	 	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	

 	 	 	
(1)	 	Incorporated by reference to the Company’s Current Report on Form 8-K filed on April 1, 2009.	
 	 	 	
(2)	 	Incorporated by reference to the Company’s Current Report on Form 8-K filed on April 16, 2009.	

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Exhibit 3.1
RESTATED BYLAWS
OF
AMKOR TECHONOLOGY, INC.
(as of June 25, 2009)

 
TABLE OF CONTENTS
 	 	 	 	 	
 	 	Page	
ARTICLE I STOCKHOLDERS	 	 	1	 	
 	 	 	 	 	
1.1 ANNUAL MEETINGS	 	 	1	 	
1.2 SPECIAL MEETINGS	 	 	1	 	
1.3 NOTICE OF MEETINGS	 	 	1	 	
1.4 NOMINATIONS	 	 	2	 	
1.5 NOTICE OF STOCKHOLDER BUSINESS	 	 	3	 	
1.6 ADJOURNMENTS	 	 	4	 	
1.7 QUORUM	 	 	5	 	
1.8 ORGANIZATION	 	 	5	 	
1.9 VOTING; PROXIES	 	 	6	 	
1.10 REMOTE COMMUNICATION	 	 	6	 	
1.11 FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF RECORD	 	 	7	 	
1.12 LIST OF STOCKHOLDERS ENTITLED TO VOTE	 	 	7	 	
1.13 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING	 	 	8	 	
 	 	 	 	 	
ARTICLE II BOARD OF DIRECTORS	 	 	8	 	
 	 	 	 	 	
2.1 POWERS; NUMBER; QUALIFICATIONS	 	 	8	 	
2.2 ELECTION; RESIGNATION; REMOVAL; VACANCIES	 	 	9	 	
2.3 REGULAR MEETINGS	 	 	9	 	
2.4 SPECIAL MEETINGS	 	 	9	 	
2.5 TELEPHONIC MEETINGS PERMITTED	 	 	9	 	
2.6 QUORUM; VOTE REQUIRED FOR ACTION	 	 	9	 	
2.7 ORGANIZATION	 	 	10	 	
2.8 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING	 	 	10	 	
 	 	 	 	 	
ARTICLE III COMMITTEES	 	 	10	 	
 	 	 	 	 	
3.1 COMMITTEES	 	 	10	 	
3.2 COMMITTEE RULES	 	 	11	 	
 	 	 	 	 	
ARTICLE IV OFFICERS	 	 	11	 	
 	 	 	 	 	
4.1 EXECUTIVE OFFICERS; ELECTION; QUALIFICATIONS; TERM OF OFFICE; RESIGNATION; REMOVAL; VACANCIES	 	 	11	 	
 	 	 	 	 	
ARTICLE V STOCK	 	 	12	 	
 	 	 	 	 	
5.1 CERTIFICATES	 	 	12	 	
5.2 LOST, STOLEN OR DESTROYED STOCK CERTIFICATES; ISSUANCE OF NEW CERTIFICATES	 	 	12	 	
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TABLE OF CONTENTS
(Continued)
 	 	 	 	 	
 	 	Page	
ARTICLE VI INDEMNIFICATION	 	 	12	 	
 	 	 	 	 	
6.1 THIRD PARTY ACTIONS	 	 	12	 	
6.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION	 	 	13	 	
6.3 SUCCESSFUL DEFENSE	 	 	13	 	
6.4 DETERMINATION OF CONDUCT	 	 	13	 	
6.5 PAYMENT OF EXPENSES IN ADVANCE	 	 	13	 	
6.6 INDEMNITY NOT EXCLUSIVE	 	 	14	 	
6.7 INSURANCE INDEMNIFICATION	 	 	14	 	
6.8 THE CORPORATION	 	 	14	 	
6.9 EMPLOYEE BENEFIT PLANS	 	 	14	 	
6.10 INDEMNITY FUND	 	 	15	 	
6.11 INDEMNIFICATION OF OTHER PERSONS	 	 	15	 	
6.12 SAVINGS CLAUSE	 	 	15	 	
6.13 CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES	 	 	15	 	
 	 	 	 	 	
