Common use of Comprehensive loss Clause in Contracts

Comprehensive loss. Issuance of stock for acquisitions............ Issuance of stock through employee stock purchase plan and stock options................. 1,547 2 11,486 -- -- -- 11,488 stockholder............. -- ------- -- ---- -- ---------- -- --------- 389 ------- -- ------- 389 ---------- 2002...................... 165,156 $166 $1,170,227 $(933,734) $(2,887) $(2,405) $ 231,367 ======= ==== ========== ========= ======= ======= ========== Payment received from BALANCE AT DECEMBER 31, The accompanying notes are an integral part of these financial statements. 51 AMKOR TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, ----------------------------------- 2002 2001 2000 --------- --------- (IN THOUSANDS) ----------- Income (loss) from continuing operations $(835,089) $(456,487) $ 137,801 Adjustments to reconcile income (loss) from continuing operations to net cash by operating activities -- Depreciation and amortization........................... 323,265 440,591 323,811 Amortization of deferred debt issuance costs............ 8,251 22,321 7,013 Debt conversion expense................................. -- -- 272 Provision for accounts receivable....................... 500 4,000 (17) Provision for excess and obsolete inventory............. 5,841 17,869 10,000 Deferred income taxes................................... 72,719 (85,022) (8,255) Equity in loss of investees............................. 33,865 100,706 20,991 Loss on impairment of equity investment................. 172,533 -- -- Loss on disposition of equity investment................ 1,767 -- -- Loss on disposal of fixed assets, net................... 2,496 14,515 1,355 Asset impairment charges and facility closure costs..... 284,602 3,600 -- Minority interest....................................... Changes in assets and liabilities excluding effects of acquisitions -- Accounts receivable..................................... 1,932 (39,328) 1,896 84,641 -- (62,556) Repurchase of accounts receivable and settlement of security agreement.................................... -- -- (71,500) Other receivables....................................... 719 (2,488) 2,884 Inventories............................................. 218 31,372 (23,871) Due to/from affiliates, net............................. 529 (2,447) (17,616) Other current assets.................................... (2,210) 6,034 (18,047) Other non-current assets................................ 19,433 (214) (17,612) Accounts payable........................................ 28,313 (23,808) 15,682 Accrued expenses........................................ 24,394 (24,126) 40,238 Other long-term liabilities............................. Net cash provided by operating activities............. 8,425 --------- 113,175 --------- 8,011 --------- 140,964 --------- 7,108 ----------- 347,681 ----------- sh flows from continuing investing activities: Purchases of property, plant and equipment................ (95,104) (158,595) (478,950) Acquisitions, net of cash acquired........................ (18,459) (11,057) (17,602) Acquisitions of K1, K2 and K3 and K4, net of cash acquired................................................ -- -- (927,290) Investment in ASI......................................... -- -- (459,000) Proceeds from the sale of property, plant and equipment... 2,870 1,863 2,823 Proceeds from disposition of equity investment............ 58,139 -- -- Proceeds from the sale (purchase) of investments.......... Net cash used in investing activities................. (2,011) --------- (54,565) --------- (321) --------- (168,110) --------- 136,879 ----------- (1,743,140) ----------- sh flows from continuing financing activities: Net change in bank overdrafts and short-term borrowings... 6,860 15,067 5,975 Net proceeds from issuance