Amkor
Annual Report 2014

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549Form 10-KANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended December 31, 2014Commission File Number 000-29472Amkor Technology, Inc.(Exact name of registrant as specified in its charter) Delaware(State of incorporation) 23-1722724(I.R.S. Employer Identification Number) 2045 East Innovation CircleTempe, AZ 85284(480) 821-5000(Address of principal executive offices and zip code)1900 South Price RoadChandler, AZ 85286(Former address of principal executive offices and zip code)Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which Registered Common Stock, $0.001 par value The NASDAQ Global Select Market Securities registered pursuant to Section 12(g) of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No oIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þIndicate 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, as amended, during thepreceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past90 days. Yes þ No oIndicate 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 andposted 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 suchfiles). Yes þ No oIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’sknowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þIndicate 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 “largeaccelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):Large accelerated filer þAccelerated filer oNon-accelerated filer oSmaller 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 þThe aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2014, based upon the closing price of the commonstock as reported by the NASDAQ Global Select Market on that date, was approximately $1,102.6 million.The number of shares outstanding of each of the issuer’s classes of common equity, as of January 30, 2015, was as follows: 237,283,749 shares of Common Stock, $0.001 parvalue.DOCUMENTS INCORPORATED BY REFERENCE:Portions of the registrant’s Proxy Statement relating to its 2015 Annual Meeting of Stockholders, to be filed subsequently, are incorporated by reference into Part III of this Reportwhere indicated. Table of ContentsTABLE OF CONTENTS PagePART IItem 1.Business3Item 1A.Risk Factors16Item 1B.Unresolved Staff Comments32Item 2.Properties32Item 3.Legal Proceedings33Item 4.Mine Safety Disclosures33 PART IIItem 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities33Item 6.Selected Consolidated Financial Data36Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations37Item 7A.Quantitative and Qualitative Disclosures About Market Risk49Item 8.Financial Statements and Supplementary Data51Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure88Item 9A.Controls and Procedures88Item 9B.Other Information89 PART IIIItem 10.Directors, Executive Officers and Corporate Governance89Item 11.Executive Compensation89Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters90Item 13.Certain Relationships and Related Transactions and Director Independence90Item 14.Principal Accountant Fees and Services90 PART IVItem 15.Exhibits and Financial Statement Schedules90All references in this Annual Report on Form 10-K to “Amkor,” “we,” “us,” “our” or the “company” are to Amkor Technology, Inc. and its subsidiaries. Werefer to the Republic of Korea, which is also commonly known as South Korea, as “Korea”. All references to "J-Devices" and "Toshiba" are to J-DevicesCorporation and Toshiba Corporation, respectively. We also refer to our new factory and research and development facility in Korea as "K5". Amountspreceded by ¥ are in Japanese yen. Amkor®, Amkor Technology®, ChipArray®, FlipStack®, FusionQuad®, MicroLeadFrame® and TMV® are registeredtrademarks of Amkor Technology, Inc. All other trademarks appearing herein are held by their respective owners. Subsequent use of the above registeredtrademarks in this report may occur without the respective superscript symbol (®) in order to facilitate the readability of the report and are not a waiver of anyrights that may be associated with the relevant trademarks.This report contains forward-looking statements within the meaning of the federal securities laws, including but not limited to statements regarding: (1) theamount, timing and focus of our expected capital investments in 2015 including expenditures in support of customer demand in the mobile communicationsmarket and expenditures related to our new factory and research and development facility in Korea, (2) our ability to fund our operating activities for the nexttwelve months, (3)1Table of Contentsthe effect of changes in capacity utilization on our gross margin, (4) the focus of our research and development activities, (5) the expiration of tax holidays injurisdictions in which we operate and expectations regarding our effective tax rate, (6) the release of valuation allowances related to taxes in the future, (7)our repurchase or repayment of outstanding debt or the conversion of debt in the future, (8) payment of dividends, (9) compliance with our covenants, (10)expected contributions to foreign pension plans, (11) liability for unrecognized tax benefits and the potential impact of our unrecognized tax benefits on oureffective tax rate, (12) the effect of foreign currency exchange rate exposure on our financial results, (13) the volatility of the trading price of our commonstock, (14) changes to our internal controls related to integration of acquired operations and implementation of an enterprise resource planning (“ERP”)system, (15) the anticipated schedule for construction of our new factory and research and development facility in Korea, (16) our plan to increase ourownership of J-Devices and consolidation of J-Devices' results into our consolidated financial statements, (17) our efforts to enlarge our customer base incertain geographic areas and markets, (18) demand for advanced packages in mobile devices and our technology leadership and potential growth in thismarket and (19) our expected forfeiture rate for outstanding stock options and restricted shares, (20) our expected rate of return for pension plan assets and(21) 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 comparableterminology. Because such statements include risks and uncertainties, actual results may differ materially from those anticipated in such forward-lookingstatements as a result of various factors, including those set forth in the following report as well as in Part I, Item 1A of this Annual Report on Form 10-K.2Table of ContentsPART IItem 1.BusinessOVERVIEWAmkor is one of the world’s leading providers of outsourced semiconductor packaging and test services. Amkor pioneered the outsourcing of semiconductorpackaging and test services through a predecessor corporation in 1968, and over the years we have built a leading position by:•Designing and developing innovative packaging and test technologies;•Offering a broad portfolio of cost-effective solutions and services;•Successfully penetrating strategic end markets which offer solid growth prospects;•Cultivating long-standing relationships with our customers, which include many of the world’s leading semiconductor companies;•Collaborating with customers, original equipment manufacturers (“OEMs”) and equipment and material suppliers;•Developing a competitive cost structure with disciplined capital investment;•Building expertise in high-volume manufacturing processes and developing a reputation for high quality and solid execution and•Having a diversified operational scope with research and development, engineering and production capabilities at various facilities throughoutChina, Japan, Korea, Malaysia, the Philippines and Taiwan.Our packaging and test services are designed to meet application and chip specific requirements including the type of interconnect technology employed;size; thickness and electrical, mechanical and thermal performance. We are able to provide turnkey packaging and test services including semiconductorwafer bump, wafer probe, wafer backgrind, package design, packaging, test and drop shipment services. Our customers will use us for one or more of theseservices.We provide our services to integrated device manufacturers (“IDMs”), “fabless” semiconductor companies and contract foundries. IDMs generally design,manufacture, package and test semiconductors in their own facilities. However, the availability of technologically advanced outsourced manufacturingservices has encouraged IDMs to increasingly outsource their manufacturing service needs. Fabless semiconductor companies do not have factories and focusexclusively on the semiconductor design process and outsource virtually every step of the manufacturing process. Fabless semiconductor companies utilizecontract foundries to manufacture their semiconductors in wafer form, and companies such as Amkor for their packaging and test needs. Some companies willengage a contract foundry to manage the complete semiconductor manufacturing process, and in turn, the contract foundry will outsource some of itspackaging and test needs.Our IDM customers include: Intel Corporation; Micron Technology, Inc.; STMicroelectronics N.V.; Texas Instruments Incorporated and ToshibaCorporation. Our fabless customers include: Altera Corporation; Avago Technologies; Broadcom Corporation and Qualcomm Incorporated. Our contractfoundry customers include: GlobalFoundries Inc. and Taiwan Semiconductor Manufacturing Company Limited.AVAILABLE INFORMATIONAmkor files annual, quarterly and current reports, proxy statements and other information with the U.S. Securities and Exchange Commission (the “SEC”).You may read and copy any document we file at the SEC’s Public Reference Room, 100 F Street, NE, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for information on the Public Reference Room. The SEC maintains a web site that contains annual, quarterly and current reports, proxy statementsand other information that issuers (including Amkor) file electronically with the SEC. The SEC’s web site is http://www.sec.gov.Amkor’s web site is http://www.amkor.com. Amkor makes available free of charge through its web site, our annual reports on Form 10-K; quarterly reports onForm 10-Q; current reports on Form 8-K; Forms 3, 4 and 5 filed on behalf of directors3Table of Contentsand executive officers and any amendments to those reports filed or furnished pursuant to the Securities Exchange Act of 1934, as amended, as soon asreasonably practicable after such material is electronically filed with, or furnished to, the SEC. We also make available, free of charge, through our web site,our Corporate Governance Guidelines, the charters of the Audit Committee, Nominating and Governance Committee and Compensation Committee of ourBoard of Directors, our Code of Business Conduct, our Code of Ethics for Directors and other information and materials. The information on Amkor’s web siteis not incorporated by reference into this report.INDUSTRY BACKGROUNDSemiconductor devices are the essential building blocks used in most electronic products. As electronic and semiconductor devices have evolved, severalimportant trends have emerged that have fueled the growth of the overall semiconductor industry, as well as the market for outsourced semiconductorpackaging and test services. These trends include:•An increasing demand for mobile and internet-connected devices, including world-wide adoption of mobile “smart” phones and tablets that canaccess the internet and provide multimedia capabilities. The demand for digital video content has driven a range of higher performance internetconnected home and mobile consumer electronics products including the rapidly growing smartphone and tablet categories.•An increase in mobility and connectivity capabilities and growing digital content driving demand for new broadband wired and wireless networkingequipment.•The proliferation of semiconductor devices into well established end products such as automotive systems due to increased use of electronics forsafety, navigation, fuel efficiency, emission reduction and entertainment systems.•An overall increase in the semiconductor content within electronic products to provide greater functionality and higher levels of performance.Our business is impacted by market conditions in the semiconductor industry, which is cyclical by nature and impacted by broad economic factors, such asworld-wide gross domestic product and consumer spending. Historical trends indicate there has been a strong correlation between world-wide gross domesticproduct levels, consumer spending and semiconductor industry cycles.Outsourcing Trends in Semiconductor ManufacturingSemiconductor companies outsource their packaging and test needs to service providers such as Amkor for the following reasons:Packaging and test service providers have developed expertise in advanced technologies.Semiconductor packaging and test technologies continue to become more sophisticated, complex and customized due to increasing demands forminiaturization, greater functionality, lower power consumption and improved thermal and electrical performance. This trend has led many semiconductorcompanies and OEMs to view packaging and test as enabling technologies requiring sophisticated expertise and technological innovation. Many of thesecompanies are also relying on packaging and test service providers as key sources for new package designs and advanced interconnect technologies, therebyenabling them to reduce their internal research and development costs.Packaging and test service providers offer a cost effective solution in a highly cyclical, capital intensive industry.The semiconductor industry is cyclical by nature and impacted by broad economic factors, such as changes in world wide gross domestic product andconsumer spending. Semiconductor packaging and test are complex processes requiring substantial investment in specialized equipment, factories andhuman resources. As a result of this cyclicality and the large investments required, manufacturing facilities must operate at consistently high levels ofutilization to be cost effective. Shorter product life cycles, coupled with the need to update or replace packaging and test equipment to accommodate newpackage types, make it more difficult for integrated semiconductor companies to maintain cost effective utilization of their packaging and test assetsthroughout semiconductor industry cycles. Packaging and test service providers, on the other hand, can typically use their assets to support a broad range ofcustomers, potentially generating more efficient use of their production assets and a more cost effective solution.4Table of ContentsPackaging and test service providers can facilitate a more efficient supply chain and help shorten time-to-market for new products.We believe that semiconductor companies, together with their customers, are seeking to shorten the time-to-market for their new products, and that having aneffective supply chain is a critical factor in facilitating timely and successful product introductions. Packaging and test service providers have the resourcesand expertise to timely develop their capabilities and implement new packaging technology in volume. For this reason, semiconductor companies and OEMsare leveraging capabilities of packaging and test service providers to deliver their new products to market more quickly.High quality packaging and test service providers enable semiconductor manufacturers to focus their resources on semiconductor design and waferfabrication.As semiconductor process technology migrates to larger wafers and smaller feature sizes, the cost of building a state-of-the-art wafer fabrication factory hasrisen significantly and can now be several billions of dollars. The high cost of investing in next generation silicon technology and equipment is causingmany semiconductor companies to adopt or maintain a “fabless” or “fab-lite” strategy to reduce or eliminate their investment in wafer fabrication andassociated packaging and test operations. As a result, these companies are increasing their reliance on outsourced providers of semiconductor manufacturingservices, including packaging and test.STRATEGY AND COMPETITIVE STRENGTHSStrategyOur financial goals are sales growth and improved profitability, and we are focusing on the following strategies to achieve these goals:Leverage Our Investment in Services for Advanced TechnologiesWe are an industry leader in developing and commercializing cost-effective advanced packaging and test technologies. These advanced technologysolutions provide increased value to our customers while typically generating gross margins above our corporate average. This is particularly true in themobile device market, where growth has outpaced the semiconductor industry rate. The key to success in the advanced packaging and test area is to generatereasonably quick returns on investments made for customers seeking leading edge technologies.In recent years we have made significant investments in state-of-the-art facilities and equipment to provide services for the industry’s most complex devices.With approximately 400 employees engaged in research and development focusing on the design and development of new semiconductor packaging andtest technologies, we are a technology leader in areas such as fine pitch bumping, advanced flip chip and wafer-level processing. During 2014, we hadsuccess capitalizing on our advanced technology to achieve design wins and new product introductions in areas such as chips fabricated at 20 nanometergeometries, fingerprint sensors and radio frequency (RF) system-in-package devices. We are also making substantial progress with 2.5D and 3D interconnectsolutions that stack multiple active chips in a single package, as we work closely with our customers to develop cost-effective leading-edge packages for thenext generation of devices.We believe that the value added by advanced packaging services will continue to grow as our customers and leading electronics OEMs strive for smallerdevice geometries, higher levels of speed and performance and lower power consumption. We intend to continue to leverage our investment in advancedtechnology to meet the demand for these services.Improve Utilization of Existing AssetsAnother key to our success is to improve the utilization of our existing assets. The transition by leading edge customers to newer packaging and testequipment and platforms typically frees up capacity in existing, previously installed equipment. As part of our strategy, we are focused on developing asecond wave of customers to more effectively utilize these assets over a longer period of time. For example, we have a concerted effort to increase our sales toChinese and Taiwanese fabless5Table of Contentschip companies, since they have a significant portion of the mid-tier and entry-level segments of the mobile device market where most of the growth isoccurring.In 2014, we made good progress in our efforts to seek out and engage new customers and deepen our engagements with existing customers. This includesexpanded emphasis on the automotive market where semiconductor content continues to grow, and in the analog area for our mainstream wirebondtechnologies. These efforts to enlarge our customer base will continue in 2015.Selectively Grow Our Scale and Scope through Strategic InvestmentsFrom time to time we see attractive opportunities to grow our customer base and expand markets. For example, in 2013, we acquired Toshiba’s power discretesemiconductor packaging and test factory in Malaysia. In addition to adding a new revenue stream from our then existing customer, Toshiba, we are now alsoservicing other customers in this factory.We believe that selective growth through joint ventures, acquisitions and other strategic investments can help diversify our revenue streams, improve ourprofits and maintain our technological leadership.Competitive StrengthsThe outsourced semiconductor packaging and test market is very competitive. We also compete with the internal semiconductor packaging and testcapabilities of many of our customers and foundries. We believe we are well-positioned in the outsourced packaging and test services market. The followingcompetitive strengths allow us to build upon our industry position and to remain one of the preferred providers of semiconductor packaging and test services.Leading Technology InnovatorWe are a leader in developing advanced semiconductor packaging and test solutions. We have designed and developed several state-of-the-art packageformats and technologies including our Package-on-Package (“PoP”) platform with Through Mold Via (“TMV”) technology, FusionQuad, flip chip ball gridarray, multi-chip modules with a silicon interposer placed between the module chips and substrate, copper pillar bumping and fine pitch copper pillar flipchip packaging technologies. In addition, we believe that as semiconductor technology continues to achieve smaller device geometries with higher levels ofspeed and performance, packages will increasingly require wafer-level chip scale packaging, flip chip and three dimensional or “3D” interconnect solutionsthat stack multiple active chips in a single package. We have been investing in our technology leadership in wafer bumping, wafer-level processing and 3Dpackaging technologies. We have also been a leader in developing environmentally friendly integrated circuit packaging, which involves the elimination oflead and certain other materials.In the area of 3D packaging, we have been a market and technology leader in both stacked die, such as stacked chip scale packages and FlipStack, andstacked package technologies such as PoP and TMV. The semiconductor industry is now in a period of 3D packaging development where Through SiliconVia (“TSV”) interconnect technology will be used to create 3D integrated circuits. An alternative approach to full 3D stacking is to place active die on apassive silicon interposer, which in turn is placed on the package substrate. The use of a silicon interposer is often referred to as a “2.5D” packaging solution.We continue to invest in developing the key processes and packaging and test technologies required for our customers to deliver 2.5D and 3D solutions tomarket. We are a leader in wafer thinning, micro-bumping and TSV-based flip chip innovation, and we are leveraging our technology developmentrelationships with key customers in diverse applications to develop and deploy new 2.5D and 3D packaging and test solutions with high density TSVinterconnections.Long-Standing Relationships and Collaboration with Prominent Semiconductor CompaniesOur customers include most of the world’s largest semiconductor companies and over the last four decades, we have developed long-standing relationshipswith many of these companies. We believe that our production excellence has been a key factor in our success in attracting and retaining customers. We workwith our customers and our suppliers to develop proprietary process technologies to enhance our existing capabilities, reduce time-to-market, increasequality and lower costs.6Table of ContentsWe believe that our focus on research and product development will enable us to enter new markets early, capture market share and promote the adoption ofour new package designs as industry standards. We collaborate with customers and leading OEMs to develop comprehensive packaging solutions that makeit easier for next-generation semiconductors to be designed into next-generation end products. By collaborating with leading semiconductor companies andOEM electronic companies, we gain access to technology roadmaps for next generation semiconductor designs and obtain the opportunity to develop newpackages that satisfy their future requirements.Broad Offering of Semiconductor Package Design, Packaging and Test ServicesCreating successful interconnect solutions for advanced semiconductor devices often poses unique thermal, electrical and mechanical design challenges, andwe employ a large number of engineers to solve these challenges. We provide services for more than 1,000 unique products. This wide variety of packagingofferings is necessary to meet the diverse needs of our customers for the optimal combination of performance, size and cost attributes. Our solutions enableour customers to focus on semiconductor design and wafer fabrication while utilizing Amkor as their turnkey design and manufacturing provider and, inmany cases, their packaging technology innovator.We also offer an extensive line of advanced probe and final test services for analog, digital, logic, mixed signal and radio frequency semiconductor devices.We believe that the breadth of our design, packaging and test services is important to customers seeking to limit the number of their suppliers.Geographically Diversified Operational BaseWe have a broad and geographically diversified operational footprint strategically located in six countries in many of the world’s important electronicsmanufacturing regions. We believe that our scale and scope allow us to provide cost effective solutions to our customers by:•Offering capacity to absorb large orders and accommodate quick turn-around times;•Obtaining favorable pricing on materials and equipment, where possible, by using our purchasing power and leading industry position;•Qualifying production of customer devices at multiple manufacturing sites to mitigate the risks of supply disruptions and•Providing capabilities and solutions for customer-specific requirements.For financial information about geographic areas, see Note 19 to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.Competitive Cost Structure and Disciplined Capital InvestmentThere is a continuous push throughout the entire semiconductor supply chain for lower cost solutions. We work to maintain a competitive cost structure andmake disciplined capital investment decisions so that we can provide cost-competitive solutions to our customers, achieve sustainable profitability andgenerate cash flow. Some of our cost control efforts have included: (1) improving the utilization of our existing assets; (2) increasing strip densities to drivehigher throughput; (3) migrating from gold wire to copper or silver wire for certain wirebond packages and (4) increasing labor productivity.We operate in a cyclical industry. During an industry downturn we seek to reduce our costs and drive greater factory and administrative efficiencies. Costcontrol efforts can include reducing labor costs by temporarily lowering compensation, reducing employee and contractor headcount, shortening work weeksand obtaining labor-related foreign government subsidies where available.7Table of ContentsPACKAGING AND TEST SERVICESOverview of Semiconductor Manufacturing ProcessIn general, the semiconductor manufacturing process consists of integrated circuit design, wafer fabrication, wafer probe, packaging and final test.Integrated circuit design involves the laying out of electronic components, such as transistors, resistors, capacitors and the metallic interconnect of thesecomponents, to achieve the desired device functionality. Wafer fabrication is a multiple-step sequence of photolithographic and chemical processing stepsduring which the integrated circuits are gradually created on semiconductor material, typically a silicon wafer. Individual integrated circuits are generallyknown as a “chip” or “die”, and a single wafer will contain many die. Wafers are fabricated by two types of companies - IDMs which design and fabricatewafers using their own in-house manufacturing facilities, and contract foundries which manufacture wafers that are designed by fabless companies or othercustomers.The packaging and test services we provide occur subsequent to wafer fabrication. The wafers that we receive from our customers are generally consigned tous; we do not own the consigned wafers or record their value in our financial statements. During wafer probe, each individual die is electrically tested, orprobed, for defects. Packaging is the processing of bare die to facilitate electrical connections and heat dissipation and protect the die. The wafer is separatedinto individual die. Each good die is then assembled into a package that typically encapsulates the die for protection and creates the electrical connectionsused to connect the package to a printed circuit board, module or other part of the electronic device. In some packages, chips are attached to a substrate orleadframe carrier through wirebonding or flip chip interconnects and then encased in a protective material. Or, for a wafer-level package, the electricalinterconnections are created directly on the surface of the die (while the wafer is still intact) so that the chip may be attached directly to other parts of anelectronic device without a substrate or leadframe. The packages are then tested using sophisticated equipment to ensure that each packaged chip meets itsdesign and performance specifications.Packaging and Test Technologies and ProcessesOur packages employ wirebond, flip chip, copper clip and other interconnect technologies. We use leadframe and substrate package carriers, and we performa variety of test services.Interconnect TechnologiesWirebond: In packages that employ wirebond interconnect technology, the die is mounted face up on the package carrier and the interconnections betweenthe die and package carrier are made through very fine gold, silver or copper wires which are attached from the bond pads of the die to the package carrier.Wirebonding is generally considered to be the most cost-effective and flexible interconnect technology and is used to assemble the majority ofsemiconductor packages.Flip Chip: In packages that employ flip chip interconnect technology, the interconnections between the die and package carrier are made throughconductive “bumps” that are placed directly on the die surface utilizing a process called wafer bumping. The bumped die is then “flipped over” and placedface down, with the bumps connecting directly to the package carrier. Flip chip allows a higher number of interconnects than wirebond as it uses the entiresurface area of the die, and sometimes the perimeter as well, instead of just the perimeter as used by most wirebond packages. Flip chip also providesenhanced thermal and electrical performance, and enables smaller die and thinner, smaller form factors (or physical package dimensions).The wafer bumping process consists of preparing the wafer for bumping and forming or placing the bumps. Preparation may include cleaning, removinginsulating oxides and providing a pad metallurgy that will protect the interconnections while making good mechanical and electrical connection betweenthe bump and the wafer.Copper Clip: Copper clip interconnect technology uses a solid copper bridge or “clip” to connect the die to the package carrier. The clip allows a higherlevel of current flow than a wire and also provides a better method of heat transfer from the die. The clip is either spot welded, or more often re-flow soldered,to the die pads and the package carrier pads.8Table of ContentsPackage CarriersLeadframe: A leadframe is a miniature sheet of metal, generally made of copper and silver alloys, on which a pattern of electrical connections (or “leads”) hasbeen cut. The leads are generally placed around the perimeter of the leadframe and are used to connect the package to the system board. The number of leadson an individual leadframe is limited as electrical shorting can occur if the leads are placed too close together.Substrate: A substrate is a laminate of multiple layers of epoxy resin, woven glass fibers and metal conductors. Bumps provide the electrical connection tothe system board. The bumps are typically distributed evenly across the bottom surface of the substrate (called a “ball grid array” format). This allows greaterdistance between individual leads and a higher number of interconnects than leadframe packages.Test ServicesAmkor provides a complete range of semiconductor testing services including wafer testing or probe and final test. We offer a full range of test software,hardware, integration and product engineering services, and we support a range of business models and test capabilities. Substantially all of our test businessis derived from testing packages that we assemble.Wafer Test Services: Wafer test, also referred to as wafer probe, is performed after wafer fabrication or wafer bumping to screen out defective devices prior topackaging. We offer a range of wafer test coverage that can be tailored based on the cost and complexity of the die, the package and the product. Theseservices range from coarse level screening for major defects all the way up to probing at high digital speeds and can include full radio frequency transmit andreceive as well as testing at multiple temperatures. Wafer testing can also involve a range of wafer mapping and inspection operations.Final Test Services: After the packaging process, final test is performed to ensure that the packaged device meets the customer’s requirements. Final test spansa range of rigor and complexity depending on the device and end market application. More rigorous types of final test include testing multiple times underdifferent electrical and temperature conditions and before and after device reliability stresses, such as burn-in. In addition to electrical testing, specializedsolutions are required for packages that also process non-electric stimuli.The electrical tests are a mix of functional, structural and system-level tests depending on the customer’s requirements and cost and reliability parameters.The electrical test equipment we use includes commercially available automated test equipment, customized and proprietary system level test equipment andinnovative types of low cost test equipment developed by Amkor.Advanced Products and Mainstream ProductsWe offer a broad range of advanced and mainstream packaging and test services to our customers. We refer to our flip chip, wafer-level processing and relatedtest services as “Advanced Products”, and our wirebond packaging and related test services as “Mainstream Products”. The following table sets forth, for theperiods indicated, the amount of advanced and mainstream packaging and test net sales and the percentage of such net sales: Year Ended December 31, 2014 2013 2012 (In millions, except percentage of net sales)Advanced products$1,553 49.6% $1,451 49.1% $1,302 47.2%Mainstream products1,576 50.4% 1,505 50.9% 1,458 52.8%Total net sales$3,129 100.0% $2,956 100.0% $2,760 100.0%9Table of ContentsAdvanced ProductsOur advanced packages include flip chip chip scale packages, wafer-level chip scale packages and flip chip ball grid array packages. These package familiesuse flip chip interconnect technology so that the die can be connected to a substrate package carrier or, in the case of wafer-level chip scale packages, directlyto a printed circuit board.Flip Chip Chip Scale Package ("FC CSP") Products: FC CSP packages are small form factor packages where the substrate size is not much larger than the dieitself. The size advantage provided by chip scale packaging technologies has made FC CSP an attractive choice for a wide variety of applications that requirevery small form factors such as smartphones, tablets and other mobile consumer electronic devices.Flip chip stacked chip scale packages ("FC SCSP") stack a second die on top of the original die. The top die is typically a memory device, and wirebondinterconnects are used to attach it to the substrate. FC SCSP is frequently used to stack memory on top of digital baseband and applications processors for usein mobile devices.We developed fine pitch copper pillar flip chip interconnect technology, which creates interconnections at finer pitches using a plating process to reduce thenumber of substrate layers to facilitate very thin packages. This innovative solution is also an enabling technology for 2.5D and 3D package stacking withTSVs.Wafer-level chip scale packages ("WL CSP") do not utilize a package carrier. The bumped wafer is singulated into individual die, and the wafer-level packageis then attached directly to the system board. WL CSP offers one of the lowest total system costs, enabling higher semiconductor content while leveraging thesmallest form factor and one of the highest performing, most reliable, semiconductor package platforms on the market today. We have seen significant growthin our WL CSP business, particularly for power management, radio frequency, and integrated connectivity applications.Flip Chip Ball Grid Array ("FC BGA") Products: FC BGA packages are large form factor substrate-based packages which are used where processing powerand speed are needed, and small form factors are not required. Our FC BGA packages are assembled around state-of-the-art substrates. Utilizing multiple highdensity routing layers, laser drilled vias, and ultra-fine line and space metallization, FC BGA substrates have the highest routing density available. Thevariety of FC BGA package options allows package selection to be tailored to the specific thermal needs of the end product. We offer FC BGA packaging in avariety of product formats to fit a wide range of end application requirements, including networking, storage, computing and consumer applications.Our Flip Chip Molded BGA ("FCmBGA") packages utilize a molding compound that replaces traditional capillary underfill to interconnect larger die onto asubstrate without the structural need for a lid or stiffening ring. This enables thinner packaging and improved thermal performance while reducing systemcost.System-in-Package ("SiP") Modules: SiP modules contain any combination of one or more die of different functionalities, passive components and MEMsintegrated into a single package to create a fully functioning system or subsystem. These modules use wirebond or flip chip interconnect technologies toconnect the die to a substrate package carrier. The passive components can include inductors, capacitors, resistors, filters and diplexers. SiP modules are usedin mobile devices and other applications for components such as fingerprint sensors, radio frequency controllers, power amplifiers, GPS modules, Bluetoothmodules, digital basebands and hard drive controllers.Mainstream PackagesOur mainstream packages include leadframe packages, substrate-based wirebond packages and micro-electro-mechanical systems packages. These packagefamilies use wirebond interconnect technology to connect a die to a leadframe or substrate package carrier.Leadframe Packages: Leadframe packages use wirebond or flip chip technology to interconnect a die to a leadframe package carrier. Leadframe packages areused in many electronic devices and remain the most practical and cost-effective solution for many low to medium pin count applications.10Table of ContentsTraditional leadframe packages support a wide variety of device types and applications. Two of our most popular traditional leadframe package types aresmall outline integrated circuit and quad flat package, commonly known as “dual” and “quad” products, respectively, based upon the number of sides fromwhich the leads extend. The traditional leadframe package family has evolved from “through hole design,” where the leads are plugged into holes on thecircuit board to “surface mount design,” where the leads are soldered to the surface of the circuit board. We offer a wide range of lead counts and body sizes tosatisfy variations in the size of customers’ semiconductor devices.Through a process of continuous engineering and customization, we have designed several leadframe package types that are thinner and smaller thantraditional leadframe packages, and which have the ability to accommodate more leads on the perimeter of the package. These leadframe packages typicallyhave superior thermal and electrical characteristics, which allow them to dissipate heat generated by high-powered semiconductor devices while providingenhanced electrical connectivity. We are developing increasingly smaller versions of these packages to keep pace with continually shrinking semiconductordevice sizes and demand for miniaturization of portable electronic products. One of our more successful leadframe package offerings is the MicroLeadFramefamily of quad flat no lead packages.Power discrete devices use a leadframe as the package carrier and primarily use wirebond interconnect technology. However, power applications that requireimproved thermal and electrical performance will use packaging with copper clip interconnect technology.Substrate-based Wirebond Packages: Substrate-based wirebond packages use wirebond technology to connect a die to a substrate. Some of our packages inthis category include stacked CSP, chip array ball grid array ("BGA") packages and plastic ball grid array ("PBGA") packages.Stacked CSP technology enables the stacking of a wide range of different semiconductor devices to deliver high levels of silicon integration and areaefficiency. Stacked CSP utilizes high density thin core substrates and advanced materials, along with leading-edge wafer thinning, die attach, and moldingcapabilities to stack multiple die on a substrate. Stacked CSP is ideal for memory, including NAND, NOR and DRAM memory, and mixed signalapplications.Chip array BGA packages offer a broad selection of ball array pitches, ball counts and body sizes, single and multi-die layouts, stacked die and passivecomponent integration. They are applicable for a wide range of semiconductors requiring a smaller package size than conventional PBGAs or leadframepackages.Plastic ball grid array packages are used in applications requiring higher pin count than leadframe packages, but typically have lower pin counts than flipchip. PBGA packages are designed for low inductance, improved thermal operation and enhanced surface-mount technology ability. Custom performanceenhancements, like ground and power planes, are also available.Micro-Electro-Mechanical Systems ("MEMS") Packages: MEMS are miniaturized mechanical and electro-mechanical sensors that can sense or manipulatethe physical world. Examples of MEMS devices include microphones, accelerometers, gyrometers, magnetometers, humidity and temperature sensors andpressure sensors. MEMS are most typically created on silicon wafers but can also employ other substrate types as well. MEMS devices often require an extrafabrication process where the device wafer is bonded to a second wafer which effectively encapsulates the MEMS structure. This method leaves the devicefree to move within a vacuum or an inert gas atmosphere. However, applications such as microphones and pressure sensors require the MEMS structure toremain unencapsulated, requiring innovative cavity style packages.11Table of ContentsEnd MarketsThe following table lists the end markets that use our products:End Market Applications Package Type Communications Handsets (Cell Phones, Feature Phones, SmartPhones)TabletsHandheld DevicesWireless LAN Flip Chip Chip Scale PackageStacked Chip Scale PackageWafer Level Chip Scale PackageFine Pitch Flip Chip Chip Scale PackageChipArray Ball Grid ArrayFlip Chip Stacked Chip Scale Package Consumer TelevisionSet Top BoxesVisual/Imaging ProductsPortable MediaGaming Flip Chip Ball Grid ArrayThin Quad Flat PackChipArray Ball Grid ArrayDigital Micromirror DevicePlastic Ball Grid ArrayMicroLeadFrame Automotive and Industrial InfotainmentSafetyPerformance, Fuel Efficiency and EnvironmentalSustainabilityComfort, Aesthetics and Security MicroLeadFrameSmall Outline Integrated CircuitPlastic Ball Grid ArrayThin Quad Flat PackThin Shrink Small Outline Package Networking ServersRoutersSwitches Flip Chip Ball Grid ArrayPlastic Ball Grid ArrayMicroLeadFrameThin Quad Flat PackChipArray Ball Grid ArrayThin Quad Flat Pack Computing Desk Top ComputerLaptop ComputerNotebook ComputerHard Disk DrivePrinters and Other PeripheralsComputer Server Flip Chip Ball Grid ArrayMicroLeadFrameChipArray Ball Grid ArrayFlip Chip Chip Scale PackageStacked Chip Scale PackageThin Quad Flat PackRELATIONSHIP WITH J-DEVICES CORPORATIONJ-Devices Corporation is the largest provider of outsourced semiconductor packaging and test services in Japan with net sales of $0.9 billion in 2014. J-Devices' business covers a broad range of packaging and test services focused on the automotive, industrial and consumer end markets. The company'scustomers