ARTICLE VII MISCELLANEOUS	 	 	15	 	
 	 	 	 	 	
7.1 FISCAL YEAR	 	 	15	 	
7.2 SEAL	 	 	16	 	
7.3 WAIVER OF NOTICE OF MEETINGS OF STOCKHOLDERS, DIRECTORS AND COMMITTEES	 	 	16	 	
7.4 INTERESTED DIRECTORS; QUORUM	 	 	16	 	
7.5 FORM OF RECORDS	 	 	16	 	
7.6 AMENDMENT OF BYLAWS	 	 	17	 	
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RESTATED BYLAWS
OF
AMKOR TECHNOLOGY, INC.
ARTICLE I
STOCKHOLDERS
     1.1 ANNUAL MEETINGS
     An annual meeting of stockholders shall be held for the election of directors at such date, time and place, either within or without the state of Delaware, as may be designated by resolution of the Board of Directors from time to time. Any other proper business may be transacted at the annual meeting. In lieu of holding an annual meeting of stockholders at a designated place, the Board of Directors may, in its sole discretion, determine that any annual meeting of stockholders may be held solely by means of remote communication.
     1.2 SPECIAL MEETINGS
     Special meetings of stockholders for any purpose or purposes may be called at any time by the Board of Directors, or by a committee of the Board of Directors which has been duly designated by the Board of Directors and whose powers and authority, as expressly provided in a resolution of the Board of Directors, include the power to call such meetings. In lieu of holding a special meeting of stockholders at a designated place, the Board of Directors may, in its sole discretion, determine that any special meeting of stockholders may be held solely by means of remote communication.
     1.3 NOTICE OF MEETINGS
     Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present and in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Unless otherwise provided by law, the Certificate of Incorporation or these Bylaws, the written notice of any meeting shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. Notice to stockholders may be given by personal delivery, mail, or, with the consent of the stockholder entitled to receive notice, by facsimile or other means of electronic transmission. If mailed, such notice shall be deemed to be given when deposited in the mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the corporation. Notice given by electronic transmission pursuant to this subsection shall be deemed given: (1) if by facsimile telecommunication, when directed to a facsimile telecommunication

 
number at which the stockholder has consented to receive notice; (2) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice; (3) if by posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and (4) if by any other form of electronic transmission, when directed to the stockholder. An affidavit of the Secretary or an Assistant Secretary, the transfer agent or other agent of the corporation that the notice has been given by personal delivery, by mail, or by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
     1.4 NOMINATIONS
     Only persons who are nominated in accordance with the procedures set forth in these Bylaws shall be eligible to serve as directors of the corporation. Nominations of persons for election to the Board of Directors of the corporation may be made at a meeting of stockholders at which directors are to be elected (i) by or at the direction of the Board of Directors or (ii) by any stockholder of the corporation who is a stockholder of record at the time of giving of notice provided for in this Section 1.4, who shall be entitled to vote for the election of directors at the meeting and who complies with the notice procedures set forth in this Section 1.4.
     Nominations by stockholders shall be made pursuant to timely notice in writing to the Secretary of the corporation. To be timely, a stockholder’s notice shall be delivered to or mailed and received at the principal executive offices of the corporation (a) in the case of an annual meeting, not later than the close of business on the ninetieth (90 th  ) calendar day, nor earlier than the close of business on the one hundred and twentieth (120 th  ) calendar day, prior to the first anniversary of the preceding year’s annual meeting; provided, however, that if the date of the annual meeting is advanced more than thirty (30) calendar days prior to, or delayed by more than sixty (60) calendar days after, the anniversary of the preceding year’s annual meeting, notice by the stockholder to be timely must be received not later than the close of business on the tenth (10 th ) calendar day following the earlier of the day on which notice of the date of the meeting was first mailed or public disclosure of the date of the meeting was first made, and (b) in respect of nominations to be brought before a special meeting, where permitted, notice by the stockholder to be timely must be so delivered not later than the close of business on the tenth (10 th ) calendar day following the earlier of the day on which notice of the date of the meeting was first mailed or public disclosure of the date of the meeting was first made. Such stockholder’s notice shall set forth (i) (A) the name, age, business address and residence address of each proposed nominee, (B) the principal occupation of each proposed nominee, (C) a representation that the notifying stockholder intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice, (D) if known, the class and total number of shares of the corporation that are beneficially owned by the proposed nominee, (E) the total number of shares of the corporation that will be voted by the notifying stockholder for each proposed nominee, (F) a description of all arrangements or understandings between the notifying stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the notifying stockholder, and (G) as to each proposed nominee all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required,
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in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, applicable listing standards and other applicable law (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected and including information as to the purpose of such nomination); and (ii) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made (A) the name and address of such stockholder, as they appear on the corporation’s books, and of such beneficial owner, (B) the class and number of shares of the corporation which are owned beneficially and of record by such stockholder and such beneficial owner and (C) a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends (x) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the corporation’s outstanding capital stock required to elect the nominee and/or (y) otherwise to solicit proxies from stockholders in support of such nomination. At the request of the Board of Directors, any person nominated by a stockholder for election as a director shall furnish to the Secretary of the corporation that information required to be set forth in a stockholder’s notice of nomination which pertains to the nominee. The corporation may request any proposed nominee to furnish such other information as may reasonably be required by the corporation to determine the qualifications of the proposed nominee to serve as a director of the corporation.
     No person shall be eligible to serve as a director of the corporation unless nominated in accordance with the procedures set forth in this Section 1.4. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by this Section 1.4, and if the Chairman of the meeting should so determine, shall so declare to the meeting and the defective nomination shall be disregarded. Any such decision by the Chairman of the meeting shall be final, binding and conclusive upon all parties in interest. In addition to the foregoing provisions of this Section 1.4, a stockholder shall also comply with and shall be subject to all applicable requirements and provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, applicable listing standards and other applicable law, with respect to the matters set forth in this Section 1.4.
     1.5 NOTICE OF STOCKHOLDER BUSINESS
     At an annual or special meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting (i) pursuant to the corporation’s notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) as to an annual meeting, by any stockholder of the corporation who is a stockholder of record at the time of giving of the notice provided for in this Section 1.5, who shall be entitled to vote at such meeting and who complies with the notice procedures set forth in this Section 1.5.
     For business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of the immediately preceding paragraph of this Section 1.5, the stockholder must have given timely notice thereof in writing to the Secretary of the corporation, and any such proposed business must constitute a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to or mailed and received at the principal executive offices of the corporation not