include some of the largest semiconductor companies in the world, such as Fujitsu Semiconductor Limited, Renesas Electronics Corporation andToshiba Corporation.J-Devices was formed in 2009 as a result of a joint venture between Amkor, Toshiba and J-Devices' predecessor, Nakaya Microdevices Corporation ("NMD").As part of this transaction, J-Devices acquired certain assets and business, including technology development, of Toshiba's semiconductor packagingbusiness. Since that time, J-Devices has experienced considerable growth through various acquisitions, including the purchase of three packaging and testfacilities from Fujitsu in 2012, the purchase of three additional packaging and test facilities from Renesas in 2013 and the purchase of our previously wholly-owned subsidiary engaged in semiconductor packaging and test operations in Japan in 2014.We increased our ownership in J-Devices from 30% to 60% in 2013 and from 60% to 65.7% in 2015. J-Devices is now owned 65.7% by Amkor and 34.3% bythe former shareholders of NMD. The governance provisions applicable to J-Devices restrict our ability to cause J-Devices to take certain actions without theconsent of the other investors. Accordingly, we account for our investment in J-Devices using the equity method of accounting. We plan to exercise theremaining option to increase our ownership interest to 80% by 2016, at which time certain governance restrictions will lapse and we will12Table of Contentsbegin consolidating J-Devices' results. We continue to work closely with J-Devices in a number of areas, including joint purchasing programs and jointtechnology development.RESEARCH AND DEVELOPMENTOur research efforts focus on developing new packaging solutions and test services, and improving the efficiency and capabilities of our existing productionprocesses. We believe that technology development is one of the keys to success in the semiconductor packaging and test industry. By concentrating ourresearch and development on our customers’ needs for innovative packages, increased performance and lower cost, we gain opportunities to enter marketsearly, capture market share and promote our new package offerings as industry standards.One of our top priorities is developing low-cost packaging solutions for the next generation of mobile devices, which minimize material and processingcosts, while maximizing yields and reliability. This development effort is particularly important for customers seeking cost-effective alternatives to furthersilicon-level integration. Another important focus area is the development of wafer-level packages for larger chips. These wafer-level chip-scale packages areincreasingly the preferred package type for many chips used in mobile devices. They provide a very low-profile product at a competitive cost. As of December 31, 2014, we had approximately 400 employees engaged in research and development activities. In 2014, 2013 and 2012, we incurred $76.9million, $64.6 million and $54.1 million, respectively, of research and development expense.MARKETING AND SALESOur marketing and sales offices are located throughout Asia, Europe and North America. Our support personnel manage and promote our packaging and testservices and provide key customer and technical support. To provide comprehensive sales and customer service, we typically assign our customers a directsupport team consisting of an account manager, technical program manager, test program manager and both field and factory customer supportrepresentatives. We also support our largest multinational customers from multiple office locations to ensure that we are aligned with their global operationaland business requirements.Our direct support teams are further supported by an extended staff of product, process, quality and reliability engineers, as well as marketing and advertisingspecialists, information systems technicians and factory personnel. Together, these direct and extended support teams deliver an array of services to ourcustomers. These services include:•Managing and coordinating ongoing manufacturing activity;•Providing information and expert advice on our portfolio of packaging and test services and related trends;•Managing the start-up of specific packaging and test programs;•Working to improve our customers’ time-to-market;•Providing a continuous flow of information to our customers regarding products and programs in process;•Partnering with customers on design solutions;•Researching and assisting in the resolution of technical and logistical issues;•Aligning our technologies and research and development activities with the needs of our customers and OEMs;•Providing guidance and solutions to customers in managing their supply chains;•Driving industry standards;•Providing design and simulation services to ensure package reliability and•Collaborating with our customers on continuous quality improvement initiatives.13Table of ContentsFurther, we implement direct electronic links with our customers to:•Achieve near real time and automated communications of order fulfillment information, such as inventory control, production schedules andengineering data, including production yields, device specifications and quality indices and•Connect our customers to our sales and marketing personnel world-wide and to our factories.SEASONALITYOur sales have generally been higher in the second half of the year than in the first half due to the effect of consumer buying patterns in the U.S., Europe andAsia and the timing of flagship mobile device launches. In addition, semiconductor companies generally reduce their production during the holidays at theend of December which results in a decrease in packaging and test services during the first quarter.CUSTOMERSAs of December 31, 2014, we had approximately 250 customers, including many of the largest semiconductor companies in the world. Our ten largestcustomers accounted for 60.9% of our net sales in 2014. Qualcomm Incorporated and Toshiba each accounted for more than 10% of our net sales in 2014.MATERIALS AND EQUIPMENTMaterialsOur materials are used primarily for packaging activities. Our packaging operations depend upon obtaining adequate supplies of materials on a timely basis.The principal materials used in our packaging process are leadframes, laminate substrates, gold and copper wire, mold compound, epoxy, tubes and trays. Thesilicon wafer is generally consigned from the customer. We do not take ownership of the customer consigned wafer, and title and risk of loss remains with thecustomer for these materials. Test materials constitute a very small portion of our total test cost. We purchase materials based on customer forecasts, and ourcustomers are generally responsible for any unused materials which we purchased based on such forecasts.We obtain the materials required for packaging services from various suppliers. We source most of our materials, including critical materials such asleadframes, laminate substrates and gold wire, from a limited group of suppliers. We work closely with our primary material suppliers to ensure that materialsare available and delivered on time and, we also negotiate world-wide pricing agreements with our major suppliers to take advantage of the scale of ouroperations.EquipmentOur ability to meet the changing demand from our customers for manufacturing capacity depends upon obtaining packaging and test equipment in a timelymanner. We work closely with our main equipment suppliers to coordinate the ordering and delivery of equipment to meet our expected capacity needs.The primary types of equipment used in providing our packaging services are wirebonders and die bonders. In addition, we maintain a variety of otherpackaging equipment, including mold, singulation, die attach, ball attach and wafer backgrind, along with numerous other types of manufacturingequipment. A substantial portion of our packaging equipment base can generally be used and adapted to support the manufacture of many of our packagesthrough the use of relatively low cost tooling, although equipment used in advanced packaging can be more difficult to redeploy than equipment used intraditional wirebond packaging.We also purchase wafer bumping equipment to facilitate our flip chip and wafer level packaging services. Wafer bump equipment includes sputter and spincoaters, electroplating equipment, reflow ovens and other types of equipment. This equipment tends to have longer lead times for delivery and installationthan other packaging equipment and is sold in relatively larger increments of capacity.14Table of ContentsThe primary equipment used in the testing process includes testers, handlers and probers. Handlers are used to transfer individual or small groups of packagedintegrated circuits to a tester. Test equipment is generally a more capital intensive portion of the process and tends to have longer delivery lead times thanmost types of packaging equipment. We focus our capital expenditures on standardized tester platforms in order to maximize test equipment utilizationwhere possible.ENVIRONMENTAL MATTERSThe semiconductor packaging process uses chemicals, materials and gases and generates byproducts that are subject to extensive governmental regulations.For example, we produce liquid waste when semiconductor wafers are diced into chips with the aid of diamond saws, then cooled with running water. Inaddition, semiconductor packages have historically utilized metallic alloys containing lead (Pb) within the interconnect terminals typically referred to asleads, pins or balls. The usage of lead (Pb) has decreased over the past few years, as we have ramped volume production of alternative lead (Pb)-free processes.Our operations are subject to numerous laws and regulations governing the protection of the environment, disposal of waste, discharges into water, emissionsinto the atmosphere and the protection of employee health and safety. Future regulations may impose stricter environmental requirements on thesemiconductor packaging and test industry and may require additional capital investment.We are engaged in a continuing program to assure compliance with federal, state and local environmental laws and regulations. We do not expect that capitalexpenditures or other costs attributable to compliance with environmental laws and regulations will have a material adverse effect on our business, liquidity,results of operations, financial condition or cash flows.COMPETITIONThe outsourced semiconductor packaging and test market is very competitive. We face substantial competition from established packaging and test serviceproviders primarily located in Asia, including companies with significant manufacturing capacity, financial resources, research and development operations,marketing and other capabilities. These companies include Advanced Semiconductor Engineering, Inc., Siliconware Precision Industries Co., Ltd. andSTATS ChipPAC Ltd.Such companies also have developed relationships with most of the world’s largest semiconductor companies, including current or potential customers ofAmkor. We also compete with the internal semiconductor packaging and test capabilities of many of our customers. Our IDM customers continually evaluatethe attractiveness of outsourced services against their own in-house packaging and test services and at times may decide to shift some or all of theiroutsourced packaging and test services to internally sourced capacity. We also compete with contract foundries that provide wafer bumping and otheradvanced packaging solutions that compete with our packaging and test services. In addition, we compete with companies that offer only test services andnot packaging.The principal elements of competition in the semiconductor packaging and test services market include:•technical competence;•quality;•price;•breadth of packaging and test services offered, including turnkey services;•new package and test design, technology innovation and implementation;•cycle times;•customer service and•available capacity and ability to invest in capacity, geographic location and scale of manufacturing.We believe that we generally compete favorably with respect to each of these elements.15Table of ContentsINTELLECTUAL PROPERTYWe maintain an active program to protect and derive value from our investment in technology and the associated intellectual property rights. Intellectualproperty rights that apply to our various products and services include patents, copyrights, trade secrets and trademarks. We have filed and obtained a numberof patents in the U.S. and abroad, and their durations vary depending on the jurisdiction in which each patent is filed. Although our patents are an importantelement of our intellectual property strategy as a whole, we are not materially dependent on any one patent or any one technology. We expect to continue tofile patent applications when appropriate to protect our proprietary technologies, but we cannot assure you that we will receive patents from pending orfuture applications. In addition, any patents we obtain may be challenged, invalidated or circumvented and may not provide meaningful protection or othercommercial advantage to us.We also protect certain details about our processes, products and strategies as trade secrets by maintaining the confidentiality of the information we believeprovides us with a competitive advantage. We have ongoing programs designed to maintain the confidentiality of such information. Further, to distinguishour products from our competitors’ products, we have obtained certain trademarks and service marks and may promote our particular brands throughadvertising and other marketing techniques.EMPLOYEESAs of December 31, 2014, we had approximately 21,900 full-time employees. Of the total employee population, approximately 19,700 were engaged inmanufacturing services. We believe that our relations with our employees are good, and we have not experienced a work stoppage in any of our factories. Ouremployees in Europe, Japan, the Philippines, Taiwan and the U.S. are not represented by any union. Certain employees at our factories in China, Korea andMalaysia are members of a union and we operate subject to collective bargaining agreements that we have entered into with these unions.Item 1A.Risk FactorsThe factors discussed below are cautionary statements that identify important factors and risks that could cause actual results to differ materially from thoseanticipated by the forward-looking statements contained in this report. For more information regarding the forward-looking statements contained in thisreport, see the Table of Contents of this Annual Report on Form 10-K. You should carefully consider the risks and uncertainties described below, togetherwith all of the other information included in this report, in considering our business and prospects. The risks and uncertainties described below are not theonly ones facing Amkor. Additional risks and uncertainties not presently known to us may also impair our business operations. The occurrence of any of thefollowing risks could affect our business, liquidity, results of operations, financial condition or cash flows.Dependence on the Highly Cyclical Semiconductor Industry - We Operate in Volatile Industries, and Industry Downturns and Declines in GlobalEconomic and Financial Conditions Could Harm Our Performance.Our business is impacted by market conditions in the semiconductor industry, which is cyclical by nature and impacted by broad economic factors, such asworld-wide gross domestic product and consumer spending. The semiconductor industry has experienced significant and sometimes sudden and prolongeddownturns in the past. For example, the financial crisis and global recession in 2008 and 2009 resulted in a downturn in the semiconductor industry thatadversely affected our business and results of operations during those periods. The economic recovery since that time has been slow and uneven.Since our business is, and will continue to be, dependent on the requirements of semiconductor companies for outsourced packaging and test services, anydownturn in the semiconductor industry or any other industry that uses a significant number of semiconductor devices, such as telecommunications,consumer electronics, or computing, could have a material adverse effect on our business and operating results. During downturns we have experienced,among other things, reduced demand, excess capacity and reduced sales. It is difficult to predict the timing, strength or duration of any economic slowdownor subsequent economic recovery, which, in turn, makes it more challenging for us to forecast our operating results, make business decisions and identifyrisks that may affect our business, sources and uses of cash, financial condition and results of operations. Additionally, if industry conditions deteriorate, wecould suffer significant losses, as we have in the past, which could materially impact our business, liquidity, results of operations, financial condition andcash flows.16Table of ContentsAlso, the action or inaction of the U.S. government relating to federal income tax increases for individuals or corporations, the federal debt ceiling, the federaldeficit and government spending restrictions or shutdowns, may adversely affect consumer demand and economic growth in the U.S. and globally, whichmay harm the semiconductor industry and our business.Fluctuations in Operating Results and Cash Flows - Our Operating Results and Cash Flows Have Varied and May Vary Significantly as a Result ofFactors That We Cannot Control.Many factors, including the impact of adverse economic conditions, could have a material adverse effect on our net sales, gross profit, operating results andcash flows, or lead to significant variability of quarterly or annual operating results. Our profitability and ability to generate cash from operations isprincipally 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 and our ability to control our costs including labor, material, overhead and financing costs.Our net sales, gross profit, operating income and cash flows have historically fluctuated significantly from quarter to quarter as a result of many of thefollowing 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 generally, as well as by specific customers, such asinventory reductions by our customers impacting demand in key markets;•changes in our capacity and capacity utilization rates;•changes in average selling prices which can occur quickly due to the absence of long term agreements on price;•changes in the mix of the semiconductor packaging and test services that we sell;•the development, transition and ramp to high volume manufacture of more advanced silicon nodes and evolving wafer, packaging and testtechnologies, may cause production delays, lower manufacturing yields and supply constraints for new wafers and other materials;•absence of backlog, the short-term nature of our customers’ commitments, double bookings by customers and deterioration in customer forecasts andthe impact of these factors, including the possible delay, rescheduling and cancellation of large orders, or the timing and volume of orders relative toour production capacity;•changes in costs, quality, availability and delivery times of raw materials, components and equipment;•changes in labor costs to perform our services;•wage inflation and fluctuations in commodity prices, including gold, copper and other precious metals;•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 legal claims, indemnification obligations, judgments and settlements;•international events, political instability, civil disturbances or environmental or natural events, such as earthquakes, that impact our operations;•pandemic illnesses that may impact our labor force and our ability to travel;17Table of Contents•costs of acquisitions and divestitures, difficulties integrating acquisitions, the failure of our joint ventures to operate in accordance with businessplans and fluctuations in the results of investments accounted for using the equity method;•our ability to attract and retain qualified personnel to support our global operations;•fluctuations in foreign exchange rates;•fluctuations in our manufacturing yields;•our ability to penetrate various market segments, such as power discrete and the mid-tier and entry-level segments of the mobile device market;•dependence on key customers or concentration of customers in certain market segments, such as mobile communications and•restructuring charges, asset write-offs and impairments.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 semiconductorindustry in 2009 increased the risks associated with the foregoing factors as customer forecasts became more volatile, and there was less visibility regardingfuture demand and significantly increased uncertainty regarding the economy, credit markets and consumer demand. The slow rate of economic growth in theU.S. and elsewhere and economic uncertainty worldwide could continue to cause volatility in customer forecasts and reduce our visibility regarding futuredemand in the semiconductor industry. These factors may have a material and adverse effect on our business, liquidity, results of operations, financialcondition and cash flows or lead to significant variability of quarterly or annual operating results. In addition, these factors may adversely affect our creditratings which could make it more difficult and expensive for us to raise capital and could adversely affect the price of our securities.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 aresubstantially dependent upon our customers’ demand in that quarter. None of our customers have committed to purchase any significant amount ofpackaging 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. Inaddition, we sometimes experience double booking by customers and our customers often reduce, cancel or delay their purchases of packaging and testservices for a variety of reasons including industry-wide, customer-specific and Amkor-specific reasons. This makes it difficult for us to forecast our capacityutilization and net sales in future periods. Since a large portion of our costs is fixed and our expense levels are based in part on our expectations of futuresales, we may not be able to adjust costs in a timely manner to compensate for any sales shortfall. If we are unable to adjust costs in a timely manner, ourmargins, operating results, financial condition and cash flows would be adversely affected.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 toAchieve 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 testservices, but also on the efficient utilization of our human resources and packaging and test equipment. Increases or decreases in our capacity utilization cansignificantly affect gross margins. In periods of low demand, we experience relatively low capacity utilization in our operations, which leads to reducedmargins during that period. Transitions between different packaging technologies, such as the transition from gold wirebond to flip chip and copperwirebond packages, can also impact our capacity utilization if we do not efficiently redeploy our equipment for other packaging and test opportunities. Forexample, in 2011 the migration of some customer demand from wirebond to flip chip packages resulted in under-utilized wirebond assets which negativelyimpacted our capacity utilization and gross margin. We cannot assure you that we will be able to achieve consistently high capacity utilization, and if we failto do so, our gross margins may decrease. If our gross margins decrease, our business, liquidity, results of operations, financial condition and cash flows couldbe materially adversely affected.18Table of ContentsIn addition, our fixed operating costs have increased in recent years in part as a result of our efforts to expand our capacity through significant capitalexpenditures. Forecasted customer demand for which we have made capital investments may not materialize, especially if industry conditions deteriorate. Asa result, our sales may not adequately cover fixed costs resulting in reduced profit levels or causing significant losses, both of which may adversely impactour business, liquidity, results of operations, financial condition 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 publishtheir own projections with respect to our future operating results. As discussed above under “Fluctuations in Operating Results and Cash Flows - OurOperating Results and Cash Flows Have Varied and May Vary Significantly as a Result of Factors That We Cannot Control,” our operating results and cashflows vary significantly and are difficult to accurately predict. Volatility in customer forecasts and fluctuations in global consumer demand make itparticularly difficult to predict future results. To the extent we fail to meet or exceed our own guidance or the analyst projections for any reason, the tradingprices of our securities may be adversely impacted. Moreover, even if we do meet or exceed that guidance or those projections, if analysts and investors donot react favorably, or if analysts were to discontinue providing coverage of our company, the trading prices of our securities may be adversely impacted.Declining Average Selling Prices - Historically There Has Been Downward Pressure on the Prices of Our Packaging and Test Services.Prices for packaging and test services have generally declined over time, and sometimes prices can change significantly in relatively short periods of time.We expect downward pressure on average selling prices for our packaging and test services to continue in the future. If we are unable to offset a decline inaverage selling prices by developing and marketing new packages with higher prices, reducing our purchasing costs, recovering more of our material costincreases from our customers and reducing our manufacturing costs, our business, liquidity, results of operations, financial condition and cash flows could bematerially adversely affected.Decisions by Our Integrated Device Manufacturer 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 IDM customers. Our IDM customers continually evaluatethe need for outsourced services against their own in-house packaging and test services. As a result, at any time and for a variety of reasons, IDMs may decideto shift some or all of their outsourced packaging and test services to internally sourced capacity.The reasons IDMs may shift their outsourced business to internal capacity include:•their desire to realize higher utilization of their existing packaging and test 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.In addition, to the extent we limit capacity commitments for certain customers, these customers may increase their level of in-house packaging and testcapabilities, which could make it more difficult for us to regain their business when we have available capacity.In a downturn in the semiconductor industry, IDMs could respond by shifting some or all outsourced packaging and test services to internally servicedcapacity on a short term basis. Also, the IDMs could curtail or reverse the trend of outsourcing packaging and test services. If we experience a significant lossof IDM business, it could have a material adverse effect on our business, liquidity, results of operations, financial condition and cash flows, especially duringa prolonged industry downturn.19Table of ContentsOur Substantial Indebtedness Could Adversely Affect Our Financial Condition and Prevent Us from Fulfilling Our Obligations.We have a significant amount of indebtedness, and the terms of the agreements governing our indebtedness allow us and our subsidiaries to incur more debt,subject to certain limitations. As of December 31, 2014, our total debt balance was $1,530.8 million, of which $5.0 million was classified as a current liabilityand $255.0 million was collateralized indebtedness at our subsidiaries. We may consider investments in joint ventures, increased capital expenditures oracquisitions which may increase our indebtedness. If new debt is added to our consolidated debt level, the related risks that we 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 purchasenotes 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 business opportunities, including jointventures and acquisitions;•require us to dedicate a substantial portion of our cash flow from operations to service payments of interest and principal on our debt therebyreducing the availability of our cash flow to fund future working capital, capital expenditures, research and development expenditures and othergeneral corporate requirements;•increase the volatility of the price of our common stock;•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;•limit, along with the financial and other restrictive covenants in our indebtedness, among other things, our ability to borrow additional funds;•limit our ability to refinance our existing indebtedness, particularly during periods of adverse credit market conditions when refinancingindebtedness may not be available under interest rates and other terms acceptable to us or at all and•increase our cost of borrowing.We May Have Difficulty Funding Liquidity Needs.We assess our liquidity based on our current expectations regarding sales, operating expenses, capital spending and debt service requirements. Our liquidityis affected by, among other things, the performance of our business, our capital expenditure and other investment levels and our ability to repay debt andother long-term obligations out of our operating cash flows or with the proceeds of debt or equity financings.We operate in a capital intensive industry. We had capital expenditures of $681.1 million in 2014. Servicing our current and future customers requires thatwe incur significant operating expenses and continue to make significant capital expenditures and other investments, which are generally made in advance ofthe related revenues and without firm customer commitments. Ultimately the actual amount of our capital expenditures for 2015 and thereafter may varymaterially and will depend on several factors. These factors include, among others, the amount, timing and implementation of our capital projects, includingthose under review and those not yet planned, the performance of our business, economic and market conditions, the cash needs and investmentopportunities for the business, the need for additional capacity and facilities and the availability of cash flows from operations or financing.In addition, we have a significant level of debt, which requires significant scheduled principal and interest payments in the coming years. The sourcesfunding our operations, including making capital expenditures and other investments and20Table of Contentsservicing principal and interest obligations with respect to our debt, are cash flows from our operations, existing cash and cash equivalents, borrowings underavailable debt facilities, or proceeds from any additional debt or equity financing.The health of the worldwide banking system and capital markets affects our liquidity. If financial institutions that have extended credit commitments to usare adversely affected by the conditions of the U.S. and international banking system and capital markets, they may refuse or be unable to fund borrowingsunder their credit commitments to us. Volatility in the banking system and capital markets could also make it difficult or more expensive for us to maintainour existing credit facilities or refinance our debt.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 fluctuationscould impact our decision or ability to utilize the equity markets as a potential source of our funding needs in the future.In addition, there is a risk that we could fail to generate the necessary net income or operating cash flows to meet the funding needs of our business due to avariety of factors, including the other factors discussed in this "Risk Factors" section. If we fail to generate the necessary cash flows or we are unable to accessthe capital markets when needed, our liquidity may be adversely impacted.Restrictive Covenants in the Indentures and Agreements Governing Our Current and Future Indebtedness and Our Joint Venture Agreements CouldRestrict 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 covenantsthat materially limit our ability to take certain actions, including our ability to incur debt, pay dividends and repurchase stock, make certain investments andother payments, enter into certain mergers and consolidations, engage in sale leaseback transactions and encumber and dispose of assets. In addition, ourfuture 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 the financial ratios or conditions could result in a default under any or all ofsuch indebtedness. If a default occurs under any such indebtedness, all of the outstanding obligations thereunder could become immediately due andpayable, which could result in a default under our other outstanding debt and could lead to an acceleration of obligations related to other outstanding debt.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 complywith the provisions of the indentures, credit facilities and other agreements governing our outstanding debt and indebtedness we may incur in the future canbe 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.Also, our ability to sell our joint venture investments or for our joint ventures to pay dividends, make distributions, provide loans or make other payments tous may be restricted by our joint venture agreements. As a result, we may not be able to access the cash flow of our joint ventures or realize a cash return onour joint venture investment. For example, the governance provisions of our joint venture with J-Devices require the consent of the joint venture partners topay dividends or for us to sell our investment.We Have Significant Severance Plan Obligations Associated With Our Manufacturing Operations in Korea Which Could Reduce Our Cash Flow andNegatively Impact Our Financial Condition.We sponsor an accrued severance plan for our Korean subsidiary, under which we have an accrued liability of $146.7 million as of December 31, 2014.Existing tax laws in Korea limit our ability to deduct severance expenses associated with the current plan. These limitations are designed to encouragecompanies to migrate to a defined contribution or defined benefit plan. If we adopt a new plan, we may fund a significant portion of the existing liability,which could have a material adverse effect on our liquidity, financial condition and cash flows. If we do not adopt a new plan, our ability to deduct accruedseverance will continue to be limited, and as a result we will have to pay higher taxes, which could adversely affect our liquidity, financial condition andcash flows.Under the existing Korean plan, to the extent eligible employees are terminated, our Korean subsidiary would be required to make lump-sum severancepayments on behalf of these eligible employees based on their length of service, seniority and21Table of Contentsrate of pay at the time of termination. Since our severance plan obligation is significant, in the event of a significant layoff or other reduction in our laborforce in Korea, payments under the plan could have a material adverse effect on our liquidity, financial condition and cash flows. See Note 15 to ourConsolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.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. We must annually evaluate ourinternal procedures to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which requires management and our independent registeredpublic accounting firm to assess the effectiveness of internal control over financial reporting.Internal controls may not prevent or detect misstatements because of their inherent limitations, including the possibility of human error, the circumvention oroverriding of controls, fraud or corruption. Therefore, even effective internal controls can provide only reasonable assurance with respect to the preparationand fair presentation of financial statements. In addition, projections of any evaluation of effectiveness of internal controls to future periods are subject to therisk that the internal controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures maydeteriorate.As previously reported, we are implementing a new ERP system in a multi-year program on a world-wide basis. We have implemented several significant ERPmodules and expect to implement additional ERP modules in the future. In addition, we implemented a new shop floor management system in certain of ourfactories and integrated the acquired operations of Amkor Technology Malaysia Sdn. Bhd. into our overall internal control over financial reporting. Theimplementation of these systems, as well as the integration of the acquired operations represents changes in our internal control over financial reporting.Although we continue to monitor and assess our internal controls for these systems and operations, there is a risk that deficiencies may occur that couldconstitute significant deficiencies or, in the aggregate, a material weakness.If we fail to remedy any deficiencies or maintain the adequacy of our internal controls, we could be subject to regulatory scrutiny, civil or criminal penaltiesor shareholder litigation. In addition, failure to maintain adequate internal controls could result in financial statements that do not accurately reflect ouroperating results or financial condition.We Face Warranty Claims, Product Return and Liability Risks, the Risk of Economic Damage Claims and the Risk of Negative Publicity if Our PackagesFail.Our packages are incorporated into a number of end products, and our business is exposed to warranty claims, product return and liability risks, the risk ofeconomic damage claims and the risk of negative publicity if our packages fail.We receive warranty claims from our customers which occur from time to time in the ordinary course of our business. If we were to experience an unusuallyhigh incidence of warranty claims, we could incur significant costs and our business could be adversely affected. In addition, we are exposed to the productand 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 productliability claim. We also may suffer a decline in sales from the negative publicity associated with such a lawsuit or with adverse public perceptions in generalregarding our customers’ products. Further, if our packages are delivered with impurities or defects, we could incur additional development, repair orreplacement costs or suffer other economic losses, and our credibility and the market’s acceptance of our packages could be harmed.22Table of ContentsRisks Associated With International Operations - We Depend on Our Factories and Operations in China, Japan, Korea, Malaysia, the Philippines andTaiwan. 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, Malaysia, the Philippines and Taiwan.Substantially all of our property, plant and equipment is located outside of the United States. Moreover, many of our customers and the vendors in our supplychain are located outside the U.S. The following are some of the risks we face in doing business internationally:•changes in consumer demand resulting from deteriorating conditions in local economies;•regulations and policies imposed by U.S. or foreign governments, such as tariffs, customs, duties and other restrictive trade barriers, antitrust andcompetition, tax, currency and banking, privacy, labor, environmental, health and safety;•the payment of dividends and other payments by non-U.S. subsidiaries may be subject to prohibitions, limitations or taxes in local jurisdictions;•fluctuations in currency exchange rates;•political and social conditions, such as civil unrest and terrorism;•disruptions or delays in shipments caused by customs brokers or government agencies;•difficulties in attracting and retaining qualified personnel and managing foreign operations, including foreign labor disruptions;•difficulty in enforcing contractual rights and protecting our intellectual property rights;•potentially adverse tax consequences resulting from tax laws in the U.S. and in foreign jurisdictions in which we operate and•local business and cultural factors that differ from our normal standards and practices, including business practices that we are prohibited fromengaging in by the Foreign Corrupt Practices Act (FCPA) and other anti-corruption laws and regulations.In particular, we have significant facilities and other investments in South Korea, and there have been heightened security concerns in recent years stemmingfrom North Korea’s nuclear weapon and long-range missile programs as well as its military actions in the region. Furthermore, there has been a history ofconflict and a recent rise in tensions among other countries in the region.We Face Risks in Connection with the Continuing Development and Implementation of Changes to, and Maintenance and Security of, Our ManagementInformation Systems.We depend on our management information systems for many aspects of our business. Some of our key software has been developed by our ownprogrammers, and this software may not be easily integrated with other software and systems. Our systems may be susceptible to damage, disruptions orshutdowns due to failures during the process of upgrading, replacing or maintaining software, databases or components thereof, power outages, hardwarefailures, computer viruses, attacks by computer hackers, telecommunication failures, user errors, malfeasance or catastrophic events. In addition, securitybreaches could result in unauthorized disclosure of confidential information. We have made and continue to make significant investments to implement andevolve our management information systems. In addition, we implemented a new shop floor system in certain of our factories. In July 2013, we acquired afactory in Malaysia, and we are integrating its management information systems into our existing systems and processes. We face risks in connection withcurrent and future projects to install or integrate new management information systems or upgrade our existing systems. These risks include:•we may face delays in the design and implementation of the system;•the cost of the systems may exceed our plans and expectations and23Table of Contents•disruptions resulting from the implementation or integration of the systems may impact our ability to process transactions and delay shipments tocustomers, 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 successfully install newsystems or improve, upgrade, integrate or expand upon our existing systems.