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later than the close of business on the ninetieth (90th) calendar day, nor earlier than the close of business on the one hundred and twentieth (120 th ) calendar day, prior to the first anniversary of the preceding year’s annual meeting; provided, however, that if the date of the annual meeting is advanced more than thirty (30) calendar days prior to, or delayed by more than sixty (60) calendar days after, the first anniversary of the preceding year’s annual meeting, notice by the stockholder to be timely must be so delivered not later than the close of business on the tenth (10 th ) calendar day following the earlier of the day on which notice of the date of the meeting was first mailed or public disclosure of the date of the meeting was first made. A stockholder’s notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the meeting (i) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, and if a specific action is to be proposed, the text of the resolution or resolutions which the stockholder proposes that the corporation adopt, (ii) the name and address, as they appear on the corporation’s books, of the stockholder proposing such business, and the name and address of the beneficial owner, if any, on whose behalf the proposal is made, (iii) the class and number of shares of the corporation which are owned beneficially and of record by such stockholder of record and by the beneficial owner, if any, on whose behalf the proposal is made, (iv) any material interest of such stockholder of record and the beneficial owner, if any, on whose behalf the proposal is made in such business, (v) a representation that the stockholder intends to appear in person or by proxy at the meeting to bring before the meeting the business specified in the notice, (vi) the total number of shares of the corporation that will be voted by the notifying stockholder for such proposal, and (vii) a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends (x) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the corporation’s outstanding capital stock required to approve or adopt the proposal and/or (y) otherwise to solicit proxies from stockholders in support of such proposal.
     Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at an annual or special meeting except in accordance with the procedures set forth in Section 1.5. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting and in accordance with the procedures prescribed by this Section 1.5, and if the Chairman of the meeting should so determine, shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. Any such decision by the Chairman shall be final, binding and conclusive upon all parties in interest. In addition to the foregoing provisions of this Section 1.5, a stockholder shall also comply with and be subject to all applicable requirements and provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, applicable listing standards and other applicable law, with respect to the matters set forth in this Section 1.5.
     1.6 ADJOURNMENTS
     Any meeting of stockholders, annual or special, may adjourn from time to time to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the date, time and place if any, thereof and the means of remote communication, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting, are announced at the meeting at which the adjournment is taken. At the adjourned meeting
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the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. The Chairman of the meeting shall have the power to adjourn any meeting of stockholders for any reason and the stockholders shall have the power to adjourn any meeting of stockholders by a majority vote of the shares present at such meeting in accordance with this Section 1.6.
     1.7 QUORUM
     Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, at each meeting of stockholders the presence in person or by proxy of the holders of shares of stock having a majority of the votes which could be cast by the holders of all outstanding shares of stock entitled to vote at the meeting shall be necessary and sufficient to constitute a quorum. In the absence of a quorum, the stockholders so present may, by majority vote of shares present, adjourn the meeting from time to time in the manner provided in Section 1.6 of these Bylaws until a quorum shall attend. Shares of its own stock belonging to the corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the corporation, shall neither be entitled to vote nor be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of the corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity.
     1.8 ORGANIZATION
     Meetings of stockholders shall be presided over by (a) the Chairman of the Board of Directors or, in the absence thereof, (b) any director or officer of the corporation designated by the Board of Directors. In the absence of the Secretary of the corporation, the secretary of the meeting shall be such person as the Chairman of the meeting appoints.
     The Board of Directors shall, in advance of any meeting of stockholders, appoint one (1) or more inspector(s), who may include individual(s) who serve the corporation in other capacities, including without limitation as officers, employees or agents, to act at the meeting of stockholders and make a written report thereof. The Board may designate one (1) or more persons as alternate inspector(s) to replace any inspector, who fails to act. If no inspector or alternate has been appointed or is able to act at a meeting of stockholders, the Chairman of the meeting shall appoint one (1) or more inspector(s) to act at the meeting. Each inspector, before discharging his or her duties, shall take and sign an oath to faithfully execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspector(s) or alternate(s) shall have the duties prescribed pursuant to Section 231 of the Delaware General Corporation Law or other applicable law.
     The Board of Directors shall be entitled to make such rules or regulations for the conduct of meetings of stockholders as it shall deem necessary, appropriate or convenient. Subject to such rules and regulations, if any, the Chairman of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all acts as, in the judgment of such Chairman of the
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meeting, are necessary, appropriate or convenient for the proper conduct of the meeting, including without limitation establishing an agenda of business of the meeting, rules or regulations to maintain order, restrictions on entry to the meeting after the time fixed for commencement thereof and the fixing of the date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at a meeting (and shall announce such at the meeting).
     1.9 VOTING; PROXIES
     Except as otherwise provided by the Certificate of Incorporation or by law, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of stock held by such stockholder which has voting power upon the matter in question. Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or another duly executed proxy bearing a later date with the Secretary of the corporation. Voting at meetings of stockholders need not be by written ballot and need not be conducted by inspectors of election unless so determined by the holders of shares of stock having a majority of the votes which could be cast by the holders of all outstanding shares of stock entitled to vote thereon which are present in person or by proxy at such meeting.
     At a stockholders’ meeting at which directors are to be elected, a stockholder shall not be entitled to cumulate votes (i.e., cast for any candidate a number of votes greater than the number of votes which such stockholder normally is entitled to cast). The candidates receiving the highest number of affirmative votes, up to the number of directors to be elected, shall be elected; votes against any candidate and votes withheld shall have no legal effect.
     1.10 REMOTE COMMUNICATION
     For the purposes of these Bylaws, if authorized by the Board of Directors in its sole discretion, and subject to such guidelines and procedures as the Board of Directors may adopt, stockholders and proxyholders may, by means of remote communication:
          (A) participate in a meeting of stockholders; and
          (B) be deemed present in person and vote at a meeting of stockholders whether such meeting is to be held at a designated place or solely by means of remote communication, provided that (i) the corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxyholder, (ii) the corporation shall implement reasonable measures to provide
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such stockholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings, and (iii) if any stockholder or proxyholder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the corporation.
     1.11 FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF RECORD
     In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and which record date: (1) in the case of determination of stockholders entitled to vote at any meeting of stockholders or adjournment thereof, shall, unless otherwise required by law, not be more than sixty (60) nor less than ten (10) days before the date of such meeting; (2) in the case of determination of stockholders entitled to express consent to corporate action in writing without a meeting, shall not be more than ten (10) days from the date upon which the resolution fixing the record date is adopted by the Board of Directors; and (3) in the case of any other action, shall not be more than sixty (60) days prior to such other action. If no record date is fixed: (1) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; (2) the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action of the Board of Directors is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation in accordance with applicable law, or, if prior action by the Board of Directors is required by law, shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action; and (3) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
     1.12 LIST OF STOCKHOLDERS ENTITLED TO VOTE
     The Secretary shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either (a) on a reasonably accessible electronic network, provided that the
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information required to gain access to such list is provided with the notice of the meeting, or (b) during ordinary business hours, at the principal place of business of the corporation. In the event that the corporation determines to make the list available on an electronic network, the corporation may take reasonable steps to ensure that such information is available only to stockholders of the corporation. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list of stockholders or the books of the corporation, or to vote in person or by proxy at any meeting of stockholders.
     1.13 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
     Unless otherwise provided in the certificate of incorporation, any action required by this chapter to be taken at any annual or special meeting of stockholders of a corporation, or any action that may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice, and without a vote if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.
     Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. If the action which is consented to is such as would have required the filing of a certificate under any section of the Delaware General Corporation Law if such action had been voted on by stockholders at a meeting thereof, then the certificate filed under such section shall state, in lieu of any statement required by such section concerning any vote of stockholders, that written notice and written consent have been given as provided in Section 228 of the Delaware General Corporation Law.
ARTICLE II
BOARD OF DIRECTORS
     2.1 POWERS; NUMBER; QUALIFICATIONS
     The business and affairs of the corporation shall be managed by or under the direction of the Board of Directors. In addition to the power and authorities these Bylaws expressly confer upon them, the Board of Directors may exercise all such powers of the corporation and do all such lawful acts and things as are not required by statute, the Certificate of Incorporation or these Bylaws to be exercised or done by the stockholders. The Board of Directors shall consist of one or more members, the number thereof to be determined from time to time by resolution of the Board of Directors. Directors need not be stockholders.
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     2.2 ELECTION; RESIGNATION; VACANCIES
     The Board of Directors shall initially consist of the persons named as directors in the Certificate of Incorporation, and each director so elected shall hold office until the first annual meeting of stockholders or until his successor is elected and qualified. At the first annual meeting of stockholders and at each annual meeting thereafter, the stockholders shall elect directors each of whom shall hold office until his successor is elected and qualified or until such director’s earlier resignation or removal. Any director may resign at any time upon written notice to the corporation. Any newly created directorship or any vacancy occurring in the Board of Directors for any cause may be filled by a majority of the remaining members of the Board of Directors, although such majority is less than a quorum, or by a sole remaining director, or by a plurality of the votes cast at a meeting of stockholders, and each director so elected shall hold office until the expiration of the term of office of the director whom he has replaced or until his successor is elected and qualified.
     2.3 REGULAR MEETINGS
     Regular meetings of the Board of Directors may be held at such places within or without the State of Delaware and at such times as the Board of Directors may from time to time determine, and if so determined notices thereof need not be given.
     2.4 SPECIAL MEETINGS
     Special meetings of the Board of Directors may be held at any time or place within or without the State of Delaware whenever called by the Chief Executive Officer, President, Chief Financial Officer, or by any member of the Board of Directors. Notice of a special meeting of the Board of Directors shall be given by the person or persons calling the meeting at least twenty-four hours before the special meeting.
     2.5 TELEPHONIC MEETINGS PERMITTED