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, sales and technical personnel, any of whom may bedifficult to replace. Competition for qualified employees is intense, and our business could be adversely affected by the loss of the services of any of ourexisting key personnel, including senior management, as a result of competition or for any other reason. We do not have employment agreements with ourkey employees, including senior management or other contracts that would prevent our key employees from working for our competitors in the event theycease working for us. We cannot assure you that we will be successful in our efforts to retain key employees or in hiring and properly training sufficientnumbers of qualified personnel and in effectively managing our growth. Our inability to attract, retain, motivate and train qualified new personnel could havea material adverse effect on our business.Difficulties Consolidating and Integrating Our Operations - 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 resulting primarily from existing andfuture facility consolidations, strategic acquisitions, joint ventures and other partnering arrangements. Some of the risks from these activities include thoseassociated with the following:•increasing the scope, geographic diversity and complexity of our operations;•conforming an acquired company's standards, practices, systems and controls with our operations;•increasing complexity from combining recent acquisitions of an acquired business;•unexpected losses of key employees or customers of an acquired business; other difficulties in the assimilation of acquired operations, technologiesor products and•diversion of management and other resources from other parts of our operations and adverse effects on existing business relationships withcustomers.In connection with these activities, we may:•use a significant portion of our available cash;•issue equity securities, which may dilute the ownership of current stockholders;•incur substantial debt;•incur or assume known or unknown contingent liabilities and•incur large, immediate accounting write offs and face antitrust or other regulatory inquiries or actions.For example, the businesses we have acquired had, at the time of acquisition, multiple systems for managing their own production, sales, inventory and otheroperations. Migrating these businesses to our systems typically is a slow, expensive process requiring us to divert significant resources from other parts of ouroperations. We may continue to face these challenges in the future. For example, on July 31, 2013, we completed the purchase of Amkor TechnologyMalaysia Sdn. Bhd. We have also exercised our option to increase our ownership interest in J-Devices from 30% to 60% in 2013 and from 60% to 65.7% in2015, and we have an additional option to increase our ownership to 80% in 2016. We are integrating the recently acquired operation in Malaysia, and weanticipate that in the future we will need to integrate J-Devices with our existing operations. In addition, J-Devices continues to integrate the acquisitions ithas recently completed with its operations. Furthermore, the governance provisions applicable to J-Devices restrict our ability to cause J-Devices to takecertain actions without the consent of the other investors. As a result of the risks discussed above, the anticipated benefits of the increase in our investment inJ-Devices or other future acquisitions, consolidations and partnering arrangements may not be fully24Table of Contentsrealized, if at all, and these activities could have a material adverse effect on our business, financial condition and results of operations.Dependence on Materials and Equipment Suppliers - Our Business May Suffer If the Cost, Quality or Supply of Materials or Equipment ChangesAdversely Including Any Disruption that May Occur in the Supply of Certain Metals due to New Regulations Regarding the Supply of Minerals fromConflict Zones.We obtain from various vendors the materials and equipment required for the packaging and test services performed by our factories. We source most of ourmaterials, including critical materials such as leadframes, laminate substrates and gold wire, from a limited group of suppliers. A disruption to the operationsof one or more of our suppliers could have a negative impact on our business. For example, the severe earthquake and tsunami in Japan in 2011 had asignificant adverse effect on the electronics industry supply chain by impacting the supply of specialty chemicals, substrates, silicon wafers, equipment andother supplies to the electronics industry. In addition, we purchase the majority of our materials on a purchase order basis. Our business may be harmed if wecannot obtain materials and other supplies from our vendors in a timely manner, in sufficient quantities, at acceptable quality or at competitive prices. Someof our customers are also dependent on a limited number of suppliers for certain materials and silicon wafers. Shortages or disruptions in our customers'supply channels could have a material adverse effect on our business, financial condition, results of operations and cash flows. For example, the shortage inthe supply of 28 nanometer wafers to some of our customers in 2012 delayed or otherwise adversely impacted the demand for certain of our advancedpackaging and test services.Rules adopted by the Securities and Exchange Commission implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act imposediligence and disclosure requirements regarding the use of certain minerals originating from the conflict zones of the Democratic Republic of Congo andadjoining countries in our products. Industry associations and some of our customers are also implementing initiatives to improve transparency andaccountability concerning the supply of these materials and, in some cases, requiring us to certify that the covered materials we use in our packages do notcome from the conflict areas. We may incur additional costs associated with complying with these requirements and customer initiatives. These requirementsand customer initiatives could affect the pricing, sourcing and availability of metals used in the manufacture of semiconductor devices, and we cannot assureyou that we will be able to obtain conflict-free materials in sufficient quantities and at competitive prices or that we will be able to verify the origin of all ofthe metals we use in our manufacturing process. If we are unable to certify that the metals we use in our packages are conflict-free, it could adversely affectour business as some customers may move their business to other suppliers. Our reputation could also be adversely affected.We purchase new packaging and test equipment to maintain and expand our operations. From time to time, increased demand for new equipment may causelead times to extend beyond those normally required by equipment vendors. For example, in the past, increased demand for equipment caused someequipment suppliers to only partially satisfy our equipment orders in the normal time frame or to increase prices during market upturns for the semiconductorindustry. The unavailability of equipment or failures to deliver equipment on a timely basis could delay or impair our ability to meet customer orders. If weare unable to meet customer orders, we could lose potential and existing customers. Generally, we acquire our equipment on a purchase order basis and do notenter into long-term equipment agreements. As a result, we could experience adverse changes in pricing, currency risk and potential shortages in equipmentin a strong market, 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 businessfluctuate. Historically, we have been able to partially offset the effect of commodity price increases through price adjustments to some customers and changesin our product designs that reduce the material content and cost, such as the use of shorter, thinner, gold wire and migration to copper wire. However, wetypically do not have long-term contracts that permit us to impose price adjustments, and market conditions may limit our ability to do so. Significant priceincreases may adversely impact our gross margin in future periods to the extent we are unable to pass along past or future commodity price increases to ourcustomers.25Table of ContentsCustomer Concentration and Loss of Customers - The Loss of Certain Customers or Reduced Orders or Pricing from Existing Customers May Have aSignificant Adverse Effect on Our Operations and Financial Results.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 tothe concentration of market share in the semiconductor industry. Our ten largest customers together accounted for 60.9% of our net sales for the year endedDecember 31, 2014, and two customers each accounted for more than 10% of our consolidated net sales during the period. The loss of a significant customer,a reduction in orders or decrease in price from a significant customer or disruption in any of our significant strategic partnerships or other commercialarrangements may result in a decline in our sales and profitability and could have a material adverse effect on our business, liquidity, results of operations,financial condition and cash flows.The demand for our services from each customer is directly dependent upon that customer’s level of business activity and purchasing decisions, the qualityand price of our services, our cycle time and delivery performance, the customer's qualification of additional competitors on products we package or test anda number of other factors. Each of these factors could vary significantly from year to year resulting in the loss or reduction of customer orders. Our business islikely to remain subject to this variability in order levels, and we cannot assure you that our key customers or any other customers will continue to placeorders with us in the future at the same levels as in past periods.For example, if a key customer decides to purchase wafers from a semiconductor foundry that provides packaging and test services, our business could bereduced if the customer also engages that foundry for related packaging and test services. We cannot assure that customer decisions regarding the purchase ofsemiconductor wafers will not significantly and adversely impact customer demand for our packaging and test services.In addition, from time to time we may acquire or build new facilities, such as our new factory and research and development center in Korea, or migrateexisting business among our facilities. In connection with these facility changes, our customers require us to re-qualify the new facilities even though wehave already qualified to perform the services at our other facilities. We cannot assure that we will successfully re-qualify or that our customers will notqualify our competitors and move the business for such services.Capital Expenditures - We Make Substantial Investments in Equipment and Facilities To Support the Demand Of Our Customers, Which May AdverselyAffect Our Business If the Demand Of Our Customers Does Not Develop As We Expect or Is Adversely Affected.We make significant investments in equipment and facilities in order to service the demand of our customers. For example, we had capital expenditures of$681.1 million in 2014, $566.3 million in 2013 and $533.5 million in 2012. The amount of our capital expenditures depends on several factors, includingthe performance of our business, our assessment of future industry and customer demand, our capacity utilization levels and availability, our liquidityposition and the availability of financing. Our ongoing capital expenditure requirements may strain our cash and short-term asset balances, and, in periodswhen we are expanding our capital base, we expect that depreciation expense and factory operating expenses associated with our capital expenditures toincrease production capacity will put downward pressure on our gross margin, at least over the near term. From time to time, we also make significant capitalexpenditures based on specific business opportunities with one or a few key customers, and the additional equipment purchased may not be readily usable tosupport other customers. If demand is insufficient to fill our capacity, or we are unable to efficiently redeploy such equipment, our capacity utilization andgross margin could be negatively impacted. Our capital expenditures may increase as we transition to new packaging and test technologies because, amongother things, new equipment used for these technologies is generally more expensive and often our existing equipment cannot be redeployed in whole or partfor these technologies.Furthermore, if we cannot generate or raise additional funds to pay for capital expenditures, particularly in some of the advanced packaging and bumpingareas, as well as research and development activities, our growth and future profitability may be adversely affected. Our ability to obtain external financing inthe future is subject to a variety of uncertainties, including:•our future financial condition, results of operations and cash flows;•general market conditions for financing;26Table of Contents•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 investments is often significant, and, as a result, we often need to commit to capitalexpenditures in advance of our receipt of firm orders or advance deposits 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 additional equipment orfacilities 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 inthe future, our business, liquidity, results of operations, financial condition and cash flows could be materially adversely affected.In addition, during periods where customer demand exceeds our capacity, customers may transfer some or all of their business to other suppliers who are ableto support their needs. To the extent this occurs, our business, liquidity, results of operations, financial condition and cash flows could be materiallyadversely affected.In September 2014, we started the construction of our new K5 facility in Korea. We plan to spend approximately $375 million for the construction of thefacility in 2015 and 2016, including capitalized interest of $40 million. The land purchase agreement includes various construction, investment, hiring,regulatory and other compliance obligations. There can be no assurance that the new facility will be completed, or that the actual scope, costs, timeline orbenefits of the project will be consistent with our current expectations.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 including property, plant and equipment, intellectual property and other intangibles for impairment whenevents or changes in circumstances indicate the carrying value may not be recoverable. Factors we consider include significant under-performance relative toexpected historical or projected future operating results, significant negative industry or economic trends and our market capitalization relative to net bookvalue. 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 ofour long-lived assets is determined. Such charges have had and could have a significant adverse impact on our results of operations and our operatingflexibility under our debt covenants.Litigation Incident to Our Business Could Adversely Affect Us.We have been a party to various legal proceedings, including those described in Note 18 to our Consolidated Financial Statements in Part II, Item 8 of thisAnnual Report on Form 10-K, and may be a party to legal proceedings in the future. These proceedings could require significant management time andresources and, if an unfavorable ruling or outcome were to occur in these legal proceedings, 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 There Are Changes in Tax Laws or Taxing Authorities Do Not Agree with OurInterpretation of Applicable Tax Laws, Including Whether We Continue to Qualify for Our Tax Holidays.Our operations are subject to tax in multiple jurisdictions with complicated and varied tax regimes. Tax laws and income tax rates in these jurisdictions aresubject to change due to economic and political conditions. Changes in U.S. or foreign tax laws could have a material adverse impact on our liquidity, resultsof operations, financial condition and cash flows. For example, there have been proposals to change U.S. tax laws that would significantly impact howU.S. corporations are taxed on foreign earnings. We earn a substantial portion of our income in foreign countries. Although we cannot predict whether or inwhat form any of these proposals might be enacted into law, if adopted they could have a material adverse impact.Our corporate structure and operations are based, in part, on interpretations of various U.S. and foreign tax laws, including withholding tax, compliance withtax 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 may27Table of Contentsconduct examinations of our income tax returns and other regulatory filings. We cannot assure you that the taxing authorities will agree with ourinterpretations, including whether we continue to qualify for our tax holidays. To the extent they do not agree, we may seek to enter into settlements with thetaxing authorities which require significant payments or otherwise adversely affect our results of operations or financial condition. We may also appeal thetaxing authorities’ determinations to the appropriate governmental authorities, but we cannot be sure we will prevail. If we do not prevail, we may have tomake significant payments or otherwise record charges (or reduce tax assets) that adversely affect our results of operations, financial condition and cash flows.Additionally, certain of our subsidiaries operate under tax holidays, which will expire in whole or in part at various dates in the future. As those tax holidaysexpire, our tax expense will increase as income from those jurisdictions becomes subject to higher statutory income tax rates, thereby reducing our liquidityand cash flow.Intellectual Property - Our Business Will Suffer if We Are Not Able to Develop New Proprietary Technology, Protect Our Proprietary Technology andOperate Without Infringing the Proprietary Rights of Others.The complexity and breadth of semiconductor packaging and test services are rapidly increasing. As a result, we expect that we will need to develop, acquireand implement new manufacturing processes and packaging technologies and tools in order to respond to competitive industry conditions and customerrequirements. Technological advances also typically lead to rapid and significant price erosion and may make our existing packages less competitive or ourexisting inventories obsolete. If we cannot achieve advances in packaging design or obtain access to advanced packaging designs developed by others, ourbusiness could suffer.The need to develop and maintain advanced packaging capabilities and equipment could require significant research and development, capital expendituresand acquisitions in future years. In addition, converting to new packaging designs or process methodologies could result in delays in producing new packagetypes, which could adversely affect our ability to meet customer orders and adversely impact our business.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 futureapplications or that, if patents are issued, the rights granted under the patents will provide us with meaningful protection or any commercial advantage. Anypatents we do obtain will eventually expire, may be challenged, invalidated or circumvented and may not provide meaningful protection or othercommercial advantage to us.Some of our technologies are not covered by any patent or patent application. The confidentiality agreements on which we rely to protect these technologiesmay be breached and may not be adequate to protect our proprietary technologies. There can be no assurance that other countries in which we market ourservices 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 or superior to our own. In addition, many of our patents are subjectto cross licenses, several of which are with our competitors. The semiconductor industry is characterized by frequent claims regarding the infringement ofpatent 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 or cease to provide the services at issue, which could curtail our business;•pay substantial damages;•develop non-infringing technologies, which may not be feasible or•acquire licenses to such technology, which may not be available on commercially reasonable terms or at all.We may need to enforce our patents or other intellectual property rights, including our rights under patent and intellectual property licenses with thirdparties, or defend ourselves against claimed infringement of the rights of others through litigation, which could result in substantial cost and diversion of ourresources. Furthermore, if we fail to obtain necessary licenses, our business could suffer, and we could be exposed to claims for damages and injunctions fromthird parties, as well as claims from our customers for indemnification. We have been involved in legal proceedings involving the acquisition and license ofintellectual property rights, the enforcement of our existing intellectual property rights or the enforcement of the intellectual property rights of others,including the recently settled legal proceedings with Tessera, Inc., which is described in more detail in Note 18 to our Consolidated Financial Statements inPart II, Item 8 of this Annual Report on Form 10-K. Unfavorable outcomes in any legal proceedings involving intellectual property could result in significantliabilities and28Table of Contentscould have a material adverse effect on our business, liquidity, results of operations, financial condition and cash flows. The potential impact from the legalproceedings referred to in this Annual Report on Form 10-K on our results of operations, financial condition and cash flows could change in the future.Packaging and Test Processes Are Complex and Our Production Yields and Customer Relationships May Suffer from Defects in the Services We Provideor if We do Not Successfully Implement New Technologies.Semiconductor packaging and test services are complex processes that require significant technological and process expertise. Defective packages primarilyresult from:•contaminants in the manufacturing environment;•human error;•equipment malfunction;•changing processes to address environmental requirements;•defective raw materials or•defective plating services.Test is also complex and involves sophisticated equipment and software. Similar to many software programs, these software programs are complex and maycontain programming errors or “bugs.” The test equipment is also subject to malfunction. In addition, the test 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 ourcapacity, change our processing steps or ramp new technologies. In addition, we must continue to develop and implement new packaging and testtechnologies, and expand our offering of packages to be competitive. Our production yields on new packages, particularly those packages which are basedon new technologies, typically are significantly lower than our production yields on our more established packages.Our failure to maintain quality standards or acceptable production yields, if significant and prolonged, could result in loss of customers, increased costs ofproduction, delays, substantial amounts of returned goods and claims by customers relating thereto. Any of these problems could have a material adverseeffect 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 existing customers, such failure could have a material adverse effect on our business, results ofoperations, financial condition and cash flows.Competition - We Compete Against Established Competitors in the Packaging and Test Business as Well as Internal Customer Capabilities and May FaceCompetition from New Competitors.The outsourced semiconductor packaging and test market is very competitive. We face substantial competition from established and emerging packagingand test service providers primarily located in Asia, including companies with significant processing capacity, financial resources, local presence, researchand development operations, marketing, technology and other capabilities. These companies may also have established relationships with many largesemiconductor companies that are our current or potential customers. Consolidation among our competitors could also strengthen their competitive position.We also face competition from the internal capabilities and capacity of many of our current and potential IDM customers. In addition, we compete withcompanies (including semiconductor foundries) that provide wafer bumping and other advanced packaging solutions that compete with our packaging andtest services. For example, one of the major semiconductor foundries, which is substantially larger and has greater financial resources than we do, hasexpanded, and may continue to expand its operations to include packaging and test services.29Table of ContentsWe 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 notrely on internal sources for packaging and test services, or that our business, liquidity, results of operations, financial condition and cash flows will not beadversely affected by such increased competition.Environmental, Health & Safety Laws and Initiatives - Future Environmental, Health & Safety Laws and Initiatives Could Place Additional Burdens onOur Manufacturing Operations.The semiconductor packaging process generates by-products that are subject to extensive governmental regulations. For example, at our foreign facilities weproduce 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 orballs. Environmental, health and safety laws and regulations in places we do business, impose various controls on the use, storage, handling, discharge anddisposal of chemicals used in our production processes and on the factories we occupy and are increasingly imposing restrictions on the materials containedin semiconductor products. We may become liable under these environmental, health and safety laws and regulations for the cost of compliance and cleanupof any disposal or release of hazardous materials arising out of our former or current operations, or otherwise as a result of the existence of hazardous materialson our properties. In such an event, we could be held liable for damages, including fines, penalties and the cost of investigations and remedial actions, andcould also be subject to revocation of permits negatively affecting our operations.Public attention has focused on the environmental impact of semiconductor operations and the risk to neighbors of chemical releases from such operationsand to the materials contained in semiconductor products. For example, the European Union’s Restriction of Use of Certain Hazardous Substances inElectrical and Electronic Equipment Directive and similar laws in other jurisdictions impose strict restrictions on the use of lead and other hazardoussubstances in electrical and electronic equipment. In addition, increasing climate change and environmental concerns could result in our customersrequesting that we exceed regulatory standards. Complying with existing and possible future environmental, health and safety laws or related customerrequests may impose upon us the need for additional equipment or other process requirements, restrict our ability to expand our operations, disrupt ouroperations, increase costs, subject us to liability or cause us to curtail our operations. Furthermore, energy costs in general could increase significantly due toclimate change and other regulations.Our Business and Financial Condition Could be Adversely Affected by Natural Disasters and Other Calamities.We have significant packaging and test and other operations in locations which are subject to natural disasters, such as earthquakes, tsunamis, typhoons,floods, droughts, volcanoes and other severe weather and geological events, and other calamities, such as fire; the outbreak of infectious diseases (such asEbola, SARs or flu); industrial strikes; breakdowns of equipment; difficulties or delays in obtaining materials, equipment, utilities and services; politicalevents; acts of war and terrorist incidents; industrial accidents and other events, that could disrupt or even shutdown our operations. In addition, our suppliersand customers also have significant operations in such locations. In the event of such a disruption or shutdown, we may be unable to reallocate production toother facilities in a timely or cost-effective manner (if at all) and we may not have sufficient capacity to service customer demands in our other facilities. Anatural disaster or other calamity that results in a prolonged disruption to our operations, or the operations of our customers or suppliers, could have amaterial adverse effect on our business, financial condition, results of operations and cash flows. For example, Japan experienced a severe earthquake andtsunami in 2011 that resulted in significant disruption in the electronics industry supply chain and adversely affected Japan's economy and consumerspending. In addition, in October 2011, Thailand experienced substantial flooding which affected the facilities and operations of customers and suppliers inour industry. In addition, some of the processes that we utilize in our operations place us at risk of fire and other damage. For example, highly flammablegases are used in the preparation of wafers holding semiconductor devices for flip chip packaging. Although we maintain insurance policies for various typesof 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 cannotassure you that it would be sufficient to cover all of our potential losses. As a result, our business, financial condition, results of operations and cash flowscould be adversely affected by natural disasters and other calamities.30Table of ContentsMr. James J. Kim and Members of His Family Can Effectively Determine or Substantially Influence The Outcome of All Matters Requiring StockholderApproval.As of December 31, 2014, Mr. James J. Kim, the Executive Chairman of our Board of Directors, members of Mr. Kim’s immediate family and affiliates ownedapproximately 137.6 million shares, or approximately 58%, of our outstanding common stock. In June 2013, the Kim family exchanged their 2014 Notes forapproximately 49.6 million shares of common stock (the "2014 Convert Shares"). The Kim Family also has options to acquire approximately 0.5 millionshares. If the options are exercised, the Kim family's total ownership would be an aggregate of approximately 138.0 million shares of our outstandingcommon stock or approximately 58% of our outstanding common stock.The 2014 Convert Shares are subject to a voting agreement. The agreement requires the Kim family to vote these shares in a “neutral manner” on all matterssubmitted to our stockholders for a vote, so that such 2014 Convert Shares are voted in the same proportion as all of the other outstanding securities(excluding the other shares owned by the Kim family) that are actually voted on a proposal submitted to Amkor’s stockholders for approval. The Kim familyis not required to vote in a “neutral manner” any 2014 Convert Shares that, when aggregated with all other voting shares held by the Kim family, represent41.6% or less of the total then-outstanding voting shares of our common stock. The voting agreement for the 2014 Convert Shares terminates upon theearliest of (i) such time as the Kim family no longer beneficially owns any of the 2014 Convert Shares, (ii) consummation of a change of control (as defined inthe voting agreement) or (iii) the mutual agreement of the Kim family and Amkor.Mr. James J. Kim and his family and affiliates, acting together, have the ability to effectively determine or substantially influence matters submitted forapproval by our stockholders by voting their shares or otherwise acting by written consent, including the election of our Board of Directors. There is also thepotential, through the election of members of our Board of Directors, that the Kim family could substantially influence matters decided upon by our Board ofDirectors. This concentration of ownership may also have the effect of impeding a merger, consolidation, takeover or other business consolidation involvingus, 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 anypremium over market price that an acquirer might otherwise pay. Concentration of ownership also reduces the public float of our common stock. There maybe less liquidity and higher price volatility for the stock of companies with a smaller public float compared to companies with broader public ownership.31Table of ContentsItem 1B.Unresolved Staff CommentsNone.Item 2.PropertiesThe location and size of our manufacturing facilities are set forth in the table below. All facilities are owned unless otherwise specified. ApproximateFacility Size(Square Feet)Korea Gwangju, Korea 1,241,000Seoul, Korea 668,000Pupyong, Korea (1) 448,000Philippines Muntinlupa, Philippines (2) 648,000Province of Laguna, Philippines (2) 633,000China Shanghai, China (3) 915,000Taiwan Hsinchu, Taiwan 489,000Lung Tan, Taiwan 353,000Malaysia Telok Panglima Garang, Malaysia (3) 377,000 Total all facilities 5,772,000(1)Includes a lease for 44,000 square feet of building space.(2)As a result of foreign ownership restrictions in the Philippines, the land is leased. A portion of the land we lease is owned by realty companies in whichwe own a 40% interest. We also lease 648,000 square feet of building space.(3)Land is leased.During 2013, we purchased land for a factory and research and development center in Korea and in September 2014, we started construction. Constructionwork is expected to continue into 2016.J-Devices, our 65.7% owned equity-method joint venture in Japan, operates 13 manufacturing facilities with a total of 3.6 million square feet of space. Thisincludes 0.9 million square feet of leased building space.Our principal executive office and operational headquarters is located in Tempe, Arizona. In addition to executive staff, the Tempe, Arizona campus housessales and customer service for the southwest region, product management, finance, information systems, planning and marketing. Our marketing and salesoffice locations include sites at most of our manufacturing locations as well as Europe, Singapore and the U.S. (Tempe, Arizona; Irvine, San Diego andSanta Clara, California; Boston, Massachusetts and Dallas, Texas).We believe that our existing properties are in good condition and suitable for the conduct of our business and that the productive capacity of such propertiesis substantially being utilized or we have plans to utilize it.32Table of ContentsItem 3.Legal ProceedingsFrom time to time, we may become involved in various disputes and litigation matters that arise in the ordinary course of our business. These includedisputes and lawsuits related to intellectual property, acquisitions, licensing, contracts, tax, regulatory, employee relations and other matters. For a discussionof “Legal Proceedings,” see Note 18 to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.Item 4.Mine Safety DisclosuresNot applicable.PART IIItem 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesLISTING ON THE NASDAQ GLOBAL SELECT MARKETOur common stock is traded on the NASDAQ Global Select Market under the symbol “AMKR.” The following table sets forth, for the periods indicated, thehigh and low sale prices per share of our common stock as quoted on the NASDAQ Global Select Market. High Low 2014 First Quarter $6.86 $5.12 Second Quarter 12.21 6.88 Third Quarter 11.44 8.41 Fourth Quarter 8.61 5.97 2013 First Quarter $4.99 $3.99 Second Quarter 4.63 3.60 Third Quarter 4.61 4.01 Fourth Quarter 6.13 4.35 There were approximately 145 holders of record of our common stock as of January 30, 2015.DIVIDEND POLICYSince our public offering in 1998, we have never paid a dividend to our stockholders, and we do not have any present plans for doing so. In addition, our U.S.revolving credit agreement and the indentures governing our senior notes limit our ability to pay dividends. Refer to the Liquidity and Capital Resourcessection in Item 7 of this Annual Report on Form 10-K.RECENT SALES OF UNREGISTERED SECURITIESNone.EQUITY COMPENSATION PLANSThe information required by this item regarding equity compensation plans is set forth in Part III, Item 12 of this Annual Report on Form 10-K.33Table of ContentsPURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERSThe following table provides information regarding repurchases of our common stock during the three months ended December 31, 2014.PeriodTotal Number ofShares Purchased(a)Average PricePaid Per Share ($)Total Number of SharesPurchased as part ofPublicly Announced Plans orPrograms (b)Approximate Dollar Valueof Shares that May Yet BePurchased Under the Plansor Programs ($) (b) October 1-October 31—$——$91,586,032November 1-November 3035,7786.45—91,586,032December 1-December 31467.19—91,586,032Total35,824$6.46— (a)Represents shares of common stock surrendered to us to satisfy tax withholding obligations associated with the vesting of restricted shares issued toemployees.(b)Our Board of Directors previously authorized the repurchase of up to $300.0 million of our common stock, $150.0 million in August 2011 and$150.0 million in February 2012, exclusive of any fees, commissions or other expenses. During 2013 and 2014, we made no common stockpurchases, and at December 31, 2014, approximately $91.6 million was available pursuant to the stock repurchase program.34Table of ContentsPERFORMANCE GRAPH(1)(1)The preceding Stock Performance Graph is not deemed filed with the Securities and Exchange Commission and shall not be incorporated by reference inany of our filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof andirrespective of any general incorporation language in any such filing. Year Ended December 31, 2009 2010 2011 2012 2013 2014Amkor Technology, Inc.$100.00 $103.49 $60.89 $59.23 $85.61 $99.16S&P 500100.00 115.06 117.49 136.30 180.44 205.14PHLX Semiconductor100.00 115.11 116.95 129.28 169.57 215.2535Table of ContentsItem 6.Selected Consolidated Financial DataThe following selected consolidated financial data as of December 31, 2014 and 2013, and for the years ended December 31, 2014, 2013 and 2012, havebeen derived from our audited Consolidated Financial Statements included in this Annual Report on Form 10-K. The following selected consolidatedfinancial data as of December 31, 2012, 2011 and 2010, and for the years ended December 31, 2011 and 2010, have been derived from audited financialstatements not included herein. You should read the selected consolidated financial data in conjunction with Management’s Discussion and Analysis ofFinancial Condition and Results of Operations and our Consolidated Financial Statements in Part II, Item 7 and Item 8, respectively, of this Annual Report onForm 10-K.SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA For the Year Ended December 31, 2014 (c) 2013 (d) 2012 2011 2010 (In thousands, except per share data)Income Statement Data: Net sales$3,129,440 $2,956,450 $2,759,546 $2,776,359 $2,939,483Gross profit (a)552,822 544,513 423,810 490,569 663,756Operating income221,460 232,109 152,692 193,670 373,798Loss on debt retirement (b)757 12,330 1,199 15,531 18,042Income tax expense33,845 22,646 17,001 7,124 19,012Equity in earnings of J-Devices (c)31,654 10,316 5,592 7,085 6,435Net income (a) (c)133,887 111,657 42,702 93,095 232,147Net income attributable to Amkor130,386 109,296 41,818 91,808 231,971Net income attributable to Amkor per common share: Basic$0.56 $0.58 $0.26 $0.48 $1.26Diluted$0.55 $0.50 $0.24 $0.39 $0.91 Other Financial Data: Depreciation and amortization$464,706 $410,346 $370,479 $335,644 $323,608Payments for property, plant and equipment681,120 566,256 533,512 466,694 445,669 Balance Sheet Data: Cash and cash equivalents$449,946 $610,442 $413,048 $434,631 $404,998Working capital497,358 541,480 438,781 354,644 289,859Total assets3,635,405 3,427,298 3,025,215 2,773,047 2,736,822Non-current liabilities, including debt1,803,879 1,771,422 1,705,794 1,429,640 1,327,933Total Amkor stockholders’ equity1,116,235 953,740 657,955 693,266 630,013(a)In January 2015, we reached a resolution to a patent license dispute and entered into a settlement agreement. During 2014, 2013 and 2012 we recordedcharges of $75.3 million, $10.0 million and $50.0 million, respectively, to cost of sales and $13.7 million, $1.8 million, and $6.0 million, respectively,to interest expense relating to this patent license dispute.(b)During 2013, we exchanged debt for shares of our common stock and a cash payment and recorded a charge of $11.6 million. During 2011, we recorded anet loss of $15.5 million related to the tender and call of debt and the write-off of associated unamortized deferred debt issuance costs. During 2010, werecorded a net loss of $18.0 million related to several debt transactions.