     Members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting thereof by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Bylaw shall constitute presence in person at such meeting.
     2.6 QUORUM; VOTE REQUIRED FOR ACTION
     At all meetings of the Board of Directors a majority of the whole Board of Directors shall constitute a quorum for the transaction of business. Except in cases in which the Certificate of Incorporation or these Bylaws otherwise provide, the vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.
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     2.7 ORGANIZATION
     Meetings of the Board of Directors shall be presided over by the Chairman of the Board, if any, or in his absence by the Vice Chairman of the Board, if any, or in their absence by a chairman chosen at the meeting. The Secretary shall act as secretary of the meeting, but in his absence the chairman of the meeting may appoint any person to act as secretary of the meeting.
     The corporation may have, at the discretion of the Board of Directors, an Executive Chairman of the Board. The Executive Chairman shall, if one is designated by the Board of Directors and if present, preside at all meetings of the stockholders and of the Board of Directors, assist the directors and the senior officers of the corporation in the formulation of the strategy and policies of the corporation, shall be available to the officers for consultation and advice, and exercise and perform such other powers and duties as may be from time to time assigned by the Board of Directors. The Executive Chairman, if so designated by the Board, shall not be considered an officer of the corporation.
     2.8 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
     Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the Board of Directors or such committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or such committee.
ARTICLE III
COMMITTEES
     3.1 COMMITTEES
     The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of the committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. Any such committee, to the extent permitted by law and to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it.
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     3.2 COMMITTEE RULES
     Unless the Board of Directors otherwise provides, each committee designated by the Board of Directors may make, alter and repeal rules for the conduct of its business.
ARTICLE IV
OFFICERS
 	4.1	 	EXECUTIVE OFFICERS; ELECTION; QUALIFICATIONS; TERM OF OFFICE; RESIGNATION; REMOVAL; VACANCIES	
          (a) Unless otherwise determined by the Board of Directors, the officers of the corporation shall consist of a chief executive officer, a president, a chief financial officer, one or more vice presidents, a secretary, one or more assistant secretaries, a treasurer or one or more assistant treasurers as are elected by the Board of Directors and such other officers as the Board of Directors may determine, who will be elected in such manner and hold their offices for such terms as the Board of Directors may prescribe. Each such officer shall hold office until the first meeting of the Board of Directors after the annual meeting of stockholders next succeeding his election, and until his successor is elected and qualified or until his earlier resignation or removal. Any officer may resign at any time upon written notice to the corporation. The Board of Directors may remove any officer with or without cause at any time, but such removal shall be without prejudice to the contractual rights of such officer, if any, with the corporation. Any number of offices may be held by the same person. Any vacancy occurring in any office of the corporation by death, resignation, removal or otherwise may be filled for the unexpired portion of the term by the Board of Directors at any regular or special meeting.
          (b) In addition to officers elected by the Board of Directors, the corporation may have one or more appointed vice presidents. Such appointed vice presidents may be appointed by the Board of Directors, the chairman of the Board of Directors or the chief executive officer and will have such duties as may be established by the Board of Directors, the chairman of the Board of Directors or the chief executive officer.
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ARTICLE V
STOCK
 	5.1	 	CERTIFICATES	
     Shares of stock of the corporation may be certificated or uncertificated as provided by the Delaware General Corporation Law. Every holder of stock, upon written request, shall be entitled to have a certificate signed by or in the name of the corporation by the Chairman or Vice Chairman of the Board of Directors, if any, or the President or Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, of the corporation, certifying the number of shares owned by him in the corporation. Any of or all the signatures on the certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent, or registrar at the date of issue.
 	5.2	 	LOST, STOLEN OR DESTROYED STOCK CERTIFICATES; ISSUANCE OF NEW CERTIFICATES	
     The corporation may issue a new certificate of stock in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the corporation may require the owner of the lost, stolen or destroyed certificate, or his legal representative, to give the corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate.
ARTICLE VI
INDEMNIFICATION
 	6.1	 	THIRD PARTY ACTIONS	
     The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director or officer of the corporation, or that such director or officer is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (collectively “Agent”), against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld) actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no
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reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of  nolo contendere  or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.
     6.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION
     The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was an Agent (as defined in Section 6.1) against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Delaware Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Delaware Court of Chancery or such other court shall deem proper.
     6.3 SUCCESSFUL DEFENSE
     To the extent that an Agent of the corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 6.1 and 6.2, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection therewith.
     6.4 DETERMINATION OF CONDUCT
     Any indemnification under Sections 6.1 and 6.2 (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that the indemnification of the Agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Sections 6.1 and 6.2. Such determination shall be made (1) by the Board of Directors or an executive committee by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such quorum is not obtainable or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the stockholders.
     6.5 PAYMENT OF EXPENSES IN ADVANCE