(c)On June 30, 2014, we sold 100% of the shares of our previously wholly-owned subsidiary in Japan to J-Devices, our equity-method joint venture inJapan. Subsequent to June 30, 2014, the results of the divested entity are included in J-Devices' financial results and in our corresponding equity inearnings of J-Devices. We recognized a net gain on the sale of $9.2 million in other (income) expense, net. In addition, J-Devices recognized a gain onthe transaction, which increased our equity in earnings of J-Devices by $8.8 million. The combined net gain we recognized was $18.0 million.36Table of Contents(d)On July 31, 2013, we completed the purchase of Amkor Technology Malaysia Sdn. Bhd. The financial results of the entity have been included in ourConsolidated Financial Statements from the date of acquisition.Item 7.Management’s Discussion and Analysis of Financial Condition and Results of OperationsOverviewAmkor is one of the world’s leading providers of outsourced semiconductor packaging and test services. Our financial goals are sales growth and improvedprofitability, and we are focusing on the following strategies to achieve these goals: capitalizing on our investments in services for advanced technologies,improving utilization of existing assets and selectively growing our scale and scope through strategic investments.We are an industry leader in developing and commercializing cost-effective advanced packaging and test technologies. These advanced technologysolutions provide increased value to our customers while typically generating gross margins above our corporate average. This is particularly true in themobile device market, where growth has outpaced the semiconductor industry rate. Advanced packages are now the preferred choice in both the high-end andthe mid-range segments of the smartphone market, which together account for a high portion of mobile phone semiconductor value. The demand foradvanced packages is also being driven by second-wave mobile device customers, who are transitioning out of wirebond into wafer-level and flip-chippackages. Our technology leadership and this technology transition create significant growth opportunities for us.We typically look for opportunities in the advanced packaging and test area where we can generate reasonably quick returns on investments made forcustomers seeking leading edge technologies. We also focus on developing a second wave of customers to fill the capacity that becomes available whenleading edge customers transition to newer packaging and test equipment and platforms. For example, we are currently working to expand our sales toChinese and Taiwanese fabless chip companies that make up a significant portion of the mid-tier and entry-level segments of the mobile device market wheremuch of the growth is occurring. In addition, we are seeking out new customers and deepening our engagement with existing customers. This includes anexpanded emphasis on the automotive market where semiconductor content continues to grow and in the analog area for our mainstream wirebondtechnologies.From time to time we identify attractive opportunities to grow our customer base and expand the markets we serve. For example, in 2009 we invested in J-Devices Corporation, a joint venture to provide semiconductor packaging and test services in Japan. We increased our investment in J-Devices to 60% in2013 and to 65.7% in 2015. In 2013, we acquired Toshiba’s power discrete semiconductor packaging and test factory in Malaysia. In addition to adding anew revenue stream from our then existing customer, Toshiba, we are now also servicing other customers in this factory. We believe that selective growththrough joint ventures, acquisitions and other strategic investments can help diversify our revenue streams, improve our profits and continue ourtechnological leadership.Our IDM customers include: Intel Corporation; Micron Technology, Inc.; STMicroelectronics N.V.; Texas Instruments Incorporated and ToshibaCorporation. Our fabless customers include: Altera Corporation; Avago Technologies; Broadcom Corporation and Qualcomm Incorporated. Our contractfoundry customers include: GlobalFoundries Inc. and Taiwan Semiconductor Manufacturing Company Limited.Our business is impacted by market conditions in the semiconductor industry, which is cyclical and impacted by broad economic factors, such as world-widegross domestic product and consumer spending. Historical trends indicate there has been a strong correlation between world-wide gross domestic productlevels, consumer spending and semiconductor industry cycles. The semiconductor industry has experienced significant and sometimes prolonged cyclicaldownturns in the past. We cannot predict the timing, strength or duration of any economic slowdown or subsequent economic recovery.Our net sales, gross profit, operating income, cash flows, liquidity and capital resources have historically fluctuated significantly from quarter to quarter as aresult of many factors, including the seasonality of our business, the cyclical nature of the semiconductor industry and other factors discussed in Part 1, Item1A of this Annual Report on Form 10-K.We operate in a capital intensive industry and have a significant level of debt. Servicing our current and future customers requires that we incur significantoperating expenses and continue to make significant capital expenditures, which are37Table of Contentsgenerally made in advance of the related revenues and without firm customer commitments. We fund our operations, including capital expenditures and debtservice requirements, with cash flows from operations, existing cash and cash equivalents, borrowings under available credit facilities and proceeds from anyadditional financing. Maintaining an appropriate level of liquidity is important to our business and depends on, among other things, the performance of ourbusiness, our capital expenditure levels and our ability to repay debt out of our operating cash flows or proceeds from debt or equity financings.2014 Financial HighlightsOur net sales increased $173.0 million or 5.9% to $3,129.4 million in 2014 from $2,956.5 million in 2013. The increase in net sales in 2014 compared to2013 was the result of strong demand for wafer services supporting mobile communications, a full year of results from our power discrete business inMalaysia acquired in mid-2013, strong demand for NAND memory and growth in our automotive business.Gross margin in 2014 benefitted primarily from higher net sales and increased utilization. Gross margin was negatively impacted by 2.4 percentage points in2014 for charges related to the settlement of patent license litigation in January 2015.On June 30, 2014, we completed the sale of our Japanese subsidiary to J-Devices, our equity-method joint venture in Japan. The results of the divested entitysubsequent to June 30, 2014 are included in J-Devices' financial results and in our corresponding equity in earnings of J-Devices. As a result of thistransaction, we recognized a net gain of $9.2 million, which included the release of accumulated foreign currency translation adjustments associated with thesold entity. J-Devices also recognized a gain of $14.7 million on the transaction as the fair value of the net assets acquired in excess of the purchase price,which resulted in an increase in our equity in earnings of J-Devices of $8.8 million. The combined net gain we recognized for the year ended December 31,2014, was $18.0 million.In 2014, our capital expenditures totaled $681.1 million, or 21.8% of net sales, compared to $566.3 million, or 19.2% of net sales in 2013. Our 2014 capitalexpenditures were primarily focused on investments in advanced packaging and test equipment supporting mobile communications and construction of ournew factory and research and development center in Korea.Net cash provided by operating activities was $613.9 million for the year ended December 31, 2014, compared to $557.5 million for the year endedDecember 31, 2013. The increase is mainly attributable to revenue growth and improved profitability, partially offset by an increase in working capital.Results of OperationsThe following table sets forth certain operating data as a percentage of net sales for the periods indicated: Year Ended December 31, 2014 2013 2012Net sales100.0% 100.0% 100.0%Materials36.8% 40.0% 43.2%Labor14.0% 14.4% 14.3%Other manufacturing costs29.1% 26.8% 25.3%Patent license litigation2.4% 0.4% 1.8%Gross margin17.7% 18.4% 15.4%Operating income7.1% 7.9% 5.5%Income before income taxes and equity in earnings of unconsolidated affiliate4.3% 4.2% 2.0%Net income attributable to Amkor4.2% 3.7% 1.5%38Table of ContentsNet Sales Change 2014 2013 2012 2014 over 2013 2013 over 2012 (In thousands, except percentages)Net sales$3,129,440 $2,956,450 $2,759,546 $172,990 5.9% $196,904 7.1%The increase in net sales in 2014 compared to 2013 was driven by strong demand for wafer services supporting mobile communications, a full year of resultsfrom our power discrete business in Malaysia acquired in mid-2013, strong demand for NAND memory and growth in our automotive business.The increase in net sales in 2013 compared to 2012 was attributable to strong demand for wafer-level processing, wirebond NAND memory and flip chipservices for mobile communications. The increase in net sales in 2013 was also a result of incremental business from our newly acquired power discretebusiness in Malaysia. These increases were offset by weakness in demand for products in the consumer end market, including gaming and home electronics.Gross Margin Change 2014 2013 2012 2014 over 2013 2013 over 2012 (In thousands, except percentages)Gross profit$552,822 $544,513 $423,810 $8,309 $120,703Gross margin17.7% 18.4% 15.4% (0.7)% 3.0%Our cost of sales consists principally of materials, labor, depreciation and manufacturing overhead. Since a substantial portion of the costs at our factories isfixed, relatively modest increases or decreases in capacity utilization rates can have a significant effect on our gross margin.Gross margin in 2014 benefitted from higher net sales, increased utilization and lower costs for gold, which is used in many of our wirebond products.The increase in 2013 was primarily driven by higher net sales and the improved mix of wafer-level processing, test and NAND memory services. Gross marginin 2013 also benefitted from lower costs for gold.Gross margin was negatively impacted by 2.4, 0.4 and 1.8 percentage points in 2014, 2013 and 2012, respectively, for charges related to the settlement ofpatent license litigation in January 2015.Selling, General and Administrative Expenses Change 2014 2013 2012 2014 over 2013 2013 over 2012 (In thousands, except percentages)Selling, general and administrative$254,498 $247,779 $217,000 $6,719 2.7% $30,779 14.2%Selling, general and administrative expenses increased in 2014 compared to 2013. The increase was primarily a result of the inclusion of a full year of costsfrom our power discrete business in Malaysia acquired in mid-2013, partially offset by lower professional fees associated with acquisitions and investments.Selling, general and administrative expenses increased in 2013 compared to 2012. The increase was driven by higher employee compensation costs as well asprofessional fees associated with litigation and acquisitions.39Table of ContentsResearch and Development Change 2014 2013 2012 2014 over 2013 2013 over 2012 (In thousands, except percentages)Research and development$76,864 $64,625 $54,118 $12,239 18.9% $10,507 19.4%Research and development activities are focused on developing new packaging solutions and test services and improving the efficiency and capabilities ofour existing production processes.Research and development expenses in 2014 increased compared to 2013 primarily attributable to the development activities related to 20 nanometerchipsets with strategic customers that moved into production during the period, increased depreciation expense from research and development investmentsand higher employee compensation costs. Research and development expenses in 2013 increased compared to 2012 as a result of expanded developmentactivities with strategic customers along with additional depreciation expense resulting from continued investments and higher employee compensationexpense.Other Income and Expense Change 2014 2013 2012 2014 over 2013 2013 over 2012 (In thousands, except percentages)Interest expense, including related party$109,925 $105,908 $97,943 $4,017 3.8 % $7,965 8.1%Other (income) expense, net(24,543) 2,214 638 (26,757) >(100%) 1,576 >100%Total other expense, net$85,382 $108,122 $98,581 $(22,740) (21.0)% $9,541 9.7%Interest expense increased in 2014 primarily due to the settlement of patent license litigation. In addition, it increased due to an increase in our senior noteswhich occurred in 2013, which is offset by a decrease due to the April 2014 conversion of $56.3 million and the June 2013 exchange of $193.7 million of our6.0% Convertible senior subordinated notes for shares of our common stock. In 2014 and 2013, we capitalized a portion of the interest on our outstandingdebt in the amount of $6.9 million and $1.7 million, respectively, in connection with the construction of our new K5 facility in Korea. Interest expense in2013 increased compared to 2012 due to higher levels of long-term debt. The additional interest expense was partially offset by interest savings from theJune 2013 exchange.Other (income) expense, net in 2014 included net foreign currency gains at various Asian subsidiaries due to favorable exchange rate movements and a netgain on the sale of a subsidiary to J-Devices. Other (income) expense, net in 2013 included a debt retirement charge related to the cash payment we made toholders of the 6.0% Convertible senior subordinated notes. During 2013, we also recorded a net foreign currency gain, which was mainly a result of thedepreciation of the Japanese yen relative to the U.S. dollar and the associated impact on our U.S. dollar denominated net monetary assets.Income Tax Expense Change 2014 2013 2012 2014 over 2013 2013 over 2012 (In thousands, except percentages)Income tax expense$33,845 $22,646 $17,001 $11,199 49.5% $5,645 33.2%Generally, our effective tax rate is below the U.S. federal tax rate of 35% because we have experienced tax losses in the U.S. and much of our income is taxedin foreign jurisdictions where we benefit from tax holidays or tax rates lower than the U.S. statutory rate. Our income tax expense is attributable to income taxon profits earned in certain foreign jurisdictions, foreign withholding taxes and minimum taxes. The increase in income tax expense in 2014 is primarilyattributable to changes in geographic income mix. The increase in income tax expense in 2013 is attributable to an increase in operating income, an increasein income tax rates in a jurisdiction where the tax holiday has expired and additions to our uncertain40Table of Contentstax positions, partially offset by the release of a valuation allowance in a foreign jurisdiction and the utilization of net operating loss carryforwards.Our income tax expense reflects the applicable tax rates in effect in the various countries around the world where our income is earned and is subject tovolatility depending on the relative jurisdictional mix of earnings. Our subsidiaries in Korea, Malaysia, the Philippines and Taiwan operate under taxholidays. We expect our effective tax rate to increase as the tax holidays expire at various dates through 2022.In connection with our investment in Korea, we intend to increase our capital in Korea within two years by at least $100 million through foreign investmentpursuant to the Foreign Investment Promotion Act thereby, availing ourselves of certain additional tax incentives.See Note 7 to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information about ourincome tax expense.Equity in Earnings of J-Devices Change 2014 2013 2012 2014 over 2013 2013 over 2012 (In thousands, except percentages)Equity in earningsof J-Devices$31,654 $10,316 $5,592 $21,338 >100% $4,724 84.5%In April 2013, we increased our ownership interest in J-Devices from 30% to 60%. Additionally, in June 2013, J-Devices acquired three packaging and testfacilities from Renesas and in June 2014, J-Devices acquired our Japanese subsidiary. Our equity in earnings of J-Devices for 2014 includes $8.8 million ofadditional equity in earnings resulting from the gain on J-Devices' purchase of our subsidiary and $8.1 million from the settlement of a take-or-payarrangement under a manufacturing services agreement.Quarterly ResultsThe following table sets forth our unaudited consolidated financial data for the last eight quarters ended December 31, 2014. Our results of operations havevaried and may continue to vary from quarter to quarter and are not necessarily indicative of the results of any future period. Our net sales, gross profit andoperating income are generally lower in the first quarter of the year as compared to the fourth quarter of the preceding year primarily due to the effect ofconsumer buying patterns in Asia, Europe and the U.S.We believe that we have included all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of our selected quarterlydata. You should read our selected quarterly data in conjunction with our Consolidated Financial Statements and the related notes, included in Part II, Item 8of this Annual Report on Form 10-K.In January 2015, we settled patent license litigation. We recorded a charge of $75.3 million to cost of sales and $11.8 million to interest expense for the threemonths ended December 31, 2014. During the three months ended September 30, 2013, we recorded a charge of $10.0 million to cost of sales and $1.0million to interest expense related to the same litigation. On June 30, 2014, we sold 100% of the shares of our previously wholly-owned subsidiary engagedin semiconductor packaging and test operations in Japan to J-Devices. Subsequent to June 30, 2014, the results of the divested entity are included in J-Devices' financial results and in our corresponding equity in earnings of J-Devices. On July 31, 2013, we completed the purchase of Amkor TechnologyMalaysia Sdn. Bhd. The financial results of the entity have been included in our Consolidated Financial Statements from the date of acquisition.The calculation of basic and diluted per share amounts for each quarter is based on the weighted average shares outstanding for that period; consequently, thesum of the quarters may not necessarily be equal to the full year basic and diluted net income per share.41Table of Contents For the Quarter Ended Dec. 31,2014 Sept. 30,2014 June 30,2014 Mar. 31,2014 Dec. 31,2013 Sept. 30,2013 June 30,2013 Mar. 31,2013 (In thousands, except per share data)Net sales$853,113 $812,824 $767,459 $696,044 $754,875 $767,987 $746,059 $687,529Gross profit120,071 153,217 150,714 128,820 150,173 141,008 138,379 114,953Operating income39,968 75,180 60,961 45,351 74,554 58,014 58,453 41,088Loss on debt retirement, net— — 622 135 711 — 11,619 —Income tax expense (benefit)1,420 14,985 12,511 4,929 16,685 12,170 (10,238) 4,029Equity in earnings of J-Devices2,485 3,372 20,036 5,761 5,637 3,179 1,445 55Net income14,128 48,170 50,406 21,183 41,558 26,004 30,329 13,766Net income attributable to Amkor13,135 47,097 49,521 20,633 40,838 25,349 29,727 13,382Net income attributable to Amkor per commonshare: Basic$0.06 $0.20 $0.21 $0.09 $0.19 $0.12 $0.18 $0.09Diluted$0.06 $0.20 $0.21 $0.09 $0.18 $0.11 $0.14 $0.07Liquidity and Capital ResourcesWe assess our liquidity based on our current expectations regarding sales, operating expenses, capital spending and debt service requirements. Based on thisassessment, we believe that our cash flow from operating activities, together with existing cash and cash equivalents and availability under our revolvingcredit facilities, will be sufficient to fund our working capital, capital expenditure and debt service requirements for at least the next twelve months. Ourliquidity is affected by, among other things, volatility in the global economy and credit markets, the performance of our business, our capital expenditurelevels, other uses of our cash including the payments due in a recently settled patent license litigation, any purchases of stock under our stock repurchaseprogram, any acquisitions or investments in joint ventures and our ability to either repay debt out of operating cash flow or refinance it at or prior to maturitywith the proceeds of debt or equity offerings. There can be no assurance that we will generate the necessary net income or operating cash flows, or be able toborrow sufficient funds, to meet the funding needs of our business beyond the next twelve months due to a variety of factors, including the cyclical nature ofthe semiconductor industry and other factors discussed in Part I, Item 1A of this Annual Report on Form 10-K.Our primary source of cash and the source of funds for our operations are cash flows from operations, current cash and cash equivalents, borrowings underavailable debt facilities and proceeds from any additional debt or equity financings. As of December 31, 2014, we had cash and cash equivalents of $449.9million. Included in our cash balance as of December 31, 2014, is $269.6 million held offshore by our foreign subsidiaries. If we were to distribute thisoffshore cash to the U.S. as dividends from our foreign subsidiaries, we would incur up to $21.5 million of foreign withholding taxes; however, we would notincur a significant amount of U.S. federal income taxes, due to the availability of tax loss carryovers and foreign tax credits.As of December 31, 2014, we had availability of $199.6 million under our $200.0 million first lien senior secured revolving credit facility. Our foreignsubsidiaries had $60.0 million available to be drawn under secured revolving credit facilities for general corporate purposes, general working capitalpurposes and capital expenditures and $220.0 million available to be borrowed under secured term loan credit facilities for general working capital purposes,capital expenditures and repayment of inter-company debt.As of December 31, 2014, we had $1,530.8 million of debt. Our scheduled principal repayments on debt include $5.0 million due in 2015, $70.0 million duein 2016, $110.0 million due in 2017, $345.0 million due in 2018, $70.0 million due in 2019 and $925.0 million due thereafter. In April 2014, holders ofour 6.0% Convertible senior subordinated notes due April 2014 converted the remaining outstanding principal amount of $56.4 million into 18.6 millionshares of our common stock, and we repaid $60.0 million of a foreign secured term loan credit facility maturing in July 2017. We were in compliance with allof our debt covenants at December 31, 2014, and we expect to remain in compliance with these covenants for at least the next twelve months.In certain foreign locations, we use non-recourse factoring arrangements with third party financial institutions to manage our working capital and cash flows.Under this program, we sell receivables to a financial institution for cash at a discount42Table of Contentsto the face amount. Available capacity under these programs is dependent on the level of our trade accounts receivable eligible to be sold, the financialinstitutions' willingness to purchase such receivables and the limits provided by the financial institutions. For the year ended December 31, 2014 and 2013,we sold accounts receivable totaling $340.0 million and $130.2 million, respectively, for a discount, plus fees, of $1.5 million and $0.6 million, respectively.At December 31, 2014 and December 31, 2013, there were outstanding receivables of $102.7 million and $96.0 million, respectively, which had been sold tofinancial institutions under these arrangements.In order to reduce our debt and future cash interest payments, we may from time to time repurchase our outstanding notes for cash or exchange shares of ourcommon stock for our outstanding notes. Any such transaction may be made in the open market, through privately negotiated transactions or otherwise and issubject to the terms of our indentures and other debt agreements, market conditions and other factors.Certain debt agreements have restrictions on dividend payments and the repurchase of stock and subordinated securities. These restrictions are determined inpart by calculations based upon cumulative net income. We have never paid a dividend to our stockholders, and we do not have any present plans for doingso. Amkor Technology, Inc. also guarantees certain debt of our subsidiaries.We sponsor an accrued severance plan for our subsidiary in Korea, which under existing tax laws in Korea, limits our ability to currently deduct relatedseverance expenses accrued under that plan. The purpose of these limitations is to encourage companies to migrate to a defined contribution or definedbenefit plan. If we retain our existing severance plan, the deduction for severance expenses will be limited to severance payments made to retired employees,which results in a larger current income tax liability in Korea. We are evaluating our alternatives, and if we decide to adopt a new plan, we may be required tofund a portion of the existing liability, which would provide a current tax deduction upon funding. Our Korean severance liability was $146.7 million as ofDecember 31, 2014.In January 2015, we settled our patent license litigation with Tessera. Under the terms of the settlement, Amkor agreed to pay Tessera a total of $155.0million in 16 equal quarterly recurring payments commencing in the first quarter of 2015 and continuing through the fourth quarter of 2018. We expect touse cash on hand, proceeds from borrowings under our existing lines of credit or other sources to make these payments. We refer you to Note 18 to ourConsolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for a discussion of the litigation relating to Amkor's licenseagreement with Tessera.We operate in a capital intensive industry. Servicing our current and future customers may require that we incur significant operating expenses and makesignificant investments in equipment and facilities, which are generally made in advance of the related revenues and without firm customer commitments.Our Board of Directors previously authorized the repurchase of up to $300.0 million of our common stock, exclusive of any fees, commissions or otherexpenses. At December 31, 2014, approximately $91.6 million was available to repurchase common stock pursuant to the stock repurchase program. Thepurchase of stock may be made in the open market or through privately negotiated transactions. The timing, manner, price and amount of any repurchaseswill be determined by us at our discretion and will depend upon a variety of factors including economic and market conditions, the cash needs andinvestment opportunities for the business, the current market price of our stock, applicable legal requirements and other factors. We have not purchased anystock under the plan since 2012.InvestmentsWe make significant capital expenditures in order to service the demand of our customers. In 2014, our capital expenditures totaled $681.1 million orapproximately 21.8% of net sales, including $37.7 million for our new K5 facility. Our spending was primarily focused on investments in advancedpackaging and test equipment supporting mobile communications.In September 2014, we started the construction of our new K5 facility in Korea. We plan to spend approximately $375 million for the construction of thefacility in 2015 and 2016, including capitalized interest of $40 million.We expect that our 2015 capital expenditures will be approximately $600 million, approximately $150 million of which will be spent on the construction ofour new K5 facility. Our expected capital expenditures will primarily support customer43Table of Contentsdemand for packaging and test services related to mobile communications. Ultimately, the amount of our 2015 capital expenditures will depend on severalfactors including, among others, the timing and implementation of any capital projects under review, the performance of our business, economic and marketconditions, the cash needs and investment opportunities for the business, the need for additional capacity to service anticipated customer demand and theavailability of cash flows from operations or financing.In January 2015, we exercised our option to increase our ownership interest of J-Devices from 60% to 65.7% for an aggregate purchase price of ¥1.5 billion($12.9 million). We expect to exercise our option to further increase our ownership in J-Devices to 80% in the fourth quarter of 2015, subject to market andother conditions at the time of exercise. If we exercise our 80% option, certain governance restrictions of our shareholders' agreement will lapse, and we willbegin consolidating the financial results of J-Devices at that time. The exercise price for all options is payable in cash and is determined using a formulabased upon the net book value and a multiple of earnings before interest, taxes, depreciation and amortization of J-Devices.In addition, we are subject to risks associated with our capital expenditures, including those discussed in Part I, Item 1A of this Annual Report on Form 10-Kunder the caption "Capital Expenditures - We Make Substantial Investments in Equipment and Facilities To Support the Demand Of Our Customers, WhichMay Adversely Affect Our Business If the Demand Of Our Customers Does Not Develop As We Expect or Is Adversely Affected."Cash FlowsNet cash provided by (used in) operating, investing and financing activities for each of the three years ended December 31, 2014 was as follows: For the Year Ended December 31, 2014 2013 2012 (In thousands)Operating activities$613,909 $557,536 $389,063Investing activities(694,478) (640,494) (520,121)Financing activities(79,995) 280,145 110,032Operating activities: Our cash flow provided by operating activities for the year ended December 31, 2014, increased by $56.4 million compared to the yearended December 31, 2013. The increase is primarily attributable to net sales growth and improved profitability, partially offset by an increase in workingcapital. Our cash provided by operating activities for the year ended December 31, 2013, increased by $168.5 million compared to the year endedDecember 31, 2012. The increase is primarily attributable to higher net sales and improved profitability.Investing activities: Our cash flow used in investing activities is principally for payments for property, plant and equipment. The net cash used in investingactivities for the year ended December 31, 2014, included cash transferred on the sale of our subsidiary to J-Devices, net of proceeds. The net cash used ininvesting activities for the year ended December 31, 2013, included payments for the land relating to K5, an investment in J-Devices and our power discretebusiness in Malaysia, offset by proceeds from the January 2013 sale of office space and land.Financing activities: The net cash used in financing activities for the year ended December 31, 2014 was driven by our repayment of borrowings at oursubsidiary in Korea and the final payment for our acquired power discrete business in Malaysia. The net cash provided by financing activities during 2013primarily resulted from the issuance of senior notes and borrowings at our subsidiary in Korea, offset by foreign debt payments.We provide the following supplemental data to assist our investors and analysts in understanding our liquidity and capital resources. We define free cashflow as net cash provided by operating activities less payments for property, plant and equipment. Free cash flow is not defined by U.S. GAAP. We believefree cash flow to be relevant and useful information to our investors because it provides them with additional information in assessing our liquidity, capitalresources and financial operating results. Our management uses free cash flow in evaluating our liquidity, our ability to service debt and our ability to fundcapital expenditures. However, free cash flow has certain limitations, including that it does not represent the residual44Table of Contentscash flow available for discretionary expenditures since other, non-discretionary expenditures, such as mandatory debt service, are not deducted from themeasure. The amount of mandatory versus discretionary expenditures can vary significantly between periods. This measure should be considered in additionto, and not as a substitute for, or superior to, other measures of liquidity or financial performance prepared in accordance with U.S. GAAP, such as net cashprovided by operating activities. Furthermore, our definition of free cash flow may not be comparable to similarly titled measures reported by othercompanies. We had negative free cash flow of $67.2 million for the year ended December 31, 2014, primarily due to our investments to support customerdemand for packaging and test services related to mobile communications. For the Year Ended December 31, 2014 2013 2012 (In thousands)Net cash provided by operating activities$613,909 $557,536 $389,063Payments for property, plant and equipment(681,120) (566,256) (533,512)Free cash flow$(67,211) $(8,720) $(144,449)45Table of ContentsContractual ObligationsThe following table summarizes our contractual obligations at December 31, 2014, and the effect such obligations are expected to have on our liquidity andcash flow in future periods. Payments Due for Year Ending December 31, Total 2015 2016 2017 2018 2019 Thereafter (In thousands)Total debt$1,525,000 $5,000 $70,000 $110,000 $345,000 $70,000 $925,000Scheduled interest payment obligations (1)556,100 94,951 93,525 89,377 75,445 62,646 140,156Purchase obligations (2)307,222 247,345 46,784 2,406 4,849 1,017 4,821Operating lease obligations52,091 13,116 7,792 6,336 6,029 6,194 12,624Severance obligations (3)146,661 13,226 12,018 10,946 9,965 9,076 91,430Settlement payments (4)155,000 38,750 38,750 38,750 38,750 — —Total contractual obligations$2,742,074 $412,388 $268,869 $257,815 $480,038 $148,933 $1,174,031(1)Scheduled interest payment obligations were calculated using stated coupon rates for fixed rate debt and interest rates applicable at December 31,2014, for variable rate debt.(2)Represents off-balance sheet purchase obligations for capital expenditures and long-term supply contracts outstanding at December 31, 2014,including $220 million for construction obligations for K5.(3)Represents estimated benefit payments for our Korean subsidiary severance plan.(4)Represents settlement payments for patent license litigation. See Note 18 to our Consolidated Financial Statements in Part II, Item 8 of this AnnualReport on Form 10-K.In addition to the obligations identified in the table above, other non-current liabilities recorded in our Consolidated Balance Sheet at December 31, 2014,include:•$19.2 million of net foreign pension plan obligations, for which the timing and actual amount of impact on our future cash flow is uncertain.•$10.5 million net liability associated with unrecognized tax benefits. Due to the uncertainty regarding the amount and the timing of any future cashoutflows 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 ArrangementsAs of December 31, 2014, we had no off-balance sheet guarantees or other off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of SECRegulation S-K.Other ContingenciesWe refer you to Note 18 to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for a discussion of our contingenciesrelated to litigation and other legal matters. If an unfavorable ruling were to occur in these matters, there exists the possibility of a material adverse impact onour business, liquidity, results of operations, financial position and cash flows in the period in which the ruling occurs. The potential impact from legalproceedings on our business, liquidity, results of operations, financial position and cash flows could change in the future.Critical Accounting Policies and Use of EstimatesWe have identified the policies below as critical to our business operations and the understanding of our results of operations. A summary of our significantaccounting policies used in the preparation of our Consolidated Financial Statements appears in Note 1 to our Consolidated Financial Statements included inPart II, Item 8 of this Annual Report on Form 10-K. Our preparation of this Annual Report on Form 10-K requires us to make estimates and assumptions thataffect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements and the46Table of Contentsreported amounts of revenue and expenses during the reporting period. There can be no assurance that actual results will not differ from those estimates.We believe the following critical accounting policies, which have been reviewed with the Audit Committee of our board of directors, affect our moresignificant judgments and estimates used in the preparation of our Consolidated Financial Statements.Revenue Recognition. We recognize revenue from our packaging and test services, net of value-added or other similar taxes, when there is evidence of anarrangement, delivery has occurred or services have been rendered, fees are fixed or determinable and collectibility is reasonably assured. Generally thesecriteria are met and revenue is recognized upon shipment. If the revenue recognition criteria are not met, we defer the revenue. Deferred revenue generallyresults from two types of transactions: contractual invoicing at interim points in the packaging and test process prior to shipment of the finished product andcustomer advances for supply agreements with customers where we commit capacity in exchange for customer prepayment of services. These prepayments aredeferred and recorded as customer advances within accrued expenses and other non-current liabilities.We generally do not take ownership of customer-supplied semiconductor wafers. Title and risk of loss remains with the customer for these materials at alltimes. Accordingly, the cost of the customer-supplied materials is not included in our Consolidated Financial Statements.An allowance for sales credits is recorded as a reduction to sales and accounts receivable during the period of sale such that accounts receivable is reported atits estimated net realizable value. The allowance for sales credits is an estimate of the future credits we will issue for billing adjustments primarily forinvoicing corrections and miscellaneous customer claims and is estimated based upon recent credit issuance, historical experience and specific identificationof known or expected sales credits at the end of the reporting period. Additionally, provisions are made for doubtful accounts when there is doubt as to thecollectibility of accounts receivable. The allowance for doubtful accounts is recorded as bad debt expense and is classified as selling, general andadministrative expense. The allowance for doubtful accounts is based upon specific identification of doubtful accounts considering the age of the receivablebalance, the customer’s historical payment history and current credit worthiness as well as specific identification of any known or expected collectibilityissues. Historically, our allowance for doubtful accounts has been immaterial.Income Taxes. We operate in and file income tax returns in various U.S. and non-U.S. jurisdictions which are subject to examination by tax authorities. Thetax returns for open years in all jurisdictions in which we do business are subject to change upon examination. We believe that we have estimated andprovided adequate accruals for potential additional taxes and related interest expense that may ultimately result from such examinations. We believe that anyadditional taxes or related interest over the amounts accrued will not have a material effect on our financial condition, results of operations or cash flows.However, resolution of these matters involves uncertainties and there can be no assurance that the outcomes will be favorable. In addition, changes in the mixof income from our foreign subsidiaries, expiration of tax holidays or changes in tax laws or regulations could result in increased effective tax rates in thefuture.Additionally, we record valuation allowances for deferred tax assets for which it is more likely than not that the related tax benefits will not be realized.U.S. GAAP requires companies to weigh both positive and negative evidence in determining the need for a valuation allowance for deferred tax assets. As aresult of net losses experienced in recent years in certain jurisdictions, we have determined that a valuation allowance is required for certain deferred taxassets including those related to all of our net operating loss carryforwards in the U.S. We will release such valuation allowances as the related deferred taxbenefits 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 berealized.Valuation of Inventory. We order raw materials based on customers’ forecasted demand. If our customers change their forecasted requirements and we areunable to cancel our raw materials order or if our vendors require that we order a minimum quantity that exceeds the current forecasted demand, we willexperience a build-up in raw material inventory. We will either seek to recover the cost of the materials from our customers or utilize the inventory inproduction. However, we may not be successful in recovering the cost from our customers or be able to use the inventory in production and, accordingly, ifwe believe that it is probable that we will not be able to recover such costs, we reduce the carrying value of our inventory. Additionally, we reduce thecarrying value of our inventories for the cost of inventory we estimate is excess47Table of Contentsand obsolete based on the age of our inventories. When a determination is made that the inventory will not be utilized in production or is not saleable, it iswritten-off.Inventories are stated at the lower of cost or market (net realizable value). Cost is principally determined by standard cost (on a first-in, first-out basis for rawmaterials and purchased components and an average cost basis for work-in-process) or by the weighted moving average method (for commodities and spareparts), both of which approximate actual cost. We review and set our standards as needed, but at a minimum on an annual basis.Long-lived Assets. Property, plant and equipment are stated at cost. Depreciation is calculated by the straight-line method over the estimated useful lives ofdepreciable assets which are as follows:Land use rights50 to 90 yearsBuildings and improvements10 to 25 yearsMachinery and equipment2 to 7 yearsSoftware and computer equipment3 to 5 yearsFurniture, fixtures and other equipment4 to 10 yearsCost and accumulated depreciation for property retired or disposed of are removed from the accounts and any resulting gain or loss is included in earnings.Expenditures for maintenance and repairs are charged to expense as incurred.We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.Recoverability of a long-lived asset group to be held and used in operations is measured by a comparison of the carrying amount to the sum of theundiscounted cash flows expected to result from the use and eventual disposition of the asset group. If such asset group is considered to be impaired, theimpairment loss is measured as the amount by which the carrying amount of the asset group exceeds its fair value. Long-lived assets to be disposed of arecarried at the lower of cost or fair value less the costs of disposal.Legal Contingencies. We may be subject to certain legal proceedings, lawsuits and other claims. We accrue for a loss contingency, including legalproceedings, lawsuits, pending claims and other legal matters, when we conclude that the likelihood of a loss is probable and the amount of the loss can bereasonably estimated. When the reasonable estimate of the loss is within a range of amounts, and no amount in the range constitutes a better estimate thanany other amount, we accrue for the amount at the low end of the range. We adjust our accruals from time to time as we receive additional information, but theloss we incur may be significantly greater than or less than the amount we have accrued. We disclose loss contingencies if there is at least a reasonablepossibility that a loss has been incurred.Our assessment of required reserves may change in the future due to new developments in each matter. The present legislative and litigation environment issubstantially uncertain, and it is possible that our liquidity, results of operations, financial position and cash flows could be materially and adversely affectedby an unfavorable outcome or settlement of pending litigation and other claims.Recently Adopted and Recently Issued StandardsFor information regarding recently adopted and recently issued accounting standards, see Note 2 to our Consolidated Financial Statements included in PartII, Item 8 of this Annual Report on Form 10-K.48Table of ContentsItem 7A.Quantitative and Qualitative Disclosures about Market RiskMarket Risk SensitivityWe are exposed to market risks, primarily related to foreign currency and interest rate fluctuations. In the normal course of business, we employ establishedpolicies 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 hedging instruments to managecurrency and other risks.Foreign Currency RiskIn order to reduce our exposure to foreign currency gains and losses, we generally use natural hedging techniques to reduce foreign currency rate risk. TheU.S. dollar is our reporting currency and the functional currency for our subsidiaries, with the exception of our equity-method investee, J-Devices, where thelocal currency is the functional currency.We have foreign currency exchange rate risk associated with the remeasurement of monetary assets and liabilities on our Consolidated Balance Sheets thatare denominated in currencies other than the functional currency. We performed a sensitivity analysis of our foreign currency exposure as of December 31,2014, to assess the potential impact of fluctuations in exchange rates for all foreign denominated assets and liabilities. Assuming a 10% adverse movementfor all currencies against the U.S. dollar as of December 31, 2014, our income before taxes and equity in earnings of unconsolidated affiliate would have beenapproximately $18 million lower due to the remeasurement of monetary assets and liabilities.In addition, we have foreign currency exchange rate exposure on our results of operations. For the year ended December 31, 2014, approximately 95% of ournet sales were denominated in U.S. dollars. Our remaining net sales were principally denominated in Korean won for local country sales. For the year endedDecember 31, 2014, approximately 63% of our cost of sales and operating expenses were denominated in U.S. dollars and were largely for raw materials anddepreciation. The remaining portion of our cost of sales and operating expenses was principally denominated in the Asian currencies where our productionfacilities are located and largely consisted of labor and utilities. To the extent that the U.S. dollar weakens against these Asian based currencies, similarforeign currency denominated transactions in the future will result in higher sales, higher cost of sales and operating expenses, with cost of sales andoperating expenses having the greater impact on our financial results. Similarly, our sales, cost of sales and operating expenses will decrease if the U.S. dollarstrengthens against these foreign currencies. We performed a sensitivity analysis of our foreign currency exposure as of December 31, 2014, to assess thepotential impact of fluctuations in exchange rates for all foreign denominated sales and expenses. Assuming a 10% adverse movement from the year endedDecember 31, 2014, exchange rates of the U.S. dollar compared to all of these Asian-based currencies as of December 31, 2014, our operating income wouldhave been approximately $100 million lower due to this exposure.There are inherent limitations in the sensitivity analysis presented, primarily due to the assumption that foreign exchange rate movements across multiplejurisdictions are similar and would be linear and instantaneous. As a result, the analysis is unable to reflect the potential effects of more complex market orother changes that could arise which may positively or negatively affect our results of operations.Our consolidated financial statements are impacted by changes in exchange rates at entities where the local currency is the functional currency. The effect offoreign exchange rate translation for these entities for the years ended December 31, 2014 and 2013, was a net foreign translation loss of $18.0 million and$17.0 million, respectively, and was recognized as an adjustment to equity through other comprehensive loss.49Table of ContentsInterest Rate RiskWe have interest rate risk with respect to our long-term debt. Our fixed rate debt consists of senior notes and our variable rate debt principally relates toforeign borrowings and revolving credit facilities. Changes in interest rates have different impacts on the fixed and variable rate portions of our debtportfolio. A change in interest rates on the fixed portion of the debt portfolio impacts the fair value of the debt instrument but has no impact on interestexpense or cash flows. A change in interest rates on the variable portion of the debt portfolio impacts the interest incurred and cash flows but does notgenerally impact the fair value of the instrument.The table below presents the interest rates, maturities and fair value of our fixed and variable rate debt as of December 31, 2014. 2015 2016 2017 2018 2019 Thereafter Total Fair ValueLong term debt: Fixed rate debt (In thousands)$— $— $— $345,000 $— $925,000 $1,270,000 $1,268,619Average interest rate—% —% —% 7.4% —% 6.5% 6.7% Variable rate debt (In thousands)$5,000 $70,000 $110,000 $— $70,000 $— $255,000 $254,999Average interest rate3.3% 4.0% 3.6% —% 3.9% —% 3.8% Total debt (In thousands)$5,000 $70,000 $110,000 $345,000 $70,000 $925,000 $1,525,000 $1,523,618For information regarding the fair value of our long-term debt, see Note 17 to our Consolidated Financial Statements in Part II, Item 8 of this Annual Reporton Form 10-K.50Table of ContentsItem 8.Financial Statements and Supplementary DataWe present the information required by Item 8 of Form 10-K here in the following order: PageReport of Independent Registered Public Accounting Firm52Consolidated Statements of Income — Years ended December 31, 2014, 2013 and 201253Consolidated Statements of Comprehensive Income — Years ended December 31, 2014, 2013 and 201254Consolidated Balance Sheets — December 31, 2014 and 201355Consolidated Statements of Stockholders’ Equity — Years ended December 31, 2014, 2013 and 201256Consolidated Statements of Cash Flows — Years ended December 31, 2014, 2013 and 201257Notes to Consolidated Financial Statements58Schedule II — Valuation and Qualifying Accounts8751Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Board of Directors and Stockholders of Amkor Technology, Inc.:In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of AmkorTechnology, Inc. and its subsidiaries at December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in theperiod ended December 31, 2014 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion,the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read inconjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internalcontrol over financial reporting as of December 31, 2014, based on criteria established in Internal Control — Integrated Framework (2013) issued by theCommittee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements andfinancial statement schedule, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal controlover financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is toexpress opinions on these financial statements, on the financial statement schedule, and on the Company’s internal control over financial reporting based onour integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatementand whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements includedexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used andsignificant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reportingincluded obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as weconsidered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate./s/ PricewaterhouseCoopers LLPPhoenix, ArizonaFebruary 19, 201552Table of ContentsAMKOR TECHNOLOGY, INC.CONSOLIDATED STATEMENTS OF INCOME For the Year Ended December 31, 2014 2013 2012 (In thousands, except per share data)Net sales$3,129,440 $2,956,450 $2,759,546Cost of sales2,576,618 2,411,937 2,335,736Gross profit552,822 544,513 423,810Selling, general and administrative254,498 247,779 217,000Research and development76,864 64,625 54,118Total operating expenses331,362 312,404 271,118Operating income221,460 232,109 152,692Interest expense104,956 96,739 83,974Interest expense, related party4,969 9,169 13,969Other (income) expense, net(24,543) 2,214 638Total other expense, net85,382 108,122 98,581Income before taxes and equity in earnings of unconsolidated affiliate136,078 123,987 54,111Income tax expense33,845 22,646 17,001Income before equity in earnings of unconsolidated affiliate102,233 101,341 37,110Equity in earnings of J-Devices31,654 10,316 5,592Net income133,887 111,657 42,702Net income attributable to noncontrolling interests(3,501) (2,361) (884)Net income attributable to Amkor$130,386 $109,296 $41,818Net income attributable to Amkor per common share: Basic$0.56 $0.58 $0.26Diluted$0.55 $0.50 $0.24Shares used in computing per common share amounts: Basic230,710 187,032 160,105Diluted236,731 235,330 243,004The accompanying notes are an integral part of these statements.53Table of ContentsAMKOR TECHNOLOGY, INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the Year Ended December 31, 2014 2013 2012 (In thousands)Net income$133,887 $111,657 $42,702Other comprehensive (loss) income, net of tax: Adjustments to unrealized components of defined benefit pension plans, net of tax(1,512) 4,360 5,137Foreign currency translation adjustment(11,964) (4,895) (2,688)Equity interest in J-Devices' other comprehensive loss, net of tax(19,136) (10,961) (2,057)Total other comprehensive (loss) income(32,612) (11,496) 392Comprehensive income101,275 100,161 43,094Comprehensive income attributable to noncontrolling interests(3,501) (2,361) (884)Comprehensive income attributable to Amkor$97,774 $97,800 $42,210The accompanying notes are an integral part of these statements.54Table of ContentsAMKOR TECHNOLOGY, INC.CONSOLIDATED BALANCE SHEETS December 31, 2014 2013 (In thousands,except per share data)ASSETS Current assets: Cash and cash equivalents$449,946 $610,442Restricted cash2,681 2,681Accounts receivable, net of allowances of $1,377 and $7,120469,683 385,542Inventories223,379 200,423Other current assets52,259 33,328Total current assets1,197,948 1,232,416Property, plant and equipment, net2,206,476 2,006,553Investments117,733 105,214Restricted cash2,123 2,234Other assets111,125 80,881Total assets$3,635,405 $3,427,298 LIABILITIES AND EQUITY Current liabilities: Short-term borrowings and current portion of long-term debt$5,000 $61,350Trade accounts payable309,025 260,534Capital expenditures payable127,568 104,800Accrued expenses258,997 264,252Total current liabilities700,590 690,936Long-term debt1,450,824 1,516,390Long-term debt, related party75,000 75,000Pension and severance obligations152,673 165,073Other non-current liabilities125,382 14,959Total liabilities2,504,469 2,462,358Commitments and contingencies (Note 18) 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, 282,231 and 262,109 shares issued, and 236,627and 216,702 shares outstanding, in 2014 and 2013, respectively282 262Additional paid-in capital1,878,810 1,812,530Accumulated deficit(516,962) (647,348)Accumulated other comprehensive loss(32,867) (255)Treasury stock, at cost, 45,604 and 45,407 shares in 2014 and 2013, respectively(213,028) (211,449)Total Amkor stockholders’ equity1,116,235 953,740Noncontrolling interests in subsidiaries14,701 11,200Total equity1,130,936 964,940Total liabilities and equity$3,635,405 $3,427,298The accompanying notes are an integral part of these statements.55Table of ContentsAMKOR TECHNOLOGY, INC.CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Additional Paid-In Capital AccumulatedDeficit AccumulatedOtherComprehensiveIncome (Loss) Total AmkorStockholders'Equity NoncontrollingInterest inSubsidiaries TotalEquity Common Stock Treasury Stock Shares Par Value Shares Cost (In thousands)Balance at December 31, 2011197,359 $197 $1,611,242 $(798,462) $10,849 (28,731) $(130,560) $693,266 $7,955 $701,221Net income— — — 41,818 — — — 41,818 884 42,702Other comprehensive income— — — — 392 — — 392 — 392Repurchase of common stock— — — — — (16,472) (79,814) (79,814) — (79,814)Treasury stock acquiredthrough surrender of sharesfor tax withholding— — — — — (109) (609) (609) — (609)Issuance of stock through share-based compensation plans350 1 181 — — — — 182 — 182Share-based compensationexpense— — 2,720 — — — — 2,720 — 2,720Balance at December 31, 2012197,709 $198 $1,614,143 $(756,644) $11,241 (45,312) $(210,983) $657,955 $8,839 $666,794Net income— — — 109,296 — — — 109,296 2,361 111,657Other comprehensive loss— — — — (11,496) — — (11,496) — (11,496)Conversion of debt to commonstock64,027 64 194,970 — — — — 195,034 — 195,034Treasury stock acquiredthrough surrender of sharesfor tax withholding— — — — — (95) (466) (466) — (466)Issuance of stock through share-based compensation plans373 — 446 — — — — 446 — 446Share-based compensationexpense— — 2,971 — — — — 2,971 — 2,971Balance at December 31, 2013262,109 $262 $1,812,530 $(647,348) $(255) (45,407) $(211,449) $953,740 $11,200 $964,940Net income— — — 130,386 — — — 130,386 3,501 133,887Other comprehensive loss— — — — (32,612) — — (32,612) — (32,612)Conversion of debt to commonstock18,632 19 56,331 — — — — 56,350 — 56,350Treasury stock acquiredthrough surrender of sharesfor tax withholding— — — — — (197) (1,579) (1,579) — (1,579)Issuance of stock through share-based compensation plans1,490 1 6,249 — — — — 6,250 — 6,250Share-based compensationexpense— — 3,700 — — — — 3,700 — 3,700Balance at December 31, 2014282,231 $282 $1,878,810 $(516,962) $(32,867) (45,604) $(213,028) $1,116,235 $14,701 $1,130,936The accompanying notes are an integral part of these statements.56Table of ContentsAMKOR TECHNOLOGY, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS For the Year Ended December 31, 2014 2013 2012 (In thousands)Cash flows from operating activities: Net income$133,887 $111,657 $42,702Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization464,706 410,346 370,479Amortization of deferred debt issuance costs and premiums2,237 2,880 3,663Deferred income taxes(17,190) (8,256) 6,078Equity in earnings of unconsolidated affiliate(31,654) (10,316) (5,592)Loss on debt retirement— 11,619 737(Gain) loss on disposal of fixed assets, net1,276 (2,545) (1,676)Share-based compensation3,700 2,971 2,720Gain on sale of subsidiary to J-Devices(9,155) — —Other, net869 (712) (1,279)Changes in assets and liabilities: Accounts receivable(80,775) (531) (97,677)Inventories(27,817) 38,248 (29,882)Other current assets(8,747) 10,873 (5,015)Other assets954 (3,709) (598)Trade accounts payable55,693 (67,198) 17,142Accrued expenses16,720 32,001 66,566Other non-current liabilities109,205 30,208 20,695Net cash provided by operating activities613,909 557,536 389,063Cash flows from investing activities: Payments for property, plant and equipment(681,120) (566,256) (533,512)Proceeds from sale of property, plant and equipment2,815 27,209 2,727Acquisition of business, net of cash acquired— (41,865) —Cash transferred on sale of subsidiary to J-Devices, net of proceeds(15,774) — —Payments from J-Devices— 8,843 15,484Investment in J-Devices— (67,372) —Purchase of short-term investment(20,000) — —Proceeds from short-term investment20,000 — —Other investing activities(399) (1,053) (4,820)Net cash used in investing activities(694,478) (640,494) (520,121)Cash flows from financing activities: Borrowings under revolving credit facilities— 5,000 —Payments under revolving credit facilities— (5,000) —Borrowings under short-term debt— — 30,000Payments of short-term debt— — (50,000)Proceeds from issuance of long-term debt80,000 375,000 637,528Payments of long-term debt(145,000) (80,000) (420,116)Payments for debt issuance costs(903) (3,216) (6,007)Payments for retirement of debt— (11,619) —Payment of deferred consideration for an acquisition(18,763) — —Payments for repurchase of common stock— — (80,946)Proceeds from issuance of stock through share-based compensation plans6,250 446 182Payments of tax withholding for restricted shares(1,579) (466) (609)Net cash (used in) provided by financing activities(79,995) 280,145 110,032Effect of exchange rate fluctuations on cash and cash equivalents68 207 (557)Net (decrease) increase in cash and cash equivalents(160,496) 197,394 (21,583)Cash and cash equivalents, beginning of period610,442 413,048 434,631Cash and cash equivalents, end of period$449,946 $610,442 $413,048Supplemental disclosures of cash flow information: Cash paid during the period for: Interest$100,650 $100,577 $86,138Income taxes37,315 18,318 8,199Non-cash investing and financing activities: Additions to property, plant and equipment included in capital expenditures payable127,568 104,800 122,969Common stock issuance for conversion and exchange in 2014 and 2013, respectively, of 6.0% convertible seniorsubordinated notes due April 2014, $150 million related party in 201356,350 193,650 —The accompanying notes are an integral part of these statements.57Table of ContentsAMKOR TECHNOLOGY, INC.Notes to Consolidated Financial Statements1.Description of Business and Summary of Significant Accounting PoliciesDescription of BusinessAmkor is one of the world’s leading providers of outsourced semiconductor packaging and test services. Amkor pioneered the outsourcing of semiconductorpackaging and test services through a predecessor corporation in 1968, and over the years we have built a leading position by:•Designing and developing innovative packaging and test technologies;•Offering a broad portfolio of cost-effective solutions and services;•Successfully penetrating strategic end markets which offer solid growth prospects;•Cultivating long-standing relationships with our customers, which include many of the world’s leading semiconductor companies;•Collaborating with customers, original equipment manufacturers ("OEMs") and equipment and material suppliers;•Developing a competitive cost structure with disciplined capital investment;•Building expertise in high-volume manufacturing processes and developing a reputation for high quality and solid execution and•Having a diversified operational scope with research and development, engineering and production capabilities at various facilities throughoutChina, Japan, Korea, Malaysia, the Philippines and Taiwan.Basis of PresentationOur Consolidated Financial Statements include the accounts of Amkor Technology, Inc. and our subsidiaries (“Amkor”). Our Consolidated FinancialStatements reflect the elimination of all significant inter-company accounts and transactions. On July 31, 2013, we completed the purchase of AmkorTechnology Malaysia Sdn. Bhd. The financial results of the entity have been included in our Consolidated Financial Statements from the date of acquisition(Note 3). On June 30, 2014, we completed the sale of our Japanese subsidiary to J-Devices, our equity-method joint venture in Japan. The financial results ofthe divested entity were included in our consolidated financial statements up to the date of sale (Note 4) and have subsequently been included in the resultsof J-Devices. Our investments in variable interest entities in which we are the primary beneficiary are consolidated. We reflect the remaining portion ofvariable interest entities and foreign subsidiaries that are not wholly owned as noncontrolling interests.The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates andassumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, we evaluate our estimates, includingthose related to revenue recognition, income taxes, inventory, long lived assets and contingencies. These estimates are based on management’s bestknowledge of current events, historical experience, actions that we may undertake in the future and on various other assumptions that are believed to bereasonable under the circumstances. As a result, actual results could differ materially from these estimates and assumptions.Consolidation of Variable Interest EntitiesWe have variable interests in certain Philippine realty corporations in which we have a 40% ownership and from whom we lease land and buildings in thePhilippines, for which we are the primary beneficiary. As of December 31, 2014, the combined book value of the assets and liabilities associated with thesePhilippine realty corporations included in our Consolidated Balance Sheet was $16.8 million and $0.2 million, respectively. The impact of consolidatingthese variable interest entities on our Consolidated Statements of Income was not significant, and other than our lease payments, we have not provided58Table of ContentsAMKOR TECHNOLOGY, INC.Notes to Consolidated Financial Statements — (Continued)any significant assistance or other financial support to these variable interest entities for the years ended December 31, 2014, 2013 or 2012. The creditors ofthe Philippine realty corporations have no recourse to our general credit.Foreign Currency TranslationThe U.S. dollar is the functional currency of our subsidiaries and the foreign currency asset and liability amounts at these subsidiaries are remeasured intoU.S. dollars at end-of-period exchange rates, except for nonmonetary items which are remeasured at historical rates. Foreign currency income and expensesare remeasured at daily exchange rates, except for expenses related to balance sheet amounts which are remeasured at historical exchange rates. Exchangegains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are included in other expense (income) in theperiod in which they occur.The local currency is the functional currency of our equity-method investee, J-Devices. The asset and liability amounts of J-Devices are translated intoU.S. dollars at end-of-period exchange rates. Income and expenses are translated into U.S. dollars at average exchange rates in effect during the period. Theresulting translation adjustments are reported as a component of accumulated other comprehensive income in the stockholders’ equity section of the balancesheet. Assets and liabilities denominated in a currency other than the functional currency are remeasured into the functional currency prior to translation intoU.S. dollars, and the resulting transaction exchange gains or losses are included in other expense (income) in the period in which they occur.Risks and ConcentrationsThe semiconductor industry is characterized by rapid technological change, competitive pricing pressures and cyclical market patterns. Our financial resultsare affected by a wide variety of factors, including general economic conditions worldwide, economic conditions specific to the semiconductor industry, thetimely implementation of new package and test technologies, the ability to safeguard patents and intellectual property in a rapidly evolving market andreliance on materials and equipment suppliers. In addition, the semiconductor market has historically been cyclical and subject to significant economicdownturns at various times. Our profitability and ability to generate cash from operations is principally dependent upon demand for semiconductors, theutilization of our capacity, semiconductor package mix, the average selling price of our services, our ability to manage our capital expenditures and ourability to control our costs including labor, material, overhead and financing costs.A significant portion of our revenues is concentrated with a small group of customers (refer to Note 19). The loss of a significant customer, a reduction inorders or decrease in price from a significant customer or disruption in any of our significant strategic partnerships or other commercial arrangements couldhave a material adverse effect on our business, liquidity, results of operations, financial condition and cash flows.Financial instruments, for which we are subject to credit risk, consist principally of accounts receivable and cash and cash equivalents. With respect toaccounts receivable, we mitigate our credit risk by selling primarily to well established companies, performing ongoing credit evaluations and makingfrequent contact with customers. In addition, we may utilize non-recourse factoring to mitigate credit risk when considered appropriate. We have historicallymitigated our credit risk with respect to cash and cash equivalents through diversification of our holdings into various high quality money market funds andbank deposit accounts. At December 31, 2014, our cash and cash equivalents were invested in U.S. money market funds and various U.S. and foreign bankoperating and time deposit accounts.Contingencies and LitigationWe may be subject to certain legal proceedings, lawsuits and other claims, as discussed in Note 18. We accrue for a loss contingency, including legalproceedings, lawsuits, pending claims and other legal matters, when we conclude that the likelihood of a loss is probable and the amount of the loss can bereasonably estimated. When the reasonable estimate of the loss is within a range of amounts, and no amount in the range constitutes a better estimate thanany other amount, we accrue for the amount at the low end of the range. We adjust our accruals from time to time as we receive additional information, but theloss we incur may be significantly greater than or less than the amount we have accrued. We disclose59Table of ContentsAMKOR TECHNOLOGY, INC.Notes to Consolidated Financial Statements — (Continued)loss contingencies if there is at least a reasonable possibility that a loss has been incurred. Attorney fees related to legal matters are expensed as incurred.Cash and Cash EquivalentsWe consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Our cash and cash equivalentsconsist of amounts invested in U.S. money market funds and various U.S. and foreign bank operating and time deposit accounts.Restricted CashRestricted cash, current, consists of short-term cash equivalents used to collateralize our daily banking services. Restricted cash, non-current, mainly consistsof collateral to fulfill foreign trade compliance requirements.InventoriesInventories are stated at the lower of cost or market (net realizable value). Cost is principally determined by standard cost (on a first-in, first-out basis for rawmaterials and purchased components and an average cost basis for work-in-process) or by the weighted moving average method (for commodities and spareparts), both of which approximate actual cost. We review and set our standards as needed, but at a minimum on an annual basis. We reduce the carrying valueof our inventories for the cost of inventory we estimate is excess and obsolete based on the age of our inventories. When a determination is made that theinventory will not be utilized in production or is not saleable, it is written-off.Other Current AssetsOther current assets consist principally of prepaid assets, deferred tax assets and an investment in government securities by a foreign subsidiary to satisfylocal regulatory requirements, which is recorded at amortized cost.Property, Plant and EquipmentProperty, plant and equipment are stated at cost. Depreciation is calculated by the straight-line method over the estimated useful lives of depreciable assetswhich are as follows:Land use rights50 to 90 yearsBuildings and improvements10 to 25 yearsMachinery and equipment2 to 7 yearsSoftware and computer equipment3 to 5 yearsFurniture, fixtures and other equipment4 to 10 yearsCost and accumulated depreciation for property retired or disposed of are removed from the accounts, and any resulting gain or loss is included in earnings.Expenditures for maintenance and repairs are charged to expense as incurred.We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.Recoverability of a long-lived asset group to be held and used in operations is measured by a comparison of the carrying amount to the sum of theundiscounted cash flows expected to result from the use and eventual disposition of the asset group. If such asset group is considered to be impaired, theimpairment loss is measured as the amount by which the carrying amount of the asset group exceeds its fair value. Long-lived assets to be disposed of arecarried at the lower of cost or fair value less the costs of disposal.60Table of ContentsAMKOR TECHNOLOGY, INC.Notes to Consolidated Financial Statements — (Continued)InvestmentsOur investment in J-Devices, a joint venture to provide semiconductor packaging and test services in Japan, is accounted for as an equity method investment.We evaluate our investment for other-than-temporary impairment whenever events or changes in circumstances indicate that the fair value of the investmentmay be less than its carrying value. See Note 12 for additional information.Other AssetsOther assets consist principally of deferred tax assets, deferred debt issuance costs and refundable security deposits.Other Non-current LiabilitiesOther non-current liabilities consist primarily of liabilities associated with the settlement of patent license litigation and uncertain income tax positions. SeeNote 18 for additional information on the settlement.Treasury StockTreasury stock is recognized when outstanding shares are repurchased or otherwise acquired by us, including when outstanding shares are withheld to satisfytax withholding obligations in connection with certain restricted share awards under our equity incentive plans. The repurchased and withheld shares areaccounted for as treasury stock at cost.Fair Value MeasurementsWe apply fair value accounting for assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring ornonrecurring basis. We define fair value as the price that would be received from selling an asset or paid to transfer a liability in the principal or mostadvantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. See Note 17 for furtherdiscussion of fair value measurements.Revenue RecognitionWe recognize revenue from our packaging and test services, net of value-added or other similar taxes, when there is evidence of an arrangement, delivery hasoccurred or services have been rendered, fees are fixed or determinable and collectibility is reasonably assured. Generally these criteria are met and revenue isrecognized upon shipment. If the revenue recognition criteria are not met, we defer the revenue. Deferred revenue generally results from two types oftransactions: contractual invoicing at interim points in the packaging and test process prior to shipment of the finished product and customer advances forsupply agreements with customers where we commit capacity in exchange for customer prepayment of services. These prepayments are deferred and recordedas customer advances within accrued expenses and other non-current liabilities.We generally do not take ownership of customer-supplied semiconductor wafers. Title and risk of loss remains with the customer for these materials at alltimes. Accordingly, the cost of the customer-supplied materials is not included in our Consolidated Financial Statements.An allowance for sales credits is recorded as a reduction to sales and accounts receivable during the period of sale such that accounts receivable is reported atits estimated net realizable value. The allowance for sales credits is an estimate of the future credits we will issue for billing adjustments primarily forinvoicing corrections and miscellaneous customer claims and is estimated based upon recent credit issuance, historical experience and specific identificationof known or expected sales credits at the end of the reporting period. Additionally, provisions are made for doubtful accounts when there is doubt as to thecollectibility of accounts receivable. The allowance for doubtful accounts is recorded as bad debt expense and is classified as selling, general andadministrative expense. The allowance for doubtful accounts is based upon specific identification of doubtful accounts considering the age of the receivablebalance, the customer’s historical payment history and current credit worthiness as well as specific identification of any known or expected collectibilityissues. Historically, our allowance for doubtful accounts has been immaterial.61Table of ContentsAMKOR TECHNOLOGY, INC.Notes to Consolidated Financial Statements — (Continued)Shipping and Handling Fees and CostsAmounts billed to customers for shipping and handling are presented in net sales. Costs incurred for shipping and handling are included in cost of sales.Research and Development CostsResearch and development expenses include costs attributable to the conduct of research and development programs primarily related to the development ofnew package designs or technologies and improving the efficiency and capabilities of our existing production processes. Such costs include salaries, payrolltaxes, employee benefit costs, materials, supplies, depreciation and maintenance of research equipment, services provided by outside contractors and theallocable portions of facility costs such as rent, utilities, insurance, repairs and maintenance, depreciation and general support services. All costs associatedwith research and development are expensed as incurred.Income TaxesIncome taxes are accounted for using the asset and liability method. Under this method, deferred income tax assets and liabilities are recognized for the futuretax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respectivetax basis as well as for net operating loss and tax credit carryforwards. Deferred income tax assets and liabilities are measured using enacted tax rates expectedto apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets andliabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for those deferredtax assets for which it is more likely than not that the related tax benefits will not be realized.In determining the amount of the valuation allowance, we consider all available evidence of realization, as well as feasible tax planning strategies, in eachtaxing jurisdiction. If all or a portion of the remaining deferred tax assets will not be realized, the valuation allowance will be increased with a charge toincome tax expense. Conversely, if we conclude that we will ultimately be able to utilize all or a portion of the deferred tax assets for which a valuationallowance has been provided, the related portion of the valuation allowance will be released to income as a credit to income tax expense. We monitor on anongoing basis our ability to utilize our deferred tax assets and the continuing need for a related valuation allowance.We recognize in our Consolidated Financial Statements the impact of an income tax position, if that position is more likely than not of being sustained onaudit, based on the technical merits of the position. Related interest and penalties are classified as income taxes in the financial statements. See Note 7 formore information regarding unrecognized income tax benefits.2.New Accounting StandardsRecently Adopted StandardsIn March 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2013-05, Parent's Accounting for theCumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in aForeign Entity (Topic 830). ASU 2013-05 provides guidance to resolve the diversity in practice regarding the release into net income of the cumulativetranslation adjustment when a company sells or ceases to hold a controlling interest in a subsidiary or group of assets within a foreign entity. This ASU iseffective for reporting periods beginning after December 15, 2013. ASU 2013-05 was adopted on January 1, 2014. On June 30, 2014, we sold our controllinginterest in a foreign subsidiary. The sale resulted in a gain upon release of the cumulative translation adjustment associated with the entity (Note 4).Recently Issued StandardsIn May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 is based on the principle that revenue isrecognized to depict the transfer of promised goods or services to customers in an amount62Table of ContentsAMKOR TECHNOLOGY, INC.Notes to Consolidated Financial Statements — (Continued)that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosureabout the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers, including significant judgments andchanges in judgments. ASU 2014-09 is effective for reporting periods beginning after December 15, 2016, and permits the use of either full retrospective ormodified retrospective methods of adoption. Early adoption is not permitted. We are currently evaluating the method of adoption and the impact that thisguidance will have on our financial statements and disclosure.3.Business AcquisitionsOn July 31, 2013, we completed the purchase of 100% of the shares of Toshiba Electronics Malaysia Sdn. Bhd., Toshiba’s power discrete semiconductorpackaging and test operation in Malaysia, and subsequently changed the name of the entity to Amkor Technology Malaysia Sdn. Bhd. The total price for theshares was $61.2 million, based on the net asset value at closing. We paid $42.4 million in cash at closing and paid the remaining $18.8 million in March2014. We were also granted a non-exclusive, royalty bearing license by Toshiba to certain intellectual property rights for providing packaging and testservices for power discrete and certain other semiconductor products. The license has a royalty cap of ¥1.5 billion (approximately $13 million). Under thepurchase method of accounting, we allocated the purchase price to the assets acquired and liabilities assumed based on their estimated fair values on the dateof acquisition. We did not record any goodwill as a result of the acquisition.4.Sale of Subsidiary to J-DevicesOn June 30, 2014, we sold 100% of the shares of our wholly-owned subsidiary engaged in semiconductor packaging and test operations in Japan to J-Devices, our equity-method joint venture in Japan, for ¥1.1 billion ($9.6 million). For additional information regarding our investment in J-Devices, we referyou to Note 12. We received ¥0.1 billion ($1.0 million) in cash from J-Devices at closing and will receive the remaining ¥1.0 billion ($8.6 million) by June30, 2015. We recognized a net gain on the sale of $9.2 million in our consolidated financial statements in other (income) expense, net, which includes a gainof $12.6 million from the release of accumulated foreign currency translation adjustments associated with the entity (Note 16). J-Devices recognized a gain of$14.7 million on the transaction in its consolidated financial statements as the fair value of the net assets acquired exceeded the purchase price. The gainrecognized by J-Devices increased our equity in earnings of J-Devices by $8.8 million. The combined net gain we recognized was $18.0 million.5.Share-Based Compensation PlansOur share-based compensation is measured at fair value and expensed over the service period (generally the vesting period). The amount of compensationexpense to be recognized is adjusted for an estimated forfeiture rate which is based on historical data. For the years ended December 31, 2014, 2013 and2012, we recognized share-based compensation attributable to stock options and restricted shares of $3.7 million, $3.0 million and $2.7 million, respectively,primarily in selling, general and administrative expenses. There were no corresponding deferred income tax benefits for stock options or restricted shares.Equity Incentive PlanAmended and Restated 2007 Equity Incentive Plan. The Amended and Restated 2007 Equity Incentive Plan, (the “2007 Plan”) provides for the grant of thefollowing types of incentive awards: (i) stock options, (ii) restricted stock, (iii) restricted stock units, (iv) stock appreciation rights, (v) performance units andperformance shares and (vi) other stock or cash awards. Those eligible for awards include employees, directors and consultants who provide services toAmkor and its subsidiaries. The 2007 Plan has a contractual life of ten years and can be terminated at the discretion of the Board of Directors. There wereoriginally 17.0 million shares of our common stock reserved for issuance under the 2007 Plan and at December 31, 2014 there were 11.4 million sharesavailable for grant.63Table of ContentsAMKOR TECHNOLOGY, INC.Notes to Consolidated Financial Statements — (Continued)Stock optionsStock options are generally granted with an exercise price equal to the market price of the stock at the date of grant. Substantially all of the options grantedare exercisable pursuant to a two to five year vesting schedule and the term of the options granted is no longer than ten years. Upon option exercise, we mayissue new shares of common or treasury stock.In order to calculate the fair value of stock options at the date of grant, we use the Black-Scholes option pricing model. Expected volatilities are based onhistorical performance of our stock. We also use historical data to estimate the timing and amount of option exercises and forfeitures within the valuationmodel. The expected term of the options is based on evaluations of historical and expected future employee exercise behavior and represents the period oftime that options granted are expected to be outstanding. The risk-free interest rate for periods within the contractual life of the option is based on theU.S. Treasury yield curve in effect at the time of grant.The following table summarizes our stock option activity for the year ended December 31, 2014: Number ofShares(In thousands) Weighted AverageExercise Priceper Share Weighted AverageRemainingContractual Term(Years) AggregateIntrinsicValue(In thousands)Outstanding at December 31, 20134,873 $6.52 Granted330 8.15 Exercised(1,011) 6.18 Forfeited or expired(370) 11.71 Outstanding at December 31, 20143,822 $6.25 6.61 $6,376Fully vested at December 31, 2014 and expected to vestthereafter3,798 $6.26 6.59 $6,325Exercisable at December 31, 20142,113 $7.17 4.93 $2,454The following assumptions were used to calculate the weighted average fair values of the options granted: For the Year Ended December 31, 2014 2013 2012Expected life (in years)6.1 6.2 6.0Risk-free interest rate2.0% 1.7% 1.0%Volatility57% 60% 65%Dividend yield— — —Weighted average grant date fair value per option granted$4.46 $2.49 $2.68Total unrecognized compensation expense from stock options, net of a forfeiture estimate, was $4.3 million as of December 31, 2014, which is expected to berecognized over a weighted-average period of approximately 2.5 years beginning January 1, 2015.Restricted SharesWe grant restricted shares to employees under the 2007 Plan. The restricted shares vest ratably over four years, with 25% of the shares vesting at the end ofthe first year and the remainder vesting monthly or quarterly thereafter, depending on the grant, such that 100% of the shares will become vested on thefourth anniversary of the award, subject to the recipient’s continued employment with us on the applicable vesting dates. In addition, provided that therestricted shares have not been forfeited earlier, for certain grants, the restricted shares will vest upon the recipient’s death, disability or retirement, or upon achange in control of Amkor or, in some cases, upon retirement. Although ownership of the restricted shares does not transfer to the recipients until the shareshave vested, recipients have voting and dividend rights on these shares from64Table of ContentsAMKOR TECHNOLOGY, INC.Notes to Consolidated Financial Statements — (Continued)the date of grant. The value of the restricted shares is determined based on the fair market value of the underlying shares on the date of the grant and isrecognized ratably over the vesting period or to the date on which the recipient becomes retirement eligible, if shorter. Upon vesting of restricted stockawards, we may issue new shares of common or treasury stock.The following table summarizes our restricted share activity for the year ended December 31, 2014: Number ofShares(In thousands) Weighted AverageGrant DateFair Value(Per Share)Nonvested at December 31, 20131,172 $4.83Awards granted— —Awards vested(479) 5.18Awards forfeited(33) 4.68Nonvested at December 31, 2014660 $4.58Total unrecognized compensation cost, net of a forfeiture estimate, was $2.6 million as of December 31, 2014, which is expected to be recognized over aweighted average period of approximately 2.1 years beginning January 1, 2015.6.Other Income and ExpenseOther income and expense consists of the following: December 31, 2014 2013 2012 (In thousands)Interest income$(3,359) $(3,785) $(3,160)Foreign currency (gain) loss, net(9,808) (5,626) 4,185Loss on debt retirement757 12,330 1,199Gain on sale of subsidiary to J-Devices (Note 4)(9,155) — —Other income, net(2,978) (705) (1,586)Total other (income) expense, net$(24,543) $2,214 $6387.Income TaxesGeographic sources of income (loss) before income taxes are as follows:For the Year Ended December 31, 2014 2013 2012 (In thousands)United States$16,571 $(36,829) $17,062Foreign119,507 160,816 37,049Total income before income taxes$136,078 $123,987 $54,111The provision for income taxes includes current federal, state and foreign taxes payable and those deferred because of temporary differences between thefinancial statement and the tax bases of assets and liabilities.65Table of ContentsAMKOR TECHNOLOGY, INC.Notes to Consolidated Financial Statements — (Continued)The components of the provision (benefit) for income taxes are as follows: For the Year Ended December 31, 2014 2013 2012 (In thousands)Current Federal$— $— $—State(46) — (75)Foreign51,081 30,902 10,998 51,035 30,902 10,923Deferred Federal— (8,556) 1,859State— 9 266Foreign(17,190) 291 3,953 (17,190) (8,256) 6,078Total provision$33,845 $22,646 $17,001 Effective Tax Rate24.9% 18.3% 31.4%The reconciliation between the U.S. federal statutory income tax rate of 35% and our income tax provision is as follows: For the Year Ended December 31, 2014 2013 2012 (In thousands)U.S. federal tax at 35%$47,627 $43,396 $18,939State taxes, net of federal benefit1,940 1,124 1,126Foreign income taxed at different rates6,579 (17,814) (14,717)Foreign exchange (loss) gain(17,321) 844 12,329Change in valuation allowance(13,527) (32,415) (3,112)Adjustments related to prior years3,643 2,727 (2,464)Income tax credits generated(2,557) (2,622) (1,370)Repatriation of foreign earnings and profits3,958 6,499 3,240Expiration of capital loss carryforward— 15,555 —Expiration of net operating losses2,534 — —Equity in earnings of J-Devices— — 2,404Debt conversion costs— 4,067 —Other969 1,285 626Total$33,845 $22,646 $17,001During 2013, we incurred costs which are not deductible for income tax purposes including certain costs in connection with the exchange of the 2014 Notesfor shares of our common stock. The 2014 change in foreign income taxed at different rates is due to a change in the geographic income mix which resultedin a lower tax benefit in the current year.Income tax expense in 2012 includes deferred taxes on undistributed earnings from our investment in J-Devices. In 2013 and 2014, deferred taxes were notrequired as a result of a change in our ownership structure of our investment in J-Devices.66Table of ContentsAMKOR TECHNOLOGY, INC.Notes to Consolidated Financial Statements — (Continued)The following is a summary of the components of our deferred tax assets and liabilities: December 31, 2014 2013 (In thousands)Deferred tax assets: Net operating loss carryforwards$120,639 $147,905Income tax credits24,754 27,751Property, plant and equipment19,796 14,390Accrued liabilities76,682 57,374Unrealized foreign exchange loss4,947 3,893Other12,963 15,137Total deferred tax assets259,781 266,450Valuation allowance(149,847) (179,183)Total deferred tax assets net of valuation allowance109,934 87,267Deferred tax liabilities: Property, plant and equipment27,921 21,716Deferred gain5,036 6,295Other2,844 1,967Total deferred tax liabilities35,801 29,978Net deferred tax assets$74,133 $57,289Recognized as: Other current assets$21,864 $10,729Other assets54,950 47,609Accrued expenses(1,092) (97)Other non-current liabilities(1,589) (952)Total$74,133 $57,289In 2014, the valuation allowance on our deferred tax assets decreased by $29.3 million primarily as a result of the utilization of domestic net operating losscarryforwards and the reduction of valuation allowance as the result of the sale of a subsidiary.In 2013, the valuation allowance on our deferred tax assets decreased by $30.6 million primarily as a result of the utilization of domestic net operating losscarryforwards and expiring capital losses. Also during 2013, we concluded that sufficient net positive evidence existed to release the valuation allowanceagainst the deferred tax assets at one of our foreign jurisdictions. The recent trend of improving taxable operating results in this jurisdiction continued in2013, and we believe this recent history of earnings is sustainable and sufficient to fully realize the deferred tax assets in this jurisdiction.In 2012, the valuation allowance on our deferred tax assets decreased by $4.5 million primarily as a result of the utilization of domestic net operating losscarryforwards partially offset by an increase associated with losses and reserves in certain foreign jurisdictions.As a result of certain income tax accounting realization requirements with respect to accounting