     Expenses incurred in defending a civil or criminal action, suit or proceeding shall be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount if it
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shall ultimately be determined that he is not entitled to be indemnified by the corporation as authorized in this Article VI.
     6.6 INDEMNITY NOT EXCLUSIVE
     The indemnification and advancement of expenses provided or granted pursuant to the other subsections of this section shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any Bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office.
     6.7 INSURANCE INDEMNIFICATION
     The corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was an Agent of the corporation, or is or was serving at the request of the corporation, as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this Article VI.
     6.8 THE CORPORATION
     For purposes of this Article VI, references to “the corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors and officers, so that any person who is or was a director or Agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under and subject to the provisions of this Article VI (including, without limitation, the provisions of Section 6.4) with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued.
     6.9 EMPLOYEE BENEFIT PLANS
     For purposes of this Article VI, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the corporation” shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the corporation” as referred to in this Article VI.
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 	6.10	 	INDEMNITY FUND	
     Upon resolution passed by the Board of Directors, the corporation may establish a trust or other designated account, grant a security interest or use other means (including, without limitation, a letter of credit), to ensure the payment of certain of its obligations arising under this Article VI and/or agreements which may be entered into between the corporation and its officers and directors from time to time.
 	6.11	 	INDEMNIFICATION OF OTHER PERSONS	
     The provisions of this Article VI shall not be deemed to preclude the indemnification of any person who is not an Agent (as defined in Section 6.1), but whom the corporation has the power or obligation to indemnify under the provisions of the Delaware General Corporation Law or otherwise. The corporation may, in its sole discretion, indemnify an employee, trustee or other agent as permitted by the Delaware General Corporation Law. The corporation shall indemnify an employee, trustee or other agent where required by law.
 	6.12	 	SAVINGS CLAUSE	
     If this Article or any portion thereof shall be invalidated on any ground by any court of competent jurisdiction, then the corporation shall nevertheless indemnify each Agent against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement with respect to any action, suit, proceeding or investigation, whether civil, criminal or administrative, and whether internal or external, including a grand jury proceeding and an action or suit brought by or in the right of the corporation, to the full extent permitted by any applicable portion of this Article that shall not have been invalidated, or by any other applicable law.
 	6.13	 	CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES	
     The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VI shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
ARTICLE VII
MISCELLANEOUS
 	7.1	 	FISCAL YEAR	
     The fiscal year of the corporation shall be determined by resolution of the Board of Directors.
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 	7.2	 	SEAL	
     The corporate seal shall have the name of the corporation inscribed thereon and shall be in such form as may be approved from time to time by the Board of Directors.
 	7.3	 	WAIVER OF NOTICE OF MEETINGS OF STOCKHOLDERS, DIRECTORS AND COMMITTEES	
     Any written waiver of notice, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of any regular or special meeting of the stockholders, directors, or members of a committee of directors need be specified in any written waiver of notice. If such a waiver is given by electronic transmission, the electronic transmission must either set forth or be submitted with information from which it can be determined that the electronic transmission was authorized by the stockholder.
 	7.4	 	INTERESTED DIRECTORS; QUORUM	
     No contract or transaction between the corporation and one or more of its directors or officers, or between the corporation and any other corporation, partnership, association or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose, if: (1) the material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (2) the material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (3) the contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof, or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.
 	7.5	 	FORM OF RECORDS	
     Any records maintained by the corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or be in the form of, punch cards, magnetic tape, photographs, microphotographs or any other information storage device, provided that the records so kept can be converted into clearly legible form within a reasonable time. The
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corporation shall so convert any records so kept upon the request of any person entitled to inspect the same.
 	7.6	 	AMENDMENT OF BYLAWS	
     These Bylaws may be amended, altered or repealed, and new Bylaws adopted, by (i) the Board of Directors or (ii) the stockholders upon the affirmative vote of a majority of the voting power of the shares of capital stock entitled to vote thereon.
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Exhibit 31.1
 
SECTION 302 CERTIFICATION
 
I, James J. Kim, certify that:
 
1. I have reviewed this Quarterly Report on Form 10-Q of Amkor Technology, Inc.;
 
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
 
August 5, 2009
 
/s/  JAMES J. KIM
James J. Kim
Chief Executive Officer

Exhibit 31.2
 
SECTION 302 CERTIFICATION
 
I, Joanne Solomon, certify that:
 
1. I have reviewed this Quarterly Report on Form 10-Q of Amkor Technology, Inc.;
 
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
 
August 5, 2009
 
/s/  JOANNE SOLOMON
Joanne Solomon
Corporate Vice President and
Chief Financial Officer

Exhibit 32
 
CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the Quarterly Report of Amkor Technology, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James J. Kim, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
 
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
August 5, 2009
 
/s/  JAMES J. KIM
James J. Kim
Chief Executive Officer
 
In connection with the Quarterly Report of Amkor Technology, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joanne Solomon, Corporate Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
 
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
August 5, 2009
 
/s/  JOANNE SOLOMON
Joanne Solomon
Corporate Vice President and
Chief Financial Officer