for share-based compensation, the table of deferred tax assetsand liabilities shown above does not include certain deferred tax assets at December 31, 2014 and 2013 that arose directly from tax deductions related toequity compensation that is greater than the compensation recognized for financial reporting. If such deferred tax assets are subsequently realized, they willbe recorded to contributed capital in the amount of $6.9 million. As a result of net operating loss carryforwards, we were not able to67Table of ContentsAMKOR TECHNOLOGY, INC.Notes to Consolidated Financial Statements — (Continued)recognize the excess tax benefits of stock option deductions in 2014 because the deductions did not reduce income tax payable.As a result of certain capital investments, export commitments and employment levels, income from operations in China, Korea, Malaysia, the Philippinesand Taiwan was subject to reduced income tax rates and in some cases is exempt from income taxes. The reduced tax rates or tax exemptions expire at variousdates through 2022. We recognized $0.9 million, $4.8 million and $13.7 million in tax benefits as a result of the tax holidays in 2014, 2013 and 2012,respectively. The benefit of the tax holidays on diluted earnings per share was approximately $0.00, $0.02 and $0.06 for 2014, 2013 and 2012, respectively.Our net operating loss carryforwards (“NOL’s”) are as follows: For the Year EndedDecember 31, 2014 2013 Expiration (In thousands) U.S. Federal NOL’s$317,841 $342,770 2021-2033U.S. State NOL’s173,756 197,618 2015-2031Foreign NOL’s4,962 38,337 2015-2024The deferred tax assets associated with certain of our foreign net operating losses have been reserved with a valuation allowance. The deferred tax assetsassociated with our U.S. federal and state net operating losses available for carryforward have been fully reserved with valuation allowances at December 31,2014 and 2013. Also, our ability to utilize our U.S. net operating loss carryforwards may be limited in the future if we experience an ownership change asdefined by the Internal Revenue Code.At December 31, 2014, we have various tax credits available to be carried forward including U.S. foreign income tax credits totaling $8.1 million, expiring in2016 and income tax credits totaling $11.1 million expiring in varying amounts through 2019 at our subsidiary in Korea. The deferred tax assets associatedwith the U.S. foreign income tax credits and certain foreign income tax credits have been fully reserved with a valuation allowance. Income tax creditsgenerated by certain of our foreign subsidiaries in 2014, 2013 and 2012 have been recognized in our income tax provision.Income taxes have not been provided on approximately $721.7 million of the undistributed earnings of our foreign subsidiaries at December 31, 2014, overwhich we have sufficient influence to control the distribution of such earnings and have determined that substantially all such earnings have been reinvestedindefinitely. These earnings could become subject to either or both federal income tax and foreign withholding tax if they are remitted as dividends, ifforeign earnings are loaned to any of our domestic companies, or if we sell our investment in certain subsidiaries. We estimate that repatriation of theseforeign earnings would generate additional foreign withholding taxes of approximately $21.5 million and insignificant U.S. federal income tax after foreigntax credits.68Table of ContentsAMKOR TECHNOLOGY, INC.Notes to Consolidated Financial Statements — (Continued)We operate in and file income tax returns in various U.S. and foreign jurisdictions which are subject to examination by tax authorities. The conclusion ofexamination of our 2008-2012 Korean income tax returns during 2014 did not result in any significant additional impact to income tax expense. Currentexaminations include our 2010, 2012 and 2013 Philippines income tax returns. We have tax returns that are open to examination in various jurisdictions fortax years 2009-2014. The open years contain matters that could be subject to differing interpretations of applicable tax laws and regulations related to theamount and/or timing of income, deductions and tax credits.A reconciliation of the beginning and ending gross amount of unrecognized tax benefits is as follows: For the Year Ended December 31, 2014 2013 2012 (In thousands)Balance at January 1$27,128 $8,218 $7,930Additions based on tax positions related to the current year6,032 17,752 5,551Additions for tax positions of prior years1,240 2,723 54Reductions for tax positions of prior years(15,433) (108) (4,091)Reductions related to settlements with tax authorities(6,297) (1,353) (1,226)Reductions from lapse of statutes of limitations— (104) —Balance at December 31$12,670 $27,128 $8,218The net decrease in our unrecognized tax benefits was $14.5 million from December 31, 2013 to December 31, 2014. Our unrecognized tax benefitsdecreased primarily because of a $15.4 million reduction related to the application of a tax law change and a $5.1 million reduction related to the settlementof a tax examination in a foreign jurisdiction. These decreases were offset by $6.0 million of additions related to income attribution and other unrecognizedtax benefits. At December 31, 2014, all of our gross unrecognized tax benefits would reduce our effective tax rate, if recognized.The liability related to our unrecognized tax benefits is $10.5 million as of December 31, 2014, and is reported as a component of other non-currentliabilities. The unrecognized tax benefits presented in the table above include positions that have reduced deferred tax assets, which are not included in theliability reported as a component of other non-current liabilities.It is reasonably possible that the total amount of unrecognized tax benefits related to revenue attribution will decrease by up to $0.6 million due to the lapseof statues of limitations in foreign jurisdictions.Our unrecognized tax benefits are subject to change as examinations of specific tax years are completed in the respective jurisdictions. Tax returnexaminations involve uncertainties and there can be no assurance that the outcome of examinations will be favorable.69Table of ContentsAMKOR TECHNOLOGY, INC.Notes to Consolidated Financial Statements — (Continued)8.Earnings Per ShareBasic earnings per share (“EPS”) is computed by dividing net income attributable to Amkor common stockholders by the weighted average number ofcommon shares outstanding during the period. The weighted average number of common shares outstanding includes restricted shares held by retirementeligible recipients and is reduced for treasury stock. We grant restricted shares which entitle recipients to voting and nonforfeitable dividend rights from thedate of grant therefore our unvested share-based compensation awards are considered participating securities and are included in the computation of EPSpursuant to the two-class method.Diluted EPS is computed on the basis of the weighted average number of shares of common stock plus the effect of dilutive potential common sharesoutstanding during the period. Dilutive potential common shares include outstanding stock options, unvested restricted shares and convertible debt. Thefollowing table summarizes the computation of basic and diluted EPS: For the Year Ended December 31, 2014 2013 2012 (In thousands, except per share data)Net income attributable to Amkor$130,386 $109,296 $41,818Income allocated to participating securities(372) (681) (212)Net income available to Amkor common stockholders — basic130,014 108,615 41,606Adjustment for dilutive securities on net income: Net income reallocated to participating securities6 93 212Interest on 6.0% convertible notes due 2014, net of tax1,039 9,440 16,103Net income attributable to Amkor — diluted$131,059 $118,148 $57,921 Weighted average shares outstanding — basic230,710 187,032 160,105Effect of dilutive securities: Stock options and restricted share awards712 21 2416.0% convertible notes due 20145,309 48,277 82,658Weighted average shares outstanding — diluted236,731 235,330 243,004Net income attributable to Amkor per common share: Basic$0.56 $0.58 $0.26Diluted0.55 0.50 0.24The following table summarizes the potential shares of common stock that were excluded from diluted EPS, because the effect of including these potentialshares was antidilutive: For the Year Ended December 31, 2014 2013 2012 (In thousands)Stock options and restricted share awards1,303 4,890 4,4169.Factoring of Accounts ReceivableIn certain foreign locations, we use non-recourse factoring arrangements with third party financial institutions to manage our working capital and cash flows.Under this program, we sell receivables to a financial institution for cash at a discount to the face amount. As part of the factoring arrangements, we performcertain collection and administrative functions for the receivables sold. For the year ended December 31, 2014 and 2013, we sold accounts receivabletotaling $340.0 million and $130.2 million, respectively, for a discount, plus fees, of $1.5 million and $0.6 million, respectively.70Table of ContentsAMKOR TECHNOLOGY, INC.Notes to Consolidated Financial Statements — (Continued)10.InventoriesInventories consist of the following: December 31, 2014 2013 (In thousands)Raw materials and purchased components$161,942 $147,292Work-in-process61,437 53,131Total inventories$223,379 $200,42311.Property, Plant and EquipmentProperty, plant and equipment consist of the following: December 31, 2014 2013 (In thousands)Land$207,985 $208,048Land use rights26,845 26,845Buildings and improvements940,846 911,258Machinery and equipment3,953,891 3,577,045Software and computer equipment185,243 193,641Furniture, fixtures and other equipment15,347 17,430Construction in progress39,261 27,039Total property, plant and equipment5,369,418 4,961,306Less accumulated depreciation and amortization(3,162,942) (2,954,753)Total property, plant and equipment, net$2,206,476 $2,006,553Depreciation expense was $463.5 million, $406.7 million and $366.6 million for 2014, 2013 and 2012, respectively.In 2013, we purchased land and have commenced construction activities for K5. We have recorded capitalized interest related to these activities of $8.6million and $1.7 million as of December 31, 2014 and 2013, respectively. 12.InvestmentsInvestments consist of the following: December 31, 2014 2013 CarryingValue OwnershipInterest CarryingValue OwnershipInterest (In thousands, except percentages)Investment in unconsolidated affiliate$117,733 60.0% $105,214 60.0%71Table of ContentsAMKOR TECHNOLOGY, INC.Notes to Consolidated Financial Statements — (Continued)J-Devices CorporationIn October 2009, Amkor and Toshiba invested in Nakaya Microdevices Corporation (“NMD”) and formed a joint venture to provide semiconductorpackaging and test services in Japan. As a result of the transaction, NMD changed its name to J-Devices Corporation. We invested $16.7 million for ouroriginal 30% equity interest and options to acquire additional equity interests. We exercised our options and increased our ownership interest in J-Devicesfrom 30% to 60% in April 2013, for an aggregate purchase price of $67.4 million, and from 60% to 65.7% in January 2015, for an aggregate purchase price of$12.9 million. J-Devices is now owned 65.7% by Amkor and 34.3% by the former shareholders of NMD.The remaining option is exercisable at our discretion and permits us to increase our ownership interest in J-Devices up to 80% in 2015 and thereafter bypurchasing shares owned by the other shareholders. The option becomes exercisable in the fourth quarter of 2015, and if exercised, we would expect closingto occur in the first half of the following year, subject to regulatory approval. After we own 80% or more shares, the original shareholders of NMD have a putoption which allows them to sell their shares to us. The exercise price for all options is payable in cash and is determined using a formula based on the netbook value and a multiple of earnings before interest, taxes, depreciation and amortization of J-Devices.The governance provisions currently applicable to J-Devices restrict our ability, even with our majority ownership, to cause J-Devices to take certain actionswithout the consent of the other investors. Accordingly, we account for our investment in J-Devices using the equity method of accounting. Under the equitymethod of accounting, we recognize our proportionate share of J-Devices’ net income or loss, which is after J-Devices' income taxes in Japan, during eachaccounting period as a change in our investment in unconsolidated affiliate. J-Devices' financial information is converted to U.S. GAAP and translated intoU.S. dollars using Japanese yen as the functional currency. In addition, we record equity method adjustments as a change in our investment. The equitymethod adjustments include the amortization of basis differences as a result of the cost of our investment differing from our proportionate share of J-Devices'equity.On June 30, 2014, J-Devices purchased 100% of the shares of our previously wholly-owned subsidiary engaged in semiconductor packaging and testoperations in Japan. For additional information regarding this transaction, we refer you to Note 4.Our share of the undistributed retained earnings of J-Devices amounted to approximately $63.5 million and $31.8 million as of December 31, 2014 and 2013,respectively.13.Accrued ExpensesAccrued expenses consist of the following: December 31, 2014 2013 (In thousands)Payroll and benefits$77,635 $75,909Deferred revenue and customer advances56,829 44,764Accrued settlement costs (Note 18)32,414 43,324Income taxes payable31,580 17,528Accrued interest15,947 21,807Accrued severance plan obligations (Note 15)13,226 11,197Acquisition payable (Note 3)— 17,897Other accrued expenses31,366 31,826Total accrued expenses$258,997 $264,252Accrued settlement costs relate to amounts due as a result of a patent license dispute (Note 18).72Table of ContentsAMKOR TECHNOLOGY, INC.Notes to Consolidated Financial Statements — (Continued)14.DebtFollowing is a summary of short-term borrowings and long-term debt: December 31, 2014 2013 (In thousands)Debt of Amkor Technology, Inc.: Senior secured credit facilities: $200 million revolving credit facility, LIBOR plus 1.25%-1.75%, due December 2019 (1)$— $—Senior notes: 7.375% Senior notes, due May 2018345,000 345,0006.625% Senior notes, due June 2021, $75 million related party400,000 400,0006.375% Senior notes, due October 2022525,000 525,000Senior subordinated notes: 6.0% Convertible senior subordinated notes, due April 2014 (2)— 56,350Debt of subsidiaries: Amkor Technology Korea, Inc.: $41 million revolving credit facility, foreign currency funding-linked base rate plus 2.00%, due June 2016(3)— —Term loan, LIBOR plus 3.70%, due June 2016 (4)70,000 70,000Term loan, foreign currency funding-linked base rate plus 2.00%, due March 2017 (5)80,000 —Term loan, LIBOR plus 3.70%, due July 2017 (6)30,000 90,000Term loan, foreign currency funding-linked base rate plus 1.75%, due September 2017 (7)5,000 10,000Term loan, LIBOR plus 3.70%, due December 201970,000 70,000Term loan, foreign currency funding-linked base rate plus 2.30%, due March 2015— 80,000Other: Revolving credit facility, TAIFX plus a bank-determined spread, due April 2015 (Taiwan) (8)— — 1,525,000 1,646,350Add: Unamortized premium5,824 6,390Less: Short-term borrowings and current portion of long-term debt(5,000) (61,350)Long-term debt (including related party)$1,525,824 $1,591,390(1)In December 2014, we amended the senior secured revolving credit facility to increase the facility amount from $150.0 million to $200.0 millionand extend its term to December 2019. The facility has a letter of credit sub-limit of $25.0 million. As amended, interest is charged under the facilityat a floating rate based on the base rate in effect from time to time plus the applicable margins, which range from 0.00% to 0.50% for base raterevolving loans, or LIBOR plus 1.25% to 1.75% for LIBOR revolving loans. The borrowing base for the revolving credit facility is based on theamount of our eligible accounts receivable, which exceeded $200.0 million as of December 31, 2014.(2)In April 2009, we issued $250.0 million of our 6.0% Convertible senior subordinated notes (the “2014 Notes”). The 2014 Notes were convertible atany time prior to the maturity date into our common stock at a price of approximately $3.02 per share, subject to adjustment. In June 2013, wecompleted a tender offer for the 2014 Notes and exchanged $193.7 million of the 2014 Notes for an aggregate 64.0 million shares of our commonstock73Table of ContentsAMKOR TECHNOLOGY, INC.Notes to Consolidated Financial Statements — (Continued)and a cash payment of $11.6 million. In April 2014, holders of the 2014 Notes converted the remaining outstanding principal amount of $56.4million into 18.6 million shares of our common stock.(3)In June 2012, we entered into a $41.0 million revolving credit facility with a Korean Bank with a term of 12 months. The loan is collateralized withsubstantially all the land, factories and equipment at our facilities in Korea. In June 2013, the facility was amended by extending the term by threeyears to June 2016. Principal is payable upon maturity. As of December 31, 2014, $41.0 million was available to be borrowed for general workingcapital purposes.(4)In April 2013, we entered into a term loan agreement with a Korean bank pursuant to which we may borrow up to $150.0 million through April 2016for general working capital purposes and the repayment of inter-company debt. The loan is collateralized by substantially all the land, factories andequipment located at our facilities in Korea. Principal is payable at maturity. As of December 31, 2014, $80.0 million was available to be borrowed.(5)In March 2014, we entered into a term loan agreement with a Korean bank pursuant to which we borrowed $80.0 million. The loan is collateralizedby substantially all the land, factories and equipment located at our facilities in Korea. Principal is payable at maturity. Proceeds were used to prepayour term loan due March 2015. In January 2015, the term loan was amended and now bears interest at 1.80%.(6)In June 2012, we entered into a term loan agreement for five years with a Korean bank collateralized by substantially all the land, factories andequipment located at our facilities in Korea. Principal is payable at maturity. In April 2014, we prepaid $60.0 million of the outstanding balance ofthe term loan. In October 2014, the term loan was amended and now bears interest at LIBOR plus 3.70%.(7)In March 2013, we entered into a loan agreement with a Korean bank pursuant to which we may borrow up to $150.0 million through September2017. The loan is collateralized by substantially all the land, factories and equipment located at our facilities in Korea. Principal is payable inquarterly installments of $5.0 million starting in December 2014, with the remaining balance due at maturity. At December 31, 2014, $140.0 millionwas available to be borrowed for capital expenditures.(8)In September 2012, Amkor Technology Taiwan Ltd, a subsidiary in Taiwan, entered into a revolving credit facility. Availability under the revolvingcredit facility was originally $44.0 million and subsequent availability steps down $5.0 million every six months from the original availablebalance. Principal is payable at maturity. As of December 31, 2014, $19.0 million was available to be drawn for general corporate purposes andcapital expenditures.Interest RatesInterest is payable semiannually on our senior notes and interest is payable semi-annually, quarterly or monthly on our variable rate debt. Refer to the tableabove for the interest rates on our fixed rate debt and to the table below for the interest rates on our variable rate debt. Variable Interest Rates at December 31, 2014 2013Amkor Technology Korea, Inc.: Term loan, LIBOR plus 3.70%, due June 20163.96% 3.95%Term loan, foreign currency funding-linked base rate plus 2.00%, due March 20173.49% —%Term loan, LIBOR plus 3.70%, due July 20173.93% 4.14%Term loan, foreign currency funding-linked base rate plus 1.75%, due September 20173.28% 3.76%Term loan, LIBOR plus 3.70%, due December 20193.93% 3.95%Term loan, foreign currency funding-linked base rate plus 2.30%, due March 2015—% 4.29%74Table of ContentsAMKOR TECHNOLOGY, INC.Notes to Consolidated Financial Statements — (Continued)Compliance with Debt CovenantsThe debt of Amkor Technology, Inc. is structurally subordinated in right of payment to all existing and future debt and other liabilities of our subsidiaries.The agreements governing our indebtedness contain a number of affirmative and negative covenants which restrict our ability to pay dividends and couldrestrict our operations. We have never paid a dividend to our stockholders and we do not have any present plans for doing so. We were in compliance with allof our covenants as of December 31, 2014 and 2013.Maturities Total Debt (In thousands)Payments due for the year ending December 31, 2015$5,000201670,0002017110,0002018345,000201970,000Thereafter925,000Total debt$1,525,00075Table of ContentsAMKOR TECHNOLOGY, INC.Notes to Consolidated Financial Statements — (Continued)15.Pension and Severance PlansDefined Contribution PlansWe sponsor defined contribution plans in Malaysia, Taiwan and the U.S. Total defined contribution expense was $6.8 million, $5.2 million and $4.1 millionfor 2014, 2013 and 2012, respectively.Korean Severance PlanOur subsidiary in Korea participates in an accrued severance plan that covers employees with at least one year of service. To the extent eligible employees areterminated, our subsidiary in Korea would be required to make lump-sum severance payments on behalf of these eligible employees based on their length ofservice, seniority and rate of pay at the time of termination. Accrued severance benefits are estimated assuming all eligible employees were to terminate theiremployment at the balance sheet date. Our contributions to the National Pension Plan of the Republic of Korea are deducted from accrued severance benefitliabilities.The changes to the balance of our severance accrual are as follows: For the Year Ended December 31, 2014 2013 2012 (In thousands)Balance at the beginning of year$145,373 $126,762 $106,715Provision of severance benefits17,593 26,550 19,667Severance payments(10,160) (10,402) (8,520)(Gain) loss on foreign currency(5,926) 2,463 8,900 146,880 145,373 126,762Payments remaining with the National Pension Fund(219) (241) (249)Total severance obligation balance at the end of year146,661 145,132 126,513Less current portion of accrued severance obligation (Note 13)13,226 11,197 9,516Non-current portion of severance obligation$133,435 $133,935 $116,997Foreign Defined Benefit Pension PlansOur subsidiaries in Japan, Malaysia, the Philippines and Taiwan sponsor defined benefit plans (the “Plans”) that cover substantially all of their respectiveemployees who are not covered by statutory plans. Charges to expense are based upon actuarial analyses.76Table of ContentsAMKOR TECHNOLOGY, INC.Notes to Consolidated Financial Statements — (Continued)The following table summarizes the Plans’ benefit obligations, fair value of the Plans’ assets and the funded status of the Plans at December 31, 2014 and2013. For the Year EndedDecember 31, 2014 2013 (In thousands)Change in projected benefit obligation: Projected benefit obligation at beginning of year$81,572 $80,528Service cost5,042 5,909Interest cost3,051 3,170Benefits paid(2,620) (1,602)Actuarial losses (gains)3,514 (2,513)Acquisition (Note 3)— 13,017Divestiture (Note 4)(14,814) —Effects of curtailment— (176)Settlement— (8,701)Foreign exchange gain(1,736) (8,060)Projected benefit obligation at end of year74,009 81,572Change in plan assets: Fair value of plan assets at beginning of year50,304 58,146Actual gain on plan assets4,149 5,159Employer contributions3,756 1,120Settlement— (8,701)Benefits paid(2,620) (1,602)Foreign exchange loss(818) (3,818)Fair value of plan assets at end of year54,771 50,304Funded status of the Plans at end of year$(19,238) $(31,268)The accrued benefit liability, included in pension and severance obligations in the Consolidated Balance Sheets, as of December 31, 2014 and 2013 was$19.2 million and $31.3 million, respectively. The accumulated benefit obligation as of December 31, 2014 and 2013 was $44.1 million and $55.9 million,respectively.77Table of ContentsAMKOR TECHNOLOGY, INC.Notes to Consolidated Financial Statements — (Continued)The following table summarizes, by component, the change in accumulated other comprehensive income related to our Plans: Prior ServiceCost Actuarial Net(Loss) Gain Total (In thousands)Balance at December 31, 2012, net of tax$188 $(5,561) $(5,373)Amortization included in net periodic pension cost250 114 364Net gain arising during period— 3,996 3,996Adjustments to unrealized components of defined benefit pension plan included in othercomprehensive income250 4,110 4,360Balance at December 31, 2013, net of tax$438 $(1,451) $(1,013)Amortization included in net periodic pension cost102 110 212Net gain arising during period— (1,724) (1,724)Adjustments to unrealized components of defined benefit pension plan included in othercomprehensive income102 (1,614) (1,512)Balance at December 31, 2014, net of tax$540 $(3,065) $(2,525) Estimated amortization of cost to be included in 2015 net periodic pension cost$34 $84 $118Information for pension plans with benefit obligations in excess of plan assets are as follows: December 31, 2014 2013 (In thousands)Plans with underfunded or non-funded projected benefit obligation: Aggregate projected benefit obligation$74,044 $73,326Aggregate fair value of plan assets54,771 41,957Plans with underfunded or non-funded accumulated benefit obligation: Aggregate accumulated benefit obligation11,854 24,877Aggregate fair value of plan assets— —78Table of ContentsAMKOR TECHNOLOGY, INC.Notes to Consolidated Financial Statements — (Continued)The following table summarizes net periodic pension costs: For the Year Ended December 31, 2014 2013 2012 (In thousands)Components of net periodic pension cost and total pension expense: Service cost$5,042 $5,909 $6,362Interest cost3,051 3,170 3,270Expected return on plan assets(3,094) (3,508) (3,188)Amortization of prior service cost116 231 291Recognized actuarial loss141 142 225Net periodic pension cost5,256 5,944 6,960Curtailment (gain) loss— (176) 1,089Settlement loss (gain)97 (120) (100)Total pension expense$5,353 $5,648 $7,949The following table summarizes the weighted-average assumptions used in computing the net periodic pension cost and projected benefit obligation atDecember 31, 2014, 2013 and 2012: For the Year Ended December 31, 2014 2013 2012Discount rate for determining net periodic pension cost3.9% 3.9% 4.2%Discount rate for determining benefit obligations at year end4.2% 3.9% 4.0%Rate of compensation increase for determining net periodicpension cost4.1% 4.1% 4.5%Rate of compensation increase for determining benefit obligationsat year end4.7% 4.1% 4.1%Expected rate of return on plan assets for determining net periodicpension cost6.2% 6.3% 6.3%The measurement date for determining the Plans’ assets and benefit obligations is December 31, each year. Discount rates are generally derived from yieldcurves constructed from high-quality corporate or foreign government bonds, for which the timing and amount of cash outflows approximate the estimatedpayouts.The expected rate of return assumption is based on weighted-average expected returns for each asset class. Expected returns reflect a combination ofhistorical performance analysis and the forward-looking views of the financial markets and include input from our actuaries. We have no control over thedirection of our investments in our defined benefit plans in Taiwan as the local Labor Standards Law Fund mandates such contributions into a cash accountbalance at the Bank of Taiwan. The defined benefit pension plans in Japan and Malaysia are non-funded plans, and as such, no assets exist related to theseplans. Our investment strategy for our Philippine defined benefit plan is based on long-term, sustained asset growth through low to medium risk investments.The current rate of return assumption targets are based on an asset allocation strategy for our Philippine plan assets of 55% debt securities (primarilyPhilippines and U.S.) and 45% equity securities (primarily U.S., Philippines and Europe). Philippine plan assets included Amkor common stock totaling $0.7million and $0.6 million at December 31, 2014, and December 31, 2013, respectively.79Table of ContentsAMKOR TECHNOLOGY, INC.Notes to Consolidated Financial Statements — (Continued)The fair value of our pension plan assets at December 31, 2014, by asset category utilizing the fair value hierarchy as discussed in Note 17, is as follows: Quoted Pricesin ActiveMarkets forIdenticalAssets(Level 1) SignificantOther ObservableInputs(Level 2) Total (In thousands)Cash and cash equivalents$5,742 $— $5,742Equity securities Foreign securities3,035 — 3,035U.S. securities19,790 — 19,790 22,825 — 22,825U.S. fixed income funds4,321 — 4,321Bonds U.S. government bonds— 2,840 2,840Foreign treasury notes10,156 — 10,156 10,156 2,840 12,996Taiwan retirement fund8,632 — 8,632Other— 255 255Total$51,676 $3,095 $54,771The fair value of our pension plan assets at December 31, 2013, by asset category utilizing the fair value hierarchy as discussed in Note 17, is as follows: Quoted Pricesin ActiveMarkets forIdenticalAssets(Level 1) SignificantOther ObservableInputs(Level 2) Total (In thousands)Cash and cash equivalents$4,542 $— $4,542Equity securities Foreign securities1,950 — 1,950U.S. securities18,223 — 18,223 20,173 — 20,173U.S. fixed income funds4,186 — 4,186Bonds U.S. government bonds— 2,087 2,087Foreign treasury notes10,374 — 10,374 10,374 2,087 12,461Taiwan retirement fund8,840 — 8,840Other— 102 102Total$48,115 $2,189 $50,30480Table of ContentsAMKOR TECHNOLOGY, INC.Notes to Consolidated Financial Statements — (Continued)The Taiwan retirement fund category of our plan assets represents accounts that our subsidiaries in Taiwan have in a government labor retirement fund in thecustody of the Bank of Taiwan. The accounts earn a minimum guaranteed rate of return. We have no control over the investment decisions of the fund whichis invested in a mix of cash, domestic and foreign equity securities and domestic and foreign debt securities.We expect to make contributions of $1.7 million during 2015. We closely monitor the funded status of the Plans with respect to legislative requirements. Weintend to make at least the minimum contribution required by law each year.The estimated future benefit payments related to our foreign defined benefit plans are as follows: Payments (In thousands)2015$1,38420162,01920171,86920182,43020193,7102020 to 202428,69416.Accumulated Other Comprehensive Income (Loss)The following table reflects the changes in accumulated other comprehensive income (loss), net of tax: Defined BenefitPension Foreign CurrencyTranslation Equity Interest in J-Devices' OtherComprehensiveIncome (Loss) Total (In thousands)Accumulated other comprehensive (loss) income at December 31,2012$(5,373) $16,346 $268 $11,241Other comprehensive income (loss) before reclassifications3,996 (4,895) (10,961) (11,860)Amounts reclassified from accumulated other comprehensive (loss)income364 — — 364Other comprehensive income (loss)4,360 (4,895) (10,961) (11,496)Accumulated other comprehensive (loss) income at December 31,2013$(1,013) $11,451 $(10,693) $(255)Other comprehensive (loss) income before reclassifications(1,724) 623 (19,136) (20,237)Amounts reclassified from accumulated other comprehensive (loss)income212 (12,587) — (12,375)Other comprehensive loss(1,512) (11,964) (19,136) (32,612)Accumulated other comprehensive loss at December 31, 2014$(2,525) $(513) $(29,829) $(32,867)Amounts reclassified out of accumulated other comprehensive (loss) income are included as a component of net periodic pension cost (Note 15) or other(income) expense, net as a result of the release of accumulated foreign currency translation adjustments associated with the sale of our subsidiary in Japan(Note 4).81Table of ContentsAMKOR TECHNOLOGY, INC.Notes to Consolidated Financial Statements — (Continued)17.Fair Value MeasurementsThe 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 asfollows: 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 areobservable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, model-basedvaluation techniques for which all significant assumptions are observable in the market or other inputs that are observable or can be corroborated byobservable market data for substantially the full term of the assets or liabilities and Level 3, defined as unobservable inputs that are not corroborated bymarket data.The fair values of cash, accounts receivable, trade accounts payable, capital expenditures payable, and certain other current assets and accrued expensesapproximate carrying values because of their short-term nature. The carrying value of other non-current liabilities approximates fair value. Our assets andliabilities recorded at fair value on a recurring basis include cash equivalent money market funds and restricted cash money market funds. Cash equivalentmoney market funds and restricted cash money market funds are invested in U.S. money market funds and various U.S. and foreign bank operating and timedeposit accounts, which are due on demand or carry a maturity date of less than three months when purchased. No restrictions have been imposed on usregarding withdrawal of balances with respect to our cash equivalents as a result of liquidity or other credit market issues affecting the money market fundswe invest in or the counterparty financial institutions holding our deposits. Money market funds are valued using quoted market prices in active markets foridentical assets.Our recurring fair value measurements consist of the following: December 31, 2014 2013 (In thousands)Cash equivalent money market funds (Level 1)$145,938 $300,352Restricted cash money market funds (Level 1)2,681 2,681We also measure certain assets and liabilities, including property, plant and equipment and our investment in J-Devices, at fair value on a nonrecurring basis.We measure the fair value of our debt for disclosure purposes. The following table presents the fair value of financial instruments that are not recorded at fairvalue on a recurring basis: December 31, 2014 December 31, 2013 FairValue CarryingValue FairValue CarryingValue (In thousands)Senior notes (Level 1)$1,268,619 $1,275,824 $1,321,443 $1,276,390Convertible senior subordinated notes (Level 1)— — 102,585 56,350Term loans (Level 2)254,999 255,000 320,000 320,000Total debt$1,523,618 $1,530,824 $1,744,028 $1,652,740The estimated fair value of our senior and convertible senior subordinated notes is based primarily on quoted market prices reported on or near the respectivebalance sheet dates. The estimated fair value of our term loans was calculated using a discounted cash flow analysis, which utilized market based assumptionsincluding forward interest rates adjusted for credit risk.82Table of ContentsAMKOR TECHNOLOGY, INC.Notes to Consolidated Financial Statements — (Continued)18.Commitments and ContingenciesWe have a letter of credit sub-facility of $25.0 million under our $200.0 million senior secured revolving credit facility that matures in December 2019. As ofDecember 31, 2014, we had $0.4 million of standby letters of credit outstanding and had an additional $24.6 million available for letters of credit. Suchstandby 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. Weaccrue costs for known warranty issues. Historically, our warranty costs have been immaterial.Legal ProceedingsWe are involved in claims and legal proceedings and may become involved in other legal matters arising in the ordinary course of our business. We evaluatethese 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. We believe that the ultimate outcome of these claims and proceedings, individually and in the aggregate, will not have amaterial 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.Proceedings with Tessera, Inc.Since March 2006, we have been involved in several proceedings with Tessera, Inc. (“Tessera”) related to a license agreement (the “License Agreement”)entered into in 1996 between Tessera and our predecessor. The proceedings generally involved disputes about whether or not Amkor owed Tessera royaltiesunder the License Agreement with respect to certain packages, the termination of the License Agreement and post-termination infringement.More recently, the proceedings included those instituted in the International Court of Arbitration of the International Chamber of Commerce in 2009 and2011, the United States District Court for the District of Delaware in 2012, the Superior Court for San Francisco County in 2013, the Patent Trial and AppealBoard at the United States Patent and Trademark Office in 2013 and the California First District Court of Appeal in 2014.In the second quarter of 2014, the arbitration panel awarded Tessera $113 million plus interest for these past royalties due under the License Agreement. InOctober 2014, the Superior Court for San Francisco County formally confirmed the arbitration panel's award and entered judgment against Amkor for $128million plus post-judgment interest at 10% per annum. In November 2014, the California First District Court of Appeal affirmed the Superior Court’s ruling.In January 2015, the parties entered into a settlement agreement to end all pending proceedings related to the dispute. Under the terms of the settlement,Amkor agreed to pay Tessera a total of $155.0 million in 16 equal quarterly recurring payments commencing in the first quarter of 2015, and continuingthrough the fourth quarter of 2018, and the parties agreed to a mutual release and dismissal of all claims relating to their pending litigation and arbitrationproceedings, including the previously awarded judgment of $128 million plus interest. The settlement agreement also provides that Tessera and Amkor willlook for opportunities to engage in potential technology collaboration.During the three months ended December 31, 2014, we recorded a pre-tax charge of $87.1 million, of which $75.3 million was charged to cost of sales and$11.8 million was charged to interest expense. This charge reflects the aggregate amount due under the settlement agreement, net of amounts previouslyreserved. At December 31, 2014, the liability was $136.9 million, which reflects the fair value as estimated by discounting the future cash flows using a ratethat reflects the estimated rate at which we could obtain financing with similar terms. The remaining amount of the gross settlement charge of $18.1 millionwill be accreted through interest expense over the four year term of the arrangement to reflect the impact of the time value of money due to the long termnature of the obligation and related payment terms. The current portion is recorded in accrued expenses (Note 13) and the non-current portion is recorded inother non-current liabilities in our consolidated financial statements.83Table of ContentsAMKOR TECHNOLOGY, INC.Notes to Consolidated Financial Statements — (Continued)LeasesFuture minimum lease payments under operating leases that have initial or remaining noncancelable lease terms in excess of one year are: Lease Payments (In thousands)2015$13,11620167,79220176,33620186,02920196,194Thereafter12,624Total$52,091Rent expense amounted to $28.5 million, $23.8 million and $13.2 million for 2014, 2013 and 2012, respectively.In order to provide packaging and test services, we purchase materials under various long-term supply contracts. Future minimum payments to be made underthese contracts for the period 2015 through 2025 are $19.4 million.19.Business Segments, Customer Concentrations and Geographic InformationWe operate as a single operating segment as managed by our Chief Executive Officer, who is considered our chief operating decision maker ("CODM"). TheCODM bears the ultimate responsibility for, and is actively engaged in, the allocation of resources and the evaluation of our operating and financial results.We have concluded that we have a single operating segment based on the following:•We are managed under a functionally-based organizational structure with the head of each function reporting directly to the CODM;•We assess performance, including incentive compensation, based on consolidated operating performance and financial results;•Our CODM allocates resources and makes other operating decisions based on specific customer business opportunities and•We have an integrated process for the design, development and manufacturing services we provide to all of our customers. We also have centralizedsales and administrative functions.The following table presents net sales by product group: Net Sales for the Year Ended December 31, 2014 2013 2012 (In thousands)Advanced products$1,552,948 $1,451,664 $1,302,145Mainstream products1,576,492 1,504,786 1,457,401Total net sales$3,129,440 $2,956,450 $2,759,54684Table of ContentsAMKOR TECHNOLOGY, INC.Notes to Consolidated Financial Statements — (Continued)The following table presents net sales by country based on customer location: Net Sales for the Year Ended December 31, 2014 2013 2012 (In thousands)China$270,282 $47,202 $28,641Ireland175,095 97,180 110,529Japan268,420 394,834 349,360Singapore432,942 496,601 452,737Taiwan212,719 144,825 99,047Thailand104,608 116,376 139,134Other foreign countries533,951 454,218 437,148Total foreign countries1,998,017 1,751,236 1,616,596United States1,131,423 1,205,214 1,142,950Total net sales$3,129,440 $2,956,450 $2,759,546One customer accounted for 17.5%, 23.7% and 21.3% of consolidated net sales in 2014, 2013 and 2012, respectively. Another customer accounted for 13.2%and 10.5% of consolidated net sales in 2014 and 2013, respectively.The following table presents property, plant and equipment, net, based on the physical location of the asset: Property, Plant and Equipment, Netat December 31, 2014 2013 (In thousands)China$575,207 $524,967Japan145 10,799Korea948,192 916,777Malaysia50,137 61,080Philippines301,291 240,187Taiwan317,192 236,178Other foreign countries293 93Total foreign countries2,192,457 1,990,081United States14,019 16,472Total property, plant and equipment, net$2,206,476 $2,006,55385Table of ContentsAMKOR TECHNOLOGY, INC.Notes to Consolidated Financial Statements — (Continued)20.Reductions in ForceAs part of our ongoing efforts to improve our manufacturing operations and manage costs, we regularly evaluate our staffing levels and facility requirementscompared to business needs. The following table summarizes changes to the balance of our accrual associated with these efforts. “Non-cash Amounts”consists of pension plan curtailments and settlements and foreign currency adjustments. Employee Separation Costs 2014 2013 (In thousands)Beginning balance$— $1,607Charges3,889 10,506Cash Payments(3,973) (12,531)Non-cash Amounts84 418Ending balance$— $—During the years ended December 31, 2014, 2013 and 2012, we reduced our workforce through workforce reduction programs. We recorded $3.9 million,$10.5 million and $11.2 million in charges in 2014, 2013 and 2012, respectively. All charges related primarily to cost of sales, except for $3.9 million ofcharges in 2012, related to selling, general and administrative expenses.86Table of ContentsSCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS Balance atBeginning ofPeriod Additions(Credited)Charged toExpense Write-offs (a)Other Balance atEnd of Period (In thousands)Deferred tax asset valuation allowance: Year ended December 31, 2012$214,269 (1,626) (1,486) (1,400) $209,757Year ended December 31, 2013209,757 (16,860) (15,555) 1,841 179,183Year ended December 31, 2014179,183 (10,838) (2,534) (15,964) 149,847(a)Column represents adjustments to the deferred tax asset valuation allowance directly through stockholders’ equity for changes in accumulated othercomprehensive income (loss) related to our foreign defined benefit pension plans and the sale of a subsidiary in 2014.87Table of ContentsItem 9.Changes In and Disagreements with Accountants on Accounting and Financial DisclosureNone.Item 9A.Controls and ProceduresEvaluation of Disclosure Controls and ProceduresWe maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic reports to the Securitiesand Exchange Commission (“SEC”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and thatsuch information is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, asappropriate, to allow timely decisions regarding required disclosure, based on the definition of “disclosure controls and procedures” in Rule 13a-15(e) andRule 15d-15(e) under the Securities Exchange Act of 1934, as amended. In designing and evaluating the disclosure controls and procedures, managementrecognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving thedesired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible disclosurecontrols and procedures.We carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and our Chief FinancialOfficer, of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2014, and concluded those disclosurecontrols and procedures were effective as of that date.Management’s Report on Internal Control Over Financial ReportingManagement is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange ActRules 13a-15(f) and 15d-15(f). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of thecompany are being made only in accordance with authorizations of management and directors of the company and (iii) provide reasonable assuranceregarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on thefinancial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies and procedures may deteriorate.Management conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2014, based on the frameworkestablished in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).Based on the results of this evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2014,based on criteria in Internal Control — Integrated Framework (2013) issued by the COSO.The effectiveness of our internal control over financial reporting as of December 31, 2014, has been audited by PricewaterhouseCoopers LLP, an independentregistered public accounting firm, as stated in their report which appears under Item 8 of this Annual Report on Form 10-K.88Table of ContentsChanges in Internal Control Over Financial ReportingAs previously reported, we are implementing an enterprise resource planning (“ERP”) system in a multi-year program on a world-wide basis. During the threemonths ended December 31, 2014, there were no changes in our internal control over financial reporting that have materially affected, or are reasonablylikely to materially affect, our internal control over financial reporting.Item 9B.Other InformationNone.PART IIIItem 10.Directors, Executive Officers and Corporate GovernanceThe information required by this Item 10, with the exception of information relating to the Code of Business Conduct as disclosed below, is incorporatedherein by reference from the material included under the captions “Election of Directors,” “Executive Officers,” and “Section 16(a) Beneficial OwnershipReporting Compliance” in our definitive proxy statement (to be filed pursuant to Regulation 14A) for our 2015 Annual Meeting of Stockholders.Additionally, our Code of Business Conduct, Code of Ethics for Directors, Corporate Governance Guidelines, and the charters of the Audit Committee,Nominating and Governance Committee and Compensation Committee of our Board of Directors are available and maintained on our web site(http://www.amkor.com). We intend to disclose on our web site future amendments or waivers of our Code of Business Conduct required to be disclosedpursuant to applicable rules and regulations.Item 11.Executive CompensationThe information required by this Item 11 is incorporated herein by reference from the material included under the captions “Executive Compensation,”“Compensation Committee Interlocks and Insider Participation” and “Report of the Compensation Committee of the Board of Directors” in our definitiveproxy statement (to be filed pursuant to Regulation 14A) for our 2015 Annual Meeting of Stockholders.89Table of ContentsItem 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersThe information required by this Item 12, with the exception of the equity compensation plan information presented below, is incorporated herein byreference to our definitive proxy statement (to be filed pursuant to Regulation 14A) for our 2015 Annual Meeting of Stockholders.EQUITY COMPENSATION PLANThe following table summarizes our equity compensation plan as of December 31, 2014: (a)Number ofSecurities to beIssued UponExercise ofOutstandingOptions(In thousands) (b)Weighted-AverageExercise Price ofOutstandingOptions (c)Number of SecuritiesRemaining Availablefor Future IssuanceUnder EquityCompensation Plans(Excluding SecuritiesReflected in Column(a)(In thousands)Equity compensation plan approved by stockholders (1)3,822 $6.25 11,370Equity compensation plans not approved by stockholders— — —Total equity compensation plans3,822 11,370(1)As of December 31, 2014, a total of 11.4 million shares were reserved for issuance under the 2007 Plan. Shares available for issuance under our 2007 Plancan be granted pursuant to stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares.Item 13.Certain Relationships and Related Transactions, and Director IndependenceThe information required by this Item 13 is incorporated herein by reference from the material included under the captions “Certain Relationships andRelated Transactions” and “Proposal One — Election of Directors” in our definitive proxy statement (to be filed pursuant to Regulation 14A) for our 2015Annual Meeting of Stockholders.Item 14.Principal Accountant Fees and ServicesThe information required by this Item 14 is incorporated herein by reference from the material included under the proposal “Ratification of Appointment ofIndependent Registered Public Accounting Firm” in our definitive proxy statement (to be filed pursuant to Regulation 14A) for our 2015 Annual Meeting ofStockholders.PART IVItem 15.Exhibits and Financial Statement Schedules(a) Financial Statements, Financial Statement Schedules and ExhibitsThe financial statements and schedules filed as part of this Annual Report on Form 10-K are listed in the index under Part II, Item 8 of this Annual Report.In accordance with Rule 3-09 of Regulation S-X, the consolidated financial statements of J-Devices Corporation for the years ended December 31, 2014(audited), 2013 and 2012 (unaudited), are included in this Annual Report on Form 10-K as Exhibit 99.1. The exhibits required by Item 601 of Regulation S-K which are filed with this report or incorporated by reference herein, are set forth in the Exhibit Index.Management contracts or compensatory plans or arrangements are identified by an asterisk.90Table of ContentsSIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Annual Report onForm 10-K to be signed, on its behalf by the undersigned, thereunto duly authorized.AMKOR TECHNOLOGY, INC.By: /s/ Stephen D. Kelley Stephen D. KelleyPresident and Chief Executive Officer Date:February 19, 2015POWER OF ATTORNEYKNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Stephen D. Kelley and JoanneSolomon, and each of them, his attorneys-in-fact, and agents, each with the power of substitution, for him and in his name, place and stead, in any and allcapacities, to sign any and all amendments to this Report on Form 10-K, and all documents in connection therewith, with the Securities and ExchangeCommission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thingrequisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying andconforming all that said attorneys-in-fact and agents of any of them, or his or their substitute or substitutes, may lawfully do or cause to be done by virtuehereof.Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of theregistrant and in the capacities and on the dates indicated.Name Title Date /s/ Stephen D. Kelley President and Chief Executive Officer February 19, 2015Stephen D. Kelley /s/ Joanne Solomon Executive Vice President and Chief Financial Officer February 19, 2015Joanne Solomon /s/ James J. Kim Executive Chairman February 19, 2015James J. Kim /s/ John T. Kim Executive Vice Chairman February 19, 2015John T. Kim /s/ Susan Y. Kim Director February 19, 2015Susan Y. Kim /s/ Roger A. Carolin Director February 19, 2015Roger A. Carolin /s/ Winston J. Churchill Director February 19, 2015Winston J. Churchill 91Table of ContentsName Title Date /s/ Robert R. Morse Director February 19, 2015Robert R. Morse /s/ John F. Osborne Director February 19, 2015John F. Osborne /s/ David N. Watson Director February 19, 2015David N. Watson /s/ James W. Zug Director February 19, 2015James W. Zug 92Table of ContentsEXHIBIT INDEX2.1 Sales Contract of Commodity Premises between Shanghai Waigaoqiao Free Trade Zone Xin Development Co., Ltd. and AmkorAssembly & Test (Shanghai) Co., Ltd. dated May 7, 2004.(4)3.1 Certificate of Incorporation.(1)3.2 Certificate of Correction to Certificate of Incorporation.(3)3.3 Restated Bylaws as amended on November 5, 2013.(21)4.1 Specimen Common Stock Certificate.(2)4.2 Indenture, dated as of April 1, 2009, between Amkor Technology, Inc. and U.S. Bank National Association, as trustee regarding the6.00% Convertible Senior Subordinated Notes due 2014.(8)4.3 Form of Note for the 6.00% Convertible Senior Subordinated Notes due 2014.(8)4.4 Letter Agreement, dated March 26, 2009, between Amkor Technology, Inc., James J. Kim and 915 Investments, LP.(8)4.5 Indenture, dated May 4, 2010, by and between Amkor Technology, Inc. and U.S. Bank National Association, as trustee, regarding the7.375% Senior Notes due 2018.(9)4.6 Indenture, dated May 20, 2011, by and between Amkor Technology, Inc. and U.S. Bank National Association, as trustee, regarding the6.625% Senior Notes due 2021.(11)4.7 Letter Agreement, dated May 17, 2011, between Amkor Technology, Inc., James J. Kim and 915 Investments, LP.(11)4.8 Indenture, dated September 21, 2012, by and between Amkor Technology, Inc. and U.S. Bank National Association, as trustee,regarding the 6.375% Senior Notes due 2022.(15)10.1 Form of Indemnification Agreement for directors and officers.(2)10.2 1998 Stock Plan, as amended.(7)*10.3 Form of Stock Option Agreement under the 1998 Stock Plan.(5)*10.4 Contract of Lease between Corinthian Commercial Corporation and Amkor/Anam Pilipinas Inc., dated October 1, 1990.(1)10.5 Contract of Lease between Salcedo Sunvar Realty Corporation and Automated Microelectronics, Inc., dated May 6, 1994.(1)10.6 Lease Contract between AAPI Realty Corporation and Amkor/Anam Advanced Packaging, Inc., dated November 6, 1996.(1)10.7 2003 Nonstatutory Inducement Grant Stock Plan, as amended.(7)*10.8 Amended and Restated 2007 Equity Incentive Plan.(12)*10.9 Form of Stock Option Agreement under the Amended and Restated 2007 Equity Incentive Plan.*10.10 Form of Restricted Stock Award Agreement under the Amended and Restated 2007 Equity Incentive Plan. (14)*10.11 Executive Incentive Bonus Plan.(12)*10.12 Kun-Mortgage Agreement, dated March 30, 2007, between Woori Bank and Amkor Technology Korea, Inc.(6)10.13 2009 Voting Agreement, dated as of March 26, 2009, between Amkor Technology, Inc., James J. Kim and 915 Investments, LP.(8)10.14 Second Amended and Restated Loan and Security Agreement, dated as of June 28, 2012, among Amkor Technology, Inc., itssubsidiaries from time to time party thereto, the lending institutions from time to time party thereto and Bank of America, N.A., asadministrative agent.(13)10.15 First Amendment, dated December 24, 2014, to Second Amended and Restated Loan and Security Agreement, dated as of June 28, 2012,among Amkor Technology, Inc., its subsidiaries from time to time party thereto, the lending institutions from time to time party theretoand Bank of America, N.A., as administrative agent.(22)10.16 Amendment to Kun-Mortgage Agreement, dated May 24, 2010, by and between Amkor Technology Korea, Inc. and Woori Bank.(10)10.17 Loan Agreement, dated June 28, 2012, by and between Amkor Technology Korea, Inc. and The Korea Development Bank (13)93Table of Contents10.18 Factory Mortgage Agreement, dated June 28, 2012, by and between The Korea Development Bank and Amkor Technology Korea, Inc.(13)10.19 Loan Agreement, dated November 23, 2012, by and between Amkor Technology Korea, Inc. and The Korea Development Bank.(16)10.20 Form of Amendment to Factory Mortgage Agreement, dated November 23, 2012, by and between The Korea Development Bank andAmkor Technology Korea, Inc.(16)10.21 Amendment to Loan Agreement, dated November 22, 2013, by and between Amkor Technology Korea, Inc. and The KoreaDevelopment Bank(21)10.22 Credit Facility Agreement, dated March 11, 2013, by and between Amkor Technology Korea, Inc. and Woori Bank(17)10.23 General Terms and Conditions for Bank Credit Transactions, dated March 11, 2013, by and between Amkor Technology Korea, Inc. andWoori Bank(17)10.24 Loan Agreement, dated April 29, 2013, by and between Amkor Technology Korea, Inc. and The Korea Development Bank.(20)10.25 Amendment to Factory Mortgage Agreement, dated April 29, 2013, by and between Amkor Technology Korea, Inc. and The KoreaDevelopment Bank.(20)10.26 Guarantee, dated April 29, 2013, by and between Amkor Technology, Inc. and The Korea Development Bank.(20)10.27 Amendment to Loan Agreement, dated December 27, 2013, by and between Amkor Technology Korea, Inc. and The KoreaDevelopment Bank(21)10.28 Amendment to Kun Mortgage Agreement, dated April 19, 2013, by and between Amkor Technology Korea, Inc. and Woori Bank.(20)10.29 Employment Offer Letter, dated April 30, 2013, between Amkor Technology, Inc. and Stephen D. Kelley.(18)*10.30 Retirement Agreement and Release, dated May 8, 2013, between Amkor Technology, Inc. and Kenneth T. Joyce.(19)*10.31 Separation and Consulting Agreement, dated July 17, 2013, between Amkor Technology, Inc. and Michael J. Lamble.(20)*12.1 Computation of Ratio of Earnings to Fixed Charges21.1 List of subsidiaries of the Registrant.23.1 Consent of PricewaterhouseCoopers LLP.23.2 Consent of PricewaterhouseCoopers Aarata31.1 Certification of Stephen D. Kelley, Chief Executive Officer of Amkor Technology, Inc., Pursuant to Rule 13a-14(a) under the SecuritiesExchange Act of 1934, as amended.31.2 Certification of Joanne Solomon, Chief Financial Officer of Amkor Technology, Inc., Pursuant to Rule 13a-14(a) under the SecuritiesExchange Act of 1934, as amended.32.1 Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section906 of the Sarbanes-Oxley Act of 2002.99.1 Consolidated Financial Statements of J-Devices Corporation101.INS XBRL Instance Document101.SCH XBRL Taxonomy Extension Schema Document101.CAL XBRL Taxonomy Extension Calculation Linkbase Document101.LAB XBRL Taxonomy Extension Label Linkbase Document101.PRE XBRL Taxonomy Extension Presentation Linkbase Document101.DEF XBRL Taxonomy Extension Definition Linkbase Document* Indicates management compensatory plan, contract or arrangement. 94Table of Contents(1) Incorporated by reference to the Company’s Registration Statement on Form S-1 filed October 6, 1997 (File No. 333-37235).(2) Incorporated by reference to the Company’s Registration Statement on Form S-1 filed on October 6, 1997, as amended on March 31, 1998 (File No.333-37235).(3) Incorporated by reference to the Company’s Registration Statement on Form S-1 filed on April 8, 1998, as amended on August 26, 1998 (File No.333-49645).(4) Incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed August 6, 2004.(5) Incorporated by reference to the Company’s Annual Report on Form 10-K filed on March 16, 2006.(6) Incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed May 4, 2007.(7) Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed August 7, 2008.(8) Incorporated by reference to the Company’s Current Report on Form 8-K filed on April 1, 2009.(9) Incorporated by reference to the Company’s Current Report on Form 8-K filed May 5, 2010.(10) Incorporated by reference to the Company’s Current Report on Form 8-K filed May 27, 2010.(11) Incorporated by reference to the Company's Current Report on Form 8-K filed May 20, 2011.(12) Incorporated by reference to the Company's Proxy Statement on Schedule 14A filed April 5, 2012.(13) Incorporated by reference to the Company's Current Report on Form 8-K filed on July 2, 2012.(14) Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed August 2, 2012.(15) Incorporated by reference to the Company's Current Report on Form 8-K filed September 21, 2012.(16) Incorporated by reference to the Company's Current Report on Form 8-K filed November 27, 2012.(17) Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed May 3, 2013.(18) Incorporated by reference to the Company's Current Report on Form 8-K filed May 3, 2013.(19) Incorporated by reference to the Company's Current Report on Form 8-K filed May 10, 2013.(20) Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed August 2, 2013.(21) Incorporated by reference to the Company's Annual Report on Form 10-K filed February 28, 2014.(22) Incorporated by reference to the Company's Current Report on Form 8-K filed December 24, 2014.95Exhibit 10.9AMKOR TECHNOLOGY, INC.AMENDED AND RESTATED 2007 EQUITY INCENTIVE PLANSTOCK OPTION AWARD AGREEMENTUnless otherwise defined herein, the terms defined in the Amkor Technology, Inc. Amended and Restated 2007 EquityIncentive Plan (the “Plan”) will have the same defined meanings in this Stock Option Award Agreement (the “Award Agreement”).Participant Name:Address:You have been granted an Option to purchase Common Stock of Amkor Technology, Inc. (the “Company”), subject to theterms and conditions of the Plan and this Award Agreement, as follows:Grant NumberDate of GrantVesting Commencement Date See Vesting Schedule BelowExercise Price per ShareTotal Number of Shares GrantedType of Option: ___ Incentive Stock Option Nonstatutory Stock OptionTerm/Expiration Date:1. Grant of Option. The Company hereby grants to the individual named in this Award Agreement (the “Participant”) anoption (the “Option”) to purchase the number of Shares, as set forth in this Award Agreement, at the exercise price per Share set forthin this Award Agreement (the “Exercise Price”), subject to all of the terms and conditions in this Award Agreement and the Plan,which is incorporated herein by reference. In the event of a conflict between the terms and conditions of the Plan and the terms andconditions of this Award Agreement, the terms and conditions of the Plan shall prevail.If designated in the Award Agreement as an Incentive Stock Option ("ISO"), this Option is intended to qualify as anIncentive Stock Option under Section 422 of the Code. However, if this Option is intended to be an Incentive Stock Option, to theextent that it exceeds the $100,000 rule of Code Section 422(d) it shall be treated as a Nonstatutory Stock Option (“NSO”).2. Vesting Schedule. Except as provided in Section 4 and subject to any acceleration provisions contained in the Plan or setforth below, this Option will become vested and exercisable in accordance with the following schedule. Shares scheduled to vest on acertain date or upon the occurrence of a certain condition will not vest in Participant in accordance with any of the provisions of thisAward Agreement, unless Participant will have been continuously a Service Provider from the Date of Grant until the date suchvesting is scheduled to occur:3. Termination Period. In the event that Participant ceases to be a Service Provider, the portion of the Option that is not vestedas of such date shall be immediately forfeited with no consideration due Participant and the portion of the Option that is vested andexercisable as of the date of such cessation shall remain exercisable (except as otherwise provided below): (x) if Participant ceases tobe a Service Provider due to Participant’s resignation for any reason (other than Retirement (as defined in the Plan)) or due to histermination by the Company for any reason, for three (3) months after Participant ceases to be a Service Provider; (y) if Participantceases to be a Service Provider due to his death or Disability, for twenty-four (24) months after Participant ceases to be a ServiceProvider; and (z) if Participant ceases to be a Service Provider due to Retirement, for twenty-four (24) months following Participant’sRetirement. If the exercise of the Option following the termination of Participant’s status as a Service Provider (other than uponParticipant’s death or Disability) would result in liability under Section 16(b), then the vested portion of the Option will terminate onthe earlier of (A) the Term/Expiration Date or (B) the tenth (10th) day after the last date on which such exercise would result in suchliability under Section 16(b). If the exercise of the Option following the termination of Participant’s status as a Service Provider (otherthan upon Participant’s death or Disability) would be prohibited at any time solely because the issuance of Shares would violate theregistration requirements under the Securities Act, then the vested portion of the Option will terminate on the earlier of (A) theTerm/Expiration Date or (B) three (3) months after the last day on which the exercise of the Option would be in violation of suchregistration requirements. Notwithstanding anything contained herein to the contrary, in no event shall this Option be exercised laterthan the Term/Expiration Date as provided above. In addition, the Option may be subject to earlier termination as provided in Section16(c) of the Plan.4. Administrator Discretion. The Administrator, in its discretion, may accelerate the vesting of the balance, or some lesserportion of the balance, of the unvested Option at any time, subject to the terms of the Plan. If so accelerated, such Option will beconsidered as having vested as of the date specified by the Administrator.5. Exercise of Option. This Option is exercisable during its term in accordance with the Vesting Schedule set out in theAward Agreement and the applicable provisions of the Plan and this Award Agreement. This Option is exercisable by completing thetransaction through the Company's captive broker assisted transactions via voice response system or the Internet secured transactionsystem.The Option shall be deemed to be exercised upon receipt by the Company of a fully executed exercise notice or otherform as may be required by the Company (the “Exercise Notice”). The Exercise Notice shall be accompanied by payment of theaggregate Exercise Price as to the number of Shares in respect of which the Option is being exercised (the “Exercised Shares”),together with any applicable tax withholding. No Shares shall be issued pursuant to the exercise of this Option unless such issuanceand exercise complies with Applicable Laws.6. Method of Payment. Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, atthe election of Participant:(a) Cash;(b) Check;(c) Consideration received by the Company under a cashless exercise program implemented by the Company inconnection with the Plan;(d) Surrender of other Shares which have a Fair Market Value on the date of exercise equal to the aggregate ExercisePrice of the Exercised Shares, provided that accepting such Shares, in the sole discretion of the Administrator, will not result in anyadverse accounting consequences to the Company; or(e) Retention by the Company of a number of the Shares otherwise deliverable to the Participant on exercise of theOption having an aggregate Fair Market Value (determined on the date of exercise) equal to the aggregate Exercise Price of theExercised Shares, unless, in the case of Participants who are not subject to the reporting requirements of Section 16 of the ExchangeAct, such right is revoked by the Administrator prior to the time of exercise.In all events, the aggregate Exercise Price must be paid to the Company within three days after the date of exercise.7. Tax Obligations.(a) Withholding Taxes. Notwithstanding any contrary provision of this Award Agreement, no certificate representingthe Shares will be issued to Participant, unless and until satisfactory arrangements (as determined by the Administrator) have beenmade by Participant with respect to the payment of income, employment and other taxes which the Company determines must bewithheld with respect to such exercise. If Participant fails to make satisfactory arrangements for the payment of any required taxwithholding obligations hereunder at the time of the Option exercise, Participant acknowledges and agrees that the Company mayrefuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time of exercise. AParticipant may satisfy his or her tax withholding obligations by directing the Company to retain a number of the Shares otherwisedeliverable to the Participant upon exercise of the Option having an aggregate Fair Market Value (determined on the date of exercise)equal to the minimum withholding taxes due, unless, in the case of Participants who are not subject to the reporting requirements ofSection 16 of the Exchange Act, such right is revoked by the Administrator prior to the time of exercise.(b) Notice of Disqualifying Disposition of ISO Shares. If the Option granted to Participant herein is an ISO, and ifParticipant sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (i) the date two (2)years after the Date of Grant or (ii) the date one (1) year after the date of exercise, Participant will immediately notify the Company inwriting of such disposition. Participant agrees that Participant may be subject to income tax withholding by the Company on thecompensation income recognized by Participant as a result of such disposition.(c) Code Section 409A. The Option is intended to comply with, or be exempt from, Code Section 409A and allregulations, guidance, compliance programs and other interpretative authority thereunder, and shall be interpreted in a mannerconsistent therewith. Notwithstanding anything contained herein to the contrary, in the event the Option is subject to CodeSection 409A, the Company may, in its sole discretion and without Participant’s prior consent, amend the Plan and/or the AwardAgreement, adopt policies and procedures, or take any other actions as deemed appropriate by the Company to (i) exempt the Optionfrom the application of Code Section 409A, (ii) preserve the intended tax treatment of the Option or (iii) comply with the requirementsof Code Section 409A. Notwithstanding anything contained herein to the contrary, in no event shall the Company or any Subsidiaryhave any liability or obligation to Participant or any other person in the event that the Plan or the Option is not exempt from, orcompliant with, Code Section 409A.8. Rights as Stockholder. Neither Participant nor any person claiming under or through Participant will have any of the rightsor privileges of a stockholder of the Company in respect of any Shares deliverable hereunder unless and until certificates representingsuch Shares have been issued, recorded on the records of the Company or its transfer agents or registrars, and delivered to Participant.After such issuance, recordation and delivery, Participant will have all the rights of a stockholder of the Company with respect to suchShares, including voting and receipt of dividends and distributions on such Shares.9. No Guarantee of Continued Service. PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE VESTING OFTHE OPTION PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS ASERVICE PROVIDER AT THE WILL OF THE COMPANY (OR THE SUBSIDIARY EMPLOYING OR RETAININGPARTICIPANT) AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRINGSHARES HEREUNDER. PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS AWARDAGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTHHEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS ASERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND WILL NOT INTERFERE INANY WAY WITH PARTICIPANT’S RIGHT OR THE RIGHT OF THE COMPANY (OR THE SUBSIDIARY EMPLOYINGOR RETAINING PARTICIPANT) TO TERMINATE PARTICIPANT’S RELATIONSHIP AS A SERVICE PROVIDER ATANY TIME, WITH OR WITHOUT CAUSE.10. Address for Notices. Any notice to be given to the Company under the terms of this Award Agreement will be addressedto the Company, in care of its Stock Plan Administrator at Amkor Technology, Inc., 2045 East Innovation Circle, Tempe, Arizona,85284, or at such other address as the Company may hereafter designate in writing.11. Non-Transferability of Option. This Option may not be transferred in any manner otherwise than by will or by the lawsof descent or distribution and may be exercised during the lifetime of Participant only by Participant.12. Binding Agreement. Subject to the limitation on the transferability of this grant contained herein, this Award Agreementwill be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto(provided that neither the Option nor this Award Agreement may be assigned by Participant).13. Additional Conditions to Issuance of Stock. If at any time the Company determines, in its discretion, that the listing,registration or qualification of the Shares upon any securities exchange or under any state or federal law, or the consent or approval ofany governmental regulatory authority is necessary or desirable as a condition to the issuance of Shares to Participant (or his or herestate), such issuance will not occur unless and until such listing, registration, qualification, consent or approval has been effected orobtained free of any conditions not acceptable to the Company. Assuming such compliance, for income tax purposes the ExercisedShares will be considered transferred to Participant on the date the Option is exercised with respect to such Exercised Shares.14. Administrator Authority. The Administrator has the power to interpret the Plan and this Award Agreement and to adoptsuch rules for the administration, interpretation and application of the Plan and this Award Agreement as are consistent therewith andto interpret or revoke any such rules (including, but not limited to, the determination of whether or not any Shares subject to the Optionhave vested). All actions taken and all interpretations and determinations made by the Administrator in good faith will be final andbinding upon Participant, the Company and all other interested persons. No member of the Administrator will be personally liable forany action, determination or interpretation made in good faith with respect to the Plan or this Award Agreement.15. Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to the Option orthe Plan by electronic means or request Participant’s consent to participate in the Plan by electronic means. Participant hereby consentsto receive such documents by electronic delivery and agrees to participate in the Plan through any on-line or electronic systemestablished and maintained by the Company or another third party designated by the Company.16. Captions. Captions provided herein are for convenience only and are not to serve as a basis for interpretation orconstruction of this Award Agreement.17. Agreement Severable. In the event that any provision in this Award Agreement is held invalid or unenforceable, suchprovision will be severable from, and such invalidity or unenforceability will not be construed to have any effect on, the remainingprovisions of this Award Agreement.18. Modifications to the Award Agreement. The Plan and this Award Agreement constitute the entire understanding of theparties on the subjects covered herein. Participant expressly warrants that he or she is not accepting this Award Agreement in relianceon any promises, representations, or inducements other than those contained herein. Except as otherwise provided herein or in the Plan,modifications to this Award Agreement can be made only in an express written contract executed by Participant and a duly authorizedofficer of the Company.19. Amendment, Suspension or Termination of the Plan. By accepting this Award, Participant expressly warrants that he orshe has received an Option under the Plan, and has received, read and understands the Plan. Participant understands that the Plan isdiscretionary in nature and may be amended, suspended or terminated by the Company at any time.20. Governing Law. This Award Agreement will be governed by the laws of the State of Delaware without giving effect tothe conflict of law principles thereof. For purposes of litigating any dispute that arises under this Option or this Award Agreement, theparties hereby submit to and consent to the jurisdiction of the State of Arizona, and agree that such litigation will be conducted solely inthe courts of Maricopa County, Arizona, or the federal courts for the United States for the District of Arizona.21. Agreement. Participant’s receipt of the Option and this Award Agreement constitutes Participant’s agreement to be boundby the terms and conditions of this AwardAgreement and the Plan. Participant’s signature is not required in order to make this Award Agreement effective.Optionee: Amkor Technology, Inc.By: (Name) Date: Date: Exhibit 12.1AMKOR TECHNOLOGY, INC.COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES Year Ended December 31, 2014 2013 2012 2011 2010 (In thousands)Earnings Income before taxes and equity in earnings of unconsolidatedaffiliate$136,078 $123,987 $54,111 $93,134 $244,724Interest expense107,688 103,027 94,280 82,869 96,340Amortization of deferred debt issuance costs and premiums2,237 2,880 3,663 3,737 4,505Interest portion of rent (1)9,502 7,947 4,386 5,020 5,450 $255,505 $237,841 $156,440 $184,760 $351,019Fixed Charges Interest expense$107,688 $103,027 $94,280 $82,869 $96,340Capitalized interest6,912 1,740 — — —Amortization of debt issuance costs and premiums2,237 2,880 3,663 3,737 4,505Interest portion of rent (1)9,502 7,947 4,386 5,020 5,450 $126,339 $115,594 $102,329 $91,626 $106,295Ratio of earnings to fixed charges2.0 2.1 1.5 2.0 3.3(1)Represents one-third of total rent expense which we believe is a reasonable estimate of the interest component of rent expense.Exhibit 21.1AMKOR TECHNOLOGY, INC.LIST OF SUBSIDIARIESSubsidiary Jurisdiction of Organization Amkor Advanced Technology Taiwan, Inc. TaiwanAmkor Assembly & Test (Shanghai) Co., Ltd. ChinaAmkor Technology Euroservices, S.A.R.L. FranceAmkor Technology Holding, B.V. NetherlandsAmkor Technology Japan, K.K. JapanAmkor Technology Korea, Inc. KoreaAmkor Technology Limited Cayman IslandsAmkor Technology Malaysia Sdn. Bhd. MalaysiaAmkor Technology Philippines, Inc. (A Branch of a Singapore Company) PhilippinesAmkor Technology Singapore Investment Pte. Ltd. SingaporeAmkor Technology Singapore Holding Pte. Ltd. SingaporeAmkor Technology Taiwan Ltd. TaiwanAmkor Worldwide Services LLC DelawareGuardian Assets, Inc. DelawareUnitive International N.V. CuracaoExhibit 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-62891, 333-86161, 333-63430, 333-100814 and333-149376) of Amkor Technology, Inc. of our report dated February 19, 2015, relating to the financial statements, financial statement schedule and theeffectiveness of internal control over financial reporting, which appears in this Form 10‑K./s/ PricewaterhouseCoopers LLPPhoenix, ArizonaFebruary 19, 2015Exhibit 23.2CONSENT OF INDEPENDENT ACCOUNTANTSWe hereby consent to the incorporation by reference in the Registration Statements on Form S‑8 (Nos. 333-62891, 333-86161, 333-63430, 333-100814 and333-149376) of Amkor Technology, Inc. of our report dated February 19, 2015 relating to the consolidated financial statements of J-Devices Corporation,which appears in this Annual Report on Form 10‑K of Amkor Technology, Inc./s/ PricewaterhouseCoopers Aarata Tokyo, Japan February 19, 20151Exhibit 31.1SECTION 302(a) CERTIFICATIONI, Stephen D. Kelley, certify that:1. I have reviewed this Annual Report on Form 10-K of Amkor Technology, Inc.;2. Based on my knowledge, this Annual Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisAnnual Report;3. Based on my knowledge, the financial statements, and other financial information included in this Annual Report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Annual Report;4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange 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, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this Annual Report is being prepared;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles;c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this Annual Report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this Annual Report based on such evaluation; andd) Disclosed in this Annual Report any change in the registrant's internal control over financial reporting that occurred during the registrant's mostrecent fiscal quarter (the registrant's fourth fiscal quarter in the case of this Annual Report) that has materially affected, or is reasonably likely tomaterially affect, the registrant's internal control over financial reporting; and5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant'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 reasonablylikely to adversely affect the registrant's ability to record, process, summarize and report financial information; andb) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controlsover financial reporting./s/ Stephen D. KelleyBy:Stephen D. KelleyTitle: President and Chief Executive OfficerDate:February 19, 2015Exhibit 31.2SECTION 302(a) CERTIFICATIONI, Joanne Solomon, certify that:1. I have reviewed this Annual Report on Form 10-K of Amkor Technology, Inc.;2. Based on my knowledge, this Annual Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisAnnual Report;3. Based on my knowledge, the financial statements, and other financial information included in this Annual Report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Annual Report;4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange 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, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this Annual Report is being prepared;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles;c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this Annual Report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this Annual Report based on such evaluation; andd) Disclosed in this Annual Report any change in the registrant's internal control over financial reporting that occurred during the registrant's mostrecent fiscal quarter (the registrant's fourth fiscal quarter in the case of this Annual Report) that has materially affected, or is reasonably likely tomaterially affect, the registrant's internal control over financial reporting; and5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant'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 reasonablylikely to adversely affect the registrant's ability to record, process, summarize and report financial information; andb) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controlsover financial reporting./s/ Joanne SolomonBy:Joanne SolomonTitle: Executive Vice President and Chief Financial OfficerDate: February 19, 2015Exhibit 32CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIALOFFICER PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002I, Stephen D. Kelley, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that theAnnual Report of Amkor Technology, Inc. on Form 10-K for the year ended December 31, 2014 fully complies with the requirements of Section 13(a) or15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-K fairly presents in all material respects the financial conditionand results of operations of Amkor Technology, Inc./s/ Stephen D. KelleyBy:Stephen D. KelleyTitle: President and Chief Executive OfficerDate:February 19, 2015 I, Joanne Solomon, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the AnnualReport of Amkor Technology, Inc. on Form 10-K for the year ended December 31, 2014 fully complies with the requirements of Section 13(a) or 15(d) of theSecurities Exchange Act of 1934 and that information contained in such Form 10-K fairly presents in all material respects the financial condition and resultsof operations of Amkor Technology, Inc./s/ Joanne SolomonBy:Joanne SolomonTitle: Executive Vice President and Chief Financial OfficerDate: February 19, 2015J-Devices CorporationConsolidated Financial StatementsFor the years ended December 31, 2014, 2013 and 20121TABLE OF CONTENTS PageIndependent Auditor's Report3Consolidated Statements of Income — Years ended December 31, 2014, 2013 (unaudited) and 2012 (unaudited)4Consolidated Statements of Comprehensive Income — Years ended December 31, 2014, 2013 (unaudited) and 2012 (unaudited)5Consolidated Balance Sheets — December 31, 2014 and 2013 (unaudited)6Consolidated Statements of Stockholders’ Equity — Years ended December 31, 2014, 2013 (unaudited) and 2012 (unaudited)7Consolidated Statements of Cash Flows — Years ended December 31, 2014, 2013 (unaudited) and 2012 (unaudited)8Notes to Consolidated Financial Statements92Independent Auditor's ReportTo the Board of Directors and Stockholders of J-Devices Corporation:We have audited the accompanying consolidated financial statements of J-Devices Corporation and its subsidiaries, which comprise the consolidatedbalance sheet as of December 31, 2014, and the related consolidated statement of income, comprehensive income, stockholders' equity and cash flows for theyear then ended.Management's Responsibility for the Consolidated Financial StatementsManagement is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principlesgenerally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparationand fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.Auditor's ResponsibilityOur responsibility is to express an opinion on the consolidated financial statements based on our audit. We conducted our audit in accordance with auditingstandards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the consolidated financial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. Theprocedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whetherdue to fraud or error. In making those risk assessments, we consider internal control relevant to the Company's preparation and fair presentation of theconsolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the Company's internal control. Accordingly, we express no such opinion. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating theoverall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our audit opinion.OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of J-Devices Corporationand its subsidiaries at December 31, 2014, and the results of their operations and their cash flows for the year then ended in accordance with accountingprinciples generally accepted in the United States of America.Other MatterThe accompanying consolidated balance sheet of J-Devices Corporation and its subsidiaries as of December 31, 2013, and the related consolidatedstatements of income, comprehensive income, stockholders' equity and cash flows for the years ended December 31, 2013 and 2012 were not audited,reviewed, or compiled by us and accordingly, we do not express an opinion or any other form of assurance on them./s/ PricewaterhouseCoopers AarataTokyo, JapanFebruary 19, 20153J-DEVICES CORPORATIONCONSOLIDATED STATEMETS OF INCOME For the Year Ended December 31, 2014 2013 2012 (unaudited) (unaudited) (In thousands)Net sales$923,020 $825,135 $531,530Cost of sales799,778 741,357 470,527Gross profit123,242 83,778 61,003Selling, general and administrative50,605 51,306 20,332Research and development15,914 11,633 8,840Total operating expenses66,519 62,939 29,172Operating income56,723 20,839 31,831Interest expense2,549 3,481 2,992Other income, net(14,464) (3,339) (2,568)Total other (income) expense, net(11,915) 142 424Income before taxes68,638 20,697 31,407Income tax expense18,889 4,034 11,041Net income$49,749 $16,663 $20,366The accompanying notes are an integral part of these statements.4J-DEVICES CORPORATIONCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the Year Ended December 31, 2014 2013 2012 (unaudited) (unaudited) (In thousands)Net income$49,749$16,663$20,366Other comprehensive (loss) income, net of tax Adjustments to unrealized components of defined benefit pension plans(912) 2,082 (517)Foreign currency translation adjustment(30,569) (27,836) (12,401)Total other comprehensive loss(31,481) (25,754) (12,918)Comprehensive income (loss)$18,268 $(9,091) $7,448The accompanying notes are an integral part of these statements.5J-DEVICES CORPORATIONCONSOLIDATED BALANCE SHEETS December 31, 2014 2013 (unaudited) (In thousands,except share data)ASSETS Current assets: Cash and cash equivalents$115,841 $84,136Accounts receivable214,164 218,209Inventories33,053 36,372Other current assets18,340 13,911Total current assets381,398 352,628Property, plant and equipment, net197,393 228,941Other assets6,746 5,299Total assets$585,537 $586,868 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term borrowings and current portion of long-term debt$35,652 $52,565Trade accounts payable165,619 177,818Capital expenditures payable28,837 19,427Accrued expenses71,515 48,591Total current liabilities301,623 298,401Long-term debt44,940 78,710Pension obligations29,673 10,100Other non-current liabilities10,315 18,939Total liabilities386,551 406,150Commitments and contingencies (Note 1) Stockholders' Equity: Common stock, no par value, 160,000 shares authorized, 64,445 shares issued and outstanding in 2014 and201353,703 53,703Additional paid-in capital34,197 34,197Retained earnings168,015 118,266Accumulated other comprehensive loss(56,929) (25,448)Total stockholders' equity198,986 180,718Total liabilities and stockholders' equity$585,537 $586,868The accompanying notes are an integral part of these statements.6J-DEVICES CORPORATIONCONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AdditionalPaid-In Capital RetainedEarnings AccumulatedOtherComprehensiveIncome (Loss) Total Stockholders'Equity Common Stock Shares Value (In thousands, except share data)Balance at December 31, 2011 (unaudited)36,826 $19,506 $— $81,237 $13,224 $113,967Net income— — — 20,366 — 20,366Other comprehensive loss— — — — (12,918) (12,918)Balance at December 31, 2012 (unaudited)36,826 $19,506 $— $101,603 $306 $121,415Net income— — — 16,663 — 16,663Other comprehensive loss— — — — (25,754) (25,754)Issuance of stock27,619 34,197 34,197 — — 68,394Balance at December 31, 2013 (unaudited)64,445 $53,703 $34,197 $118,266 $(25,448) $180,718Net income— — — 49,749 — 49,749Other comprehensive loss— — — — (31,481) (31,481)Balance at December 31, 201464,445 $53,703 $34,197 $168,015 $(56,929) $198,986The accompanying notes are an integral part of these statements.7J-DEVICES CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS For the Year Ended December 31, 2014 2013 2012 (unaudited) (unaudited) (In thousands)Cash flows from operating activities: Net income$49,749 $16,663 $20,366Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization77,238 66,062 56,681Amortization of deferred debt issuance costs and premiums452 761 621Deferred income taxes112 (4,723) 4,023Gain from acquisition of business(14,739) (2,724) (2,356)(Gain) loss on disposal of fixed assets, net2,861 507 2,058Other, net622 1,743 980Changes in assets and liabilities: Accounts receivable(19,627) (99,612) (14,721)Inventories3,495 32,059 (429)Other current assets149 7,115 (11,175)Other assets(73) (1,394) (563)Trade accounts payable4,943 112,219 2,543Accrued expenses16,995 22,022 (3,781)Pension obligations7,501 5,715 2,973Other non-current liabilities(244) (3,315) (3,827)Net cash provided by operating activities129,434 153,098 53,393Cash flows from investing activities: Payments for property, plant and equipment(53,171) (33,666) (54,985)Proceeds from sale of property, plant and equipment1,941 97 —Acquisition of business, net of cash acquired(3,425) (59,207) (38,161)Cash received on acquisition of business from Amkor, net of payments15,777 — —Other investing activities(11) (13) (15)Net cash used in investing activities(38,889) (92,789) (93,161)Cash flows from financing activities: Borrowings under short-term credit facilities28,248 30,223 77,060Payments under short-term credit facilities(29,970) (54,323) (43,244)Proceeds from issuance of long-term debt— — 53,063Payments of long-term debt(36,705) (34,235) (20,604)Payments for debt issuance costs— — (1,442)Payments of capital lease obligations(1,794) (1,952) (1,863)Payments of capital lease obligations to Amkor— (8,843) (15,446)Proceeds from issuance of stock— 68,394 —Net cash (used in) provided by financing activities(40,221) (736) 47,524Effect of exchange rate fluctuations on cash and cash equivalents(18,619) (10,574) (2,746)Net increase in cash and cash equivalents31,705 48,999 5,010Cash and cash equivalents, beginning of period84,136 35,137 30,127Cash and cash equivalents, end of period$115,841 $84,136 $35,137Supplemental disclosures of cash flow information: Cash paid during the period for: Interest$2,451 $1,551 $1,516Income taxes6,446 1,406 24,102Non-cash investing activities: Additions to property, plant and equipment included in capital expenditures payable28,837 19,427 24,333Equipment acquired through capital leases2,161 798 1,289The accompanying notes are an integral part of these statements.8J-DEVICES CORPORATIONNotes to Consolidated Financial Statements1.Description of Business and Summary of Significant Accounting PoliciesDescription of BusinessIn October 2009, Amkor Technology, Inc. ("Amkor") and Toshiba Corporation ("Toshiba") invested in Nakaya Microdevices Corporation (“NMD”), asemiconductor company with a history dating back to 1970, to form a joint venture in Japan. As a result of the transaction, NMD was owned 60% by theformer shareholders of NMD, 30% by Amkor and 10% by Toshiba, and changed its name to J-Devices Corporation ("J-Devices"). In April 2013, Amkorcompleted the exercise of their option and purchased 27,619 new common shares for an aggregate purchase price of $68.4 million. The transaction increasedAmkor's ownership interest to 60.0% and decreased the ownership interest of the former shareholders of NMD to 34.3% and Toshiba to 5.7%. In January2015, Amkor purchased shares from Toshiba, which increased their ownership interest to 65.7%. Amkor has an option to increase their ownership interest upto 80% in 2015 and thereafter by purchasing shares owned by the other shareholders.The governance provisions currently applicable to the joint venture restrict the ability of any individual investor, even with majority ownership, to cause usto take certain actions without the consent of the other investors. If Amkor exercises their 80% option, certain governance restrictions will lapse, and Amkorwill obtain control.J-Devices is the largest provider of outsourced semiconductor packaging and test services in Japan. Semiconductor manufacturing is broadly divided intowafer processing and packaging and test processing; wafer processing refers to the process of making wafers (semiconductor components). J-Devices' businesssolutions enable customers to outsource the packaging and test process via a turn-key solution; from wafer test through to packaging and all other evaluationtest processes.Basis of PresentationOur Consolidated Financial Statements include the accounts of J-Devices Corporation and our subsidiaries (“J-Devices”). Our Consolidated FinancialStatements reflect the elimination of all significant inter-company accounts and transactions. We completed the purchase of a legal entity consisting of threefactories from Renesas Electronics Corporation ("Renesas") on June 1, 2013, and Amkor Iwate Company, Ltd. ("AIC") from Amkor on June 30, 2014. Thefinancial results of the entities have been included in our Consolidated Financial Statements from the dates of acquisition (Note 3). As of December 31, 2014,AIC merged into J-Devices.The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates andassumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ materially from those estimatesand assumptions. We have evaluated subsequent events through February 19, 2015, which is the date the financial statements were issued. These financialstatements have been prepared pursuant to Rule 3-09 of SEC Regulation S-X for inclusion in the Form 10-K of Amkor, as we are an equity-method investee ofAmkor. Pursuant to Rule 3-09, only the financial statements as of and for the year ended December 31, 2014 have been audited and the financial statementsfor the years ended December 31, 2013 and 2012 are unaudited. Those unaudited financial statements include all adjustments of a normal recurring naturenecessary to present fairly our results of operations, financial position and cash flows for the years presented.Foreign Currency TranslationThe Japanese yen is our functional currency and U.S. dollars is our reporting currency. Our asset and liability amounts are translated into U.S. dollars at end-of-period exchange rates. Income and expenses are translated into U.S. dollars at average exchange rates in effect during the period. The resulting translationadjustments are reported as a component of accumulated other comprehensive income in the stockholders’ equity section of the balance sheet. Assets andliabilities denominated in a currency other than the functional currency are remeasured into the functional currency prior to translation into U.S. dollars, andthe resulting transaction exchange gains or losses are included in other expense (income) in the period in which they occur.9J-DEVICES CORPORATIONNotes to Consolidated Financial Statements — (Continued)Risks and ConcentrationsThe semiconductor industry is characterized by rapid technological change, competitive pricing pressures and cyclical market patterns. Our financial resultsare affected by a wide variety of factors, including general economic conditions worldwide, economic conditions specific to the semiconductor industry, thetimely implementation of new package and test technologies, the ability to safeguard patents and intellectual property in a rapidly evolving market andreliance on materials and equipment suppliers. In addition, the semiconductor market has historically been cyclical and subject to significant economicdownturns at various times. Our profitability and ability to generate cash from operations is principally dependent upon demand for semiconductors, theutilization of our capacity, semiconductor package mix, the average selling price of our services, our ability to manage our capital expenditures and ourability to control our costs including labor, material, overhead and financing costs.A significant portion of our revenues is concentrated with a small number of customers. The loss of a significant customer, a reduction in orders or decrease inprice from a significant customer or disruption in any of our significant strategic partnerships or other commercial arrangements could have a material adverseeffect on our business, liquidity, results of operations, financial condition and cash flows.Financial instruments, for which we are subject to credit risk, consist principally of accounts receivable and cash and cash equivalents. With respect toaccounts receivable, we mitigate our credit risk by selling primarily to well established companies, performing ongoing credit evaluations and makingfrequent contact with customers. In addition, we may utilize non-recourse factoring to mitigate credit risk when considered appropriate. We have historicallymitigated our credit risk with respect to cash through diversification of our holdings into various high quality bank deposit accounts.WarrantyWe generally warrant that our services will be performed in a professional and workmanlike manner and in compliance with our customers’ specifications. Weaccrue costs for known warranty issues. Historically, our warranty costs have been immaterial.Asset Retirement ObligationsWe recognize a liability for the fair value of required asset retirement obligations ("ARO") when such obligations are incurred. Our AROs are primarilyassociated with leasehold improvements, which, at the end of a lease, we are contractually obligated to remove in order to comply with the lease agreement.At the inception of a lease with such conditions, we record a liability and a corresponding capital asset in an amount equal to the estimated fair value of theobligation. We estimate the liability using a number of assumptions, including cost inflation rates and discount rates, and accrete it to its projected futurevalue over time. The capitalized asset is depreciated using the same depreciation convention as leasehold improvement assets. Upon satisfaction of the AROconditions, any difference between the recorded liability and the actual retirement costs incurred is recognized as a gain or loss in the consolidatedstatements of income. Our net ARO liabilities included in other long-term liabilities as of December 31, 2014 and 2013, were $2.3 million and $0.8 million,respectively. The ARO assets have been fully depreciated as of December 31, 2014 and 2013.Contingencies and LitigationWe may be subject to certain legal proceedings, lawsuits and other claims. We accrue for a loss contingency, including legal proceedings, lawsuits, pendingclaims and other legal matters, when we conclude that the likelihood of a loss is probable and the amount of the loss can be reasonably estimated. When thereasonable estimate of the loss is within a range of amounts, and no amount in the range constitutes a better estimate than any other amount, we accrue for theamount at the low end of the range. We adjust our accruals from time to time as we receive additional information, but the loss we incur may be significantlygreater than or less than the amount we have accrued. We disclose loss contingencies if there is at least a reasonable possibility that a loss has been incurred.Attorney fees related to legal matters are expensed as incurred.10J-DEVICES CORPORATIONNotes to Consolidated Financial Statements — (Continued)CashOur cash consists of amounts invested in various bank operating accounts.InventoriesInventories are stated at the lower of cost or market (net realizable value). Cost is principally determined by a weighted moving average basis for rawmaterials and purchased components and on an average cost basis for work-in-process, both of which approximate actual cost. We reduce the carrying valueof our inventories for the cost of inventory we estimate is excess and obsolete based on the age of our inventories. When a determination is made that theinventory will not be utilized in production or is not saleable, it is written-off.Other Current AssetsOther current assets consist principally of deferred tax assets and prepaid expenses.Property, Plant and EquipmentProperty, plant and equipment are stated at cost. Depreciation is calculated by the straight-line method over the estimated useful lives of depreciable assetswhich are as follows:Buildings and improvements2 to 50 yearsMachinery and equipment2 to 7 yearsSoftware and computer equipment2 to 6 yearsFurniture, fixtures and other equipment2 to 20 yearsCost and accumulated depreciation for property retired or disposed of are removed from the accounts, and any resulting gain or loss is included in earnings.Expenditures for maintenance and repairs are charged to expense as incurred.We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.Recoverability of a long-lived asset group to be held and used in operations is measured by a comparison of the carrying amount to the sum of theundiscounted cash flows expected to result from the use and eventual disposition of the asset group. If such asset group is considered to be impaired, theimpairment loss is measured as the amount by which the carrying amount of the asset group exceeds its fair value. Long-lived assets to be disposed of arecarried at the lower of cost or fair value less the costs of disposal.Other AssetsOther assets consist principally of deposits.Other Non-current LiabilitiesOther non-current liabilities consist primarily of liabilities associated with deferred tax liabilities, long-term portion of capital lease obligation and assetretirement obligations.11J-DEVICES CORPORATIONNotes to Consolidated Financial Statements — (Continued)Fair Value MeasurementsWe apply fair value accounting for assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring ornonrecurring basis. We define fair value as the price that would be received from selling an asset or paid to transfer a liability in the principal or mostadvantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. See Note 13 for furtherdiscussion of fair value measurements.Revenue RecognitionWe recognize revenue from our packaging and test services, net of value-added or other similar taxes, when there is evidence of an arrangement, delivery hasoccurred or services have been rendered, fees are fixed or determinable and collectibility is reasonably assured. Generally these criteria are met and revenue isrecognized upon customer acceptance.We generally do not take ownership of customer-supplied semiconductor wafers. Title and risk of loss remains with the customer for these materials at alltimes. Accordingly, the cost of the customer-supplied materials is not included in our Consolidated Financial Statements.Provisions are made for doubtful accounts when there is doubt as to the collectibility of accounts receivable. The allowance for doubtful accounts is recordedas bad debt expense and is classified as selling, general and administrative expense. The allowance for doubtful accounts is based upon specificidentification of doubtful accounts considering the age of the receivable balance, the customer’s historical payment history and current credit worthiness aswell as specific identification of any known or expected collectibility issues. Historically, our allowance for doubtful accounts has been immaterial.Shipping and Handling Fees and CostsAmounts billed to customers for shipping and handling are presented in net sales. Costs incurred for shipping and handling are included in cost of sales.Research and Development CostsResearch and development expenses include costs attributable to the conduct of research and development programs primarily related to the development ofnew package designs and improving the efficiency and capabilities of our existing production processes. Such costs include salaries, payroll taxes, employeebenefit costs, materials, supplies, depreciation and maintenance of research equipment, services provided by outside contractors and the allocable portions offacility costs such as rent, utilities, insurance, repairs and maintenance, depreciation and general support services. All costs associated with research anddevelopment are expensed as incurred.Income TaxesIncome taxes are accounted for using the asset and liability method. Under this method, deferred income tax assets and liabilities are recognized for the futuretax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respectivetax basis as well as for net operating loss and tax credit carryforwards. Deferred income tax assets and liabilities are measured using enacted tax rates expectedto apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets andliabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for those deferredtax assets for which it is more likely than not that the related tax benefits will not be realized.In determining the amount of the valuation allowance, we consider all available evidence of realization, as well as feasible tax planning strategies. If all or aportion of the remaining deferred tax assets will not be realized, the valuation allowance will be increased with a charge to income tax expense. Conversely,if we conclude that we will ultimately be able to utilize all or a portion of the deferred tax assets for which a valuation allowance has been provided, therelated portion of the valuation allowance will be released to income as a credit to income tax expense. We believe that it is more likely than not12J-DEVICES CORPORATIONNotes to Consolidated Financial Statements — (Continued)that the tax benefits related to the deferred tax assets will be realized and do not have a valuation allowance. We monitor on an ongoing basis our ability toutilize our deferred tax assets and the need for a related valuation allowance.We recognize in our Consolidated Financial Statements the impact of an income tax position, if that position is more likely than not of being sustained onaudit, based on the technical merits of the position. Related interest and penalties are classified as income taxes in the financial statements. See Note 5 formore information regarding unrecognized income tax benefits.2.New Accounting StandardsRecently Issued StandardsIn May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 is based on the principle that revenue isrecognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to beentitled in exchange for those goods or services. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenueand cash flows arising from contracts with customers, including significant judgments and changes in judgments. ASU 2014-09 is effective for reportingperiods beginning after December 15, 2016, and permits the use of either full retrospective or modified retrospective methods of adoption. Early adoption isnot permitted. We are currently evaluating the method of adoption and the impact that this guidance will have on our financial statements and disclosure.3. Business AcquisitionsIn June 2014, we completed the purchase of 100% of the shares of AIC, Amkor’s previously wholly-owned subsidiary engaged in semiconductor packagingand test operations in Japan, for ¥1.1 billion ($9.5 million). We paid ¥0.1 billion ($1.0 million) in cash at closing and will pay the remaining ¥1.0 billion($8.5 million) by June 30, 2015. Under the purchase method of accounting, we allocated the purchase price to the assets acquired and liabilities assumedbased on their estimated fair values on the date of acquisition and recognized a gain of $14.7 million (Note 4) as the fair value of the net assets acquiredexceeded the purchase price. As part of the acquisition, we entered into an agreement by which Amkor shall continue to bill customers on behalf of AICduring the transition period. As of December 31, 2014, we received $5.4 million and have an outstanding receivable of $2.7 million.In June 2013, we completed the purchase of a legal entity consisting of three back-end factories that were engaged in the semiconductor packaging and testoperations in Japan from Renesas, and subsequently changed the name of the entity to J-Devices Semiconductor Corporation ("J-Semi"). The purpose of theacquisition is to improve our competitiveness in the market through establishing a mutually beneficial relationship with Renesas, one of Japan's largestelectronics companies and one of the world's largest semiconductor companies. The total price paid for the shares was ¥12.6 billion ($124.1 million). We paid¥4.8 billion ($47.5 million) in cash at closing, assumed a loan of ¥7.0 billion ($69.1 million) from Renesas and paid an additional ¥0.8 billion ($7.5 million)in cash as a price adjustment in August 2013.The following table presents the allocation of the purchase price to the assets acquired and liabilities assumed based on their fair values on the date ofacquisition: (In thousands)Inventories$40,406Property, plant and equipment, net94,593Other Assets1,747Total assets acquired136,746Current liabilities(3,758)Non-current liabilities(6,195)Total liabilities assumed(9,953)Net assets acquired$126,79313J-DEVICES CORPORATIONNotes to Consolidated Financial Statements — (Continued)As the fair value of the net assets acquired exceeded the purchase price, we recognized a gain of $2.7 million (Note 4). The gain is primarily due to the factthat Renesas was undertaking a restructuring of their business and motivated to outsource their packaging and test service to a specialized company like J-Devices to achieve better efficiency. As part of the acquisition, we entered into a five-year manufacturing services agreement with Renesas to providesemiconductor packaging and test services. Under the agreement, there is a take or pay arrangement subject to annual settlement for the first two years.In December 2012, we completed the purchase of certain assets and the transfer of certain employees of three factories from Fujitsu Semiconductor Limited.The purchase price was ¥3.4 billion ($42.3 million), for which we paid ¥3.1 billion ($38.2 million) in cash at closing and ¥345.9 million ($4.1 million) incash in January 2013. We allocated the purchase price to the assets acquired and liabilities assumed based on their estimated fair values on the date ofacquisition and recognized a gain of $2.4 million (Note 4) as the fair value of the net assets acquired exceeded the purchase price. As part of the acquisition,we entered into a three-year outsourcing agreement to provide semiconductor packaging and test services.4. Other Income and ExpenseOther income and expense consists of the following: For the Year Ended December 31, 2014 2013 2012 (unaudited) (unaudited) (In thousands)Foreign currency loss (gain)$357 $(415) $(128)Gain from acquisition of business(14,739) (2,724) (2,356)Other income, net(82) (200) (84)Total other income, net$(14,464) $(3,339) $(2,568)5. Income TaxesThe components of the provision (benefit) for income taxes are as follows:For the Year Ended December 31, 2014 2013 2012 (unaudited) (unaudited) (In thousands)Current$18,777 $8,757 $7,018Deferred112 (4,723) 4,023Total provision$18,889 $4,034 $11,041The reconciliation between the Japan statutory income tax rate of approximately 36% (2014), 38% (2013) and 39% (2012) and our income tax provision is asfollows:14J-DEVICES CORPORATIONNotes to Consolidated Financial Statements — (Continued) For the Year Ended December 31, 2014 2013 2012 (unaudited) (unaudited) (In thousands)Japan statutory tax at 36% (2014), 38% (2013) and 39% (2012)$24,710 $7,815 $12,212Income tax credits generated(525) (3,411) (835)Bargain purchase gain(5,215) (550) (924)Other(81) 180 588Total$18,889 $4,034 $11,041On November 30, 2011, Japan enacted a corporate tax rate reduction effective for the fiscal year starting on April 1, 2012 partially offset by a temporaryearthquake damage restoration surtax, which expired for fiscal year starting April 1, 2014.Research and development credits are available for a base level of qualified research and development expenditures and additional credits are available forincremental research and development expenditures over prior year levels subject to certain tax liability limitations.The Japanese government provides special tax credit relief to support earthquake disaster district reconstruction. We were certified as a designated businessoperator by Murata-Cho in Miyagi prefecture in March 2013 and are allowed to claim tax credits for 10% of the salaries of affected employees limited to 20%of the national corporate income tax liability within five years from March 2013.Income tax credits generated in 2014, 2013 and 2012 have been recognized in our income tax provision.The gains from our recent business acquisitions (Note 3) are not taxable for Japanese tax purposes.15J-DEVICES CORPORATIONNotes to Consolidated Financial Statements — (Continued)The following is a summary of the components of our deferred tax assets and liabilities: December 31, 2014 2013 (unaudited) (In thousands)Deferred tax assets: Net operating loss carryforwards$5,054 $—Accounts receivable28 1,937Income tax credits328 2,114Accrued liabilities21,480 10,900Property, plant and equipment1,049 —Other210 138Total deferred tax assets28,149 15,089Deferred tax liabilities: Property, plant and equipment10,949 17,238Deferred gain3,613 521Other357 1,225Total deferred tax liabilities14,919 18,984Net deferred tax assets$13,230 $(3,895)Recognized as: Other current assets$15,219 $10,835Other assets2,899 —Other non-current liabilities(4,888) (14,730)Total$13,230 $(3,895)At December 31, 2014, we had net operating loss carryforwards ("NOL's") of $19.3 million which expire from 2017-2022. These NOL's were acquired as partof the AIC stock acquisition on June 30, 2014.Our income tax returns are subject to examination by tax authorities. The tax years ended March 31, 2013 and 2012 have recently been examined withoutmaterial adjustment. Our tax returns for the open years ended March 31, 2014 and after are subject to changes upon examination. Tax return examinationsinvolve uncertainties and there can be no assurance that the outcome of examinations will be favorable.We have not identified any uncertain tax positions for which we have unrecognized tax benefits as of December 31, 2014, 2013 or 2012.6. Factoring of Accounts ReceivableWe utilize non-recourse factoring arrangements with third party financial institutions to manage our working capital and cash flows. Under this program, wesell receivables to a financial institution for cash at a discount to the face amount. As part of the factoring arrangements, we perform certain collection andadministrative functions for the receivables sold. For the year ended December 31, 2014 and 2013, we sold accounts receivable totaling $115.1 million and$297.9 million, respectively, for a discount, plus fees, of $0.08 million and $0.14 million, respectively.167. InventoriesInventories consist of the following: December 31, 2014 2013 (unaudited) (In thousands)Raw materials and purchased components$19,038 $18,857Work-in-process14,015 17,515Total inventories$33,053 $36,3728. Property, Plant and EquipmentProperty, plant and equipment consist of the following: December 31, 2014 2013 (unaudited) (In thousands)Land$23,760 $27,349Buildings and improvements49,579 56,000Machinery and equipment342,644 350,628Software and computer equipment16,306 14,544Furniture, fixtures and other equipment39,769 36,023Machinery and equipment under capital lease6,264 6,637Construction in progress10,340 5,097Total property, plant and equipment488,662 496,278Less accumulated depreciation and amortization(291,269) (267,337)Total property, plant and equipment, net$197,393 $228,941Depreciation expense was $77.2 million, $66.1 million, and $56.7 million for 2014, 2013 and 2012, respectively.9. Accrued ExpensesAccrued expenses consist of the following: December 31, 2014 2013 (unaudited) (In thousands)Payroll and benefits$36,918 $33,474Acquisition payable (Note 3)8,485 —Income taxes payable11,322 1,406Other accrued expenses14,790 13,711Total accrued expenses$71,515 $48,59117J-DEVICES CORPORATIONNotes to Consolidated Financial Statements — (Continued)10. DebtFollowing is a summary of short-term borrowings and long-term debt: December 31, 2014 2013 (unaudited) (In thousands)Short-term credit facilities: Variable rate (1)$7,848 $9,318Fixed rate (1)4,144 6,180Term loans: Long-term prime lending rate linked to short-term prime lending rate less 1.275%, due 2015 (2)690 5,547TIBOR plus 1.0%, due 2015 (2)1,025 8,312TIBOR plus 1.0%, due 2016 (2)6,112 10,815TIBOR plus 1.2% due 2017 (3)17,265 27,873Fixed rate at 2.1%, due 2018 (4)43,508 63,230 80,592 131,275Less: Short-term borrowings and current portion of long-term debt(35,652) (52,565)Long-term debt$44,940 $78,710(1)We have ¥1.5 billion ($12.4 million) of short-term credit facilities which mature annually and semi-annually. The facilities have been renewed ateach maturity. Principal is payable in monthly installments.(2)In 2011, we entered into ¥7.0 billion ($58.0 million) of term loan agreements which are collateralized by substantially all the land and factorieslocated at our facilities and a certain portion of accounts receivable. Principal is payable in monthly installments.(3)In 2012, we entered into a ¥4.3 billion ($35.2 million) syndicated term loan agreement which is collateralized by the land, factories and equipmentlocated at our facilities and a certain portion of accounts receivable. Principal is payable in quarterly installments.(4)In 2013, we entered into a ¥7.0 billion ($58.0 million) term loan with Renesas in accordance with the Stock Transfer Agreement which iscollateralized by substantially all the land, factories and equipment located at our facilities at J-Semi. Principal is payable in quarterly installments.Interest RatesInterest is payable monthly on the variable rate debt and monthly or quarterly on the fixed rate debt. Refer to the following table for the interest rates on ourdebt.18J-DEVICES CORPORATIONNotes to Consolidated Financial Statements — (Continued) Interest Rates at December 31, 2014 2013 (unaudited)Short-term credit facilities: Variable rate0.53% 0.55%Fixed rate0.53% 0.65%Term loan: Long-term prime lending rate linked to short-term prime lending rate less 1.275%, due 20151.20% 1.20%TIBOR plus 1.0%, due 20151.13% 1.15%TIBOR plus 1.0%, due 20161.13% 1.15%TIBOR plus 1.2%, due 20171.33% 1.35%Fixed rate at 2.1%, due 20182.10% 2.10%Compliance with Debt CovenantsOur loan agreements contain a number of affirmative and negative covenants which could restrict our operations and could result in acceleration of paymentif there is a material adverse event. The loan agreement governing our syndicated term loan contains financial covenants that requires us to maintain certainlevels of net assets and debt service coverage and net leverage ratios. We were in compliance with all our covenants as of December 31, 2014 and 2013.Assets pledged as collateralAs of December 31, 2014 and 2013, the carrying value of the assets pledged as collateral for our syndicated term loan and term loans amounted to $119.2million and $138.7 million, respectively.Maturities Total Debt (In thousands)Payments due for the year ending December 31, 2015$35,652201621,426201714,81320188,7012019—Thereafter—Total debt$80,59219J-DEVICES CORPORATIONNotes to Consolidated Financial Statements — (Continued)11. Pension PlansWe sponsor defined benefit plans (the “Plans”) that cover all regular employees with at least one year of service. Charges to expense are based upon actuarialanalyses.The following table summarizes the Plans’ benefit obligations, fair value of the Plans’ assets and the funded status of the Plans at December 31, 2014 and2013. For the Year EndedDecember 31, 2014 2013 (unaudited) (In thousands)Change in projected benefit obligation: Projected benefit obligation at beginning of year$17,189 $13,781Service cost9,032 7,765Interest cost340 151Benefits paid(652) (327)Actuarial losses (gains)2,312 (1,182)Acquisition (Note 3)14,676 —Foreign exchange gain(5,290) (2,999)Projected benefit obligation at end of year37,607 17,189Change in plan assets: Fair value of plan assets at beginning of year9,405 6,873Actual gain on plan assets978 2,245Employer contributions3,100 2,030Benefits paid(653) (176)Foreign exchange loss(1,619) (1,567)Fair value of plan assets at end of year11,211 9,405Funded status of the Plans at end of year$(26,396) $(7,784)The accrued benefit liability, included in pension obligations in the Consolidated Balance Sheets, as of December 31, 2014 and 2013 was $26.4 million and$7.8 million, respectively. The accumulated benefit obligation as of December 31, 2014 and 2013 was $35.5 million and $16.1 million, respectively.20J-DEVICES CORPORATIONNotes to Consolidated Financial Statements — (Continued)The following table summarizes, by component, the change in accumulated other comprehensive income related to our Plans: Prior ServiceCost Actuarial Net(Loss) Gain Total (In thousands)Balance at December 31, 2012, net of tax (unaudited)$(379) $(575) $(954)Amortization included in net periodic pension cost27 (34) (7)Net gain arising during period— 2,089 2,089Adjustments to unrealized components of defined benefit pension plan included in othercomprehensive income27 2,055 2,082Balance at December 31, 2013, net of tax (unaudited)$(352) $1,480 $1,128Amortization included in net periodic pension cost25 — 25Net gain arising during period— (937) (937)Adjustments to unrealized components of defined benefit pension plan included in othercomprehensive income25 (937) (912)Balance at December 31, 2014, net of tax$(327) $543 $216 Estimated amortization to be included in 2015 net periodic pension cost$(48) $— $(48)Information for pension plans with benefit obligations in excess of plan assets are as follows: December 31, 2014 2013 (unaudited) (In thousands)Plans with underfunded or non-funded projected benefit obligation: Aggregate projected benefit obligation$37,607 $17,189Aggregate fair value of plan assets11,211 9,405Plans with underfunded or non-funded accumulated benefit obligation: Aggregate accumulated benefit obligation35,455 16,118Aggregate fair value of plan assets11,211 9,405The following table summarizes net periodic pension costs: For the Year Ended December 31, 2014 2013 2012 (unaudited) (unaudited) (In thousands)Components of net periodic pension cost and total pension expense: Service cost$9,032 $7,765 $5,174Interest cost340 151 134Expected return on plan assets(106) (151) (123)Amortization of prior service cost(39) (43) (52)Recognized actuarial loss— 53 43Total pension expense$9,227 $7,775 $5,17621J-DEVICES CORPORATIONNotes to Consolidated Financial Statements — (Continued)The following table summarizes the weighted-average assumptions used in computing the net periodic pension cost and projected benefit obligations atDecember 31, 2014, 2013 and 2012: For the Year Ended December 31, 2014 2013 2012 (unaudited) (unaudited)Discount rate for determining net periodic pension cost1.5% 1.5% 1.5%Discount rate for determining benefit obligations at year end1.0% 1.5% 1.3%Rate of compensation increase for determining benefit obligationsat year end0.6% —% —%Expected rate of return on plan assets for determining net periodicpension cost1.5% 1.0% 2.0%The measurement date for determining the Plans’ assets and benefit obligations is December 31, each year. Discount rates are generally derived from yieldcurves constructed from high-quality corporate or foreign government bonds, for which the timing and amount of cash outflows approximate the estimatedpayouts.The expected rate of return assumption is based on weighted-average expected returns for each asset class. Expected returns reflect a combination ofhistorical performance analysis and the forward-looking views of the financial markets and include input from our actuaries. One of our defined benefitpension plans is a non-funded plan and as such, no assets exist related to this plan. Our investment strategy for our other defined benefit plan is based onlong-term, sustained asset growth through low to medium risk investments. The current rate of return assumption targets are based on an asset allocationstrategy for our plan assets of 57% debt securities, 41% equity securities and 2% others.The fair value of our pension plan assets at December 31, 2014, by asset category utilizing the fair value hierarchy as discussed in Note 13, is as follows: Quoted Pricesin ActiveMarkets forIdenticalAssets(Level 1) SignificantOther ObservableInputs(Level 2) SignificantUnobservableInputs(Level 3) Total (In thousands)Cash and cash equivalents$690 $— $— $690Equity securities Domestic securities2,188 — — 2,188Foreign securities2,231 — — 2,231 4,419 — — 4,419Bonds Domestic government and corporate bonds— 5,014 5,014Foreign government and corporate bonds— 1,001 — 1,001 — 6,015 — 6,015Other— — 87 87Total$5,109 $6,015 $87 $11,21122J-DEVICES CORPORATIONNotes to Consolidated Financial Statements — (Continued)The fair value of our pension plan assets at December 31, 2013, by asset category utilizing the fair value hierarchy as discussed in Note 13, is as follows: Quoted Pricesin ActiveMarkets forIdenticalAssets(Level 1) SignificantOther ObservableInputs(Level 2) SignificantUnobservableInputs(Level 3) Total (In thousands)Cash and cash equivalents$2,269 $— $— $2,269Equity securities Domestic securities1,493 — — 1,493Foreign securities1,373 — — 1,373 2,866 — — 2,866Bonds Domestic government and corporate bonds— 3,578 — 3,578Foreign government and corporate bonds— 609 — 609 — 4,187 — 4,187Other— — 83 83Total$5,135 $4,187 $83 $9,405We contributed $3.1 million and $2.0 million to the Plans during 2014 and 2013, respectively, and we expect to contribute $2.8 million during 2015. Weclosely monitor the funded status of the Plans with respect to legislative requirements. We intend to make at least the minimum contribution required by laweach year.The estimated future benefit payments related to our foreign defined benefit plans are as follows: Payments (In thousands)2015$70820161,19520171,55620182,50920193,1952020 to 202426,17023J-DEVICES CORPORATIONNotes to Consolidated Financial Statements — (Continued)12. Accumulated Other Comprehensive Income (Loss)The following table reflects the changes in accumulated other comprehensive income (loss), net of tax: Defined BenefitPension Foreign CurrencyTranslation Total (In thousands)Accumulated other comprehensive (loss) income at December 31, 2012 (unaudited)$(954) $1,260 $306Other comprehensive income (loss) before reclassifications2,089 (27,836) (25,747)Amounts reclassified from accumulated other comprehensive (loss) income(7) — (7)Other comprehensive income (loss)2,082 (27,836) (25,754)Accumulated other comprehensive income (loss) at December 31, 2013 (unaudited)$1,128 $(26,576) $(25,448)Other comprehensive loss before reclassifications(937) (30,569) (31,506)Amounts reclassified from accumulated other comprehensive income (loss)25 — 25Other comprehensive loss(912) (30,569) (31,481)Accumulated other comprehensive income (loss) at December 31, 2014$216 $(57,145) $(56,929)Amounts reclassified out of accumulated other comprehensive (loss) income are included as a component of net periodic pension cost (Note 11).13. Fair Value MeasurementsThe 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 asfollows: 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 areobservable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, model-basedvaluation techniques for which all significant assumptions are observable in the market or other inputs that are observable or can be corroborated byobservable market data for substantially the full term of the assets or liabilities and Level 3, defined as unobservable inputs that are not corroborated bymarket data.The fair values of cash, accounts receivable, trade accounts payable, capital expenditures payable and the majority of other current assets, other assets,accrued expenses and other non current liabilities approximate carrying values because of their short-term nature. We also measure certain assets andliabilities, including property, plant and equipment, at fair value on a nonrecurring basis.We measure the fair value of our debt for disclosure purposes. The following table presents the fair value of our debt:24J-DEVICES CORPORATIONNotes to Consolidated Financial Statements — (Continued) December 31, 2014 December 31, 2013 (unaudited) FairValue CarryingValue FairValue CarryingValue (In thousands)Short-term credit facilities$11,994 $11,992 $15,500 $15,498Term loans69,485 68,600 116,638 115,777Total debt$81,479 $80,592 $132,138 $131,275The estimated fair value of our short-term credit facilities and term loans was based on a third-party valuation using an income approach which discounts thefuture interest and principal payments at the estimated fair market yield.14. LeasesFuture minimum lease payments under operating leases that have initial or remaining noncancelable lease terms in excess of one year are: Lease Payments (In thousands)2015$9,54720165,886201783820183362019300Thereafter438Total$17,345Rent expense amounted to $19.0 million, $24.2 million and $27.0 million for 2014, 2013 and 2012, respectively.The following is a summary of future minimum lease payments under capital leases together with the present value of the minimum lease payments atDecember 31, 2014:(In thousands)2015$1,72020161,51820171,2522018241201922Thereafter—Total minimum lease payments4,753Less: amount of interest contained in above payments(236)Present value of minimum lease payments4,517Less: current portion of capital lease obligation(1,484)Long-term portion of capital lease obligation$3,033In conjunction with the joint venture agreement, we leased packaging and test equipment from Amkor, which was accounted for as a direct financing lease.During 2012, we made lease payments of $15.4 million, which included imputed interest.25J-DEVICES CORPORATIONNotes to Consolidated Financial Statements — (Continued)At the end of the lease in October 2012, we purchased the remaining equipment for $8.8 million, which was paid in January 2013.15. Related Party TransactionsMr. Yoshifumi Nakaya, Representative Director and one of our major shareholders, provides guarantee, free of charge, for certain debt we borrowed frombanks. The outstanding balance of those debts as of December 31, 2014 and 2013 was $36.0 million and $68.0 million, respectively.26

Continue reading text version or see original annual report in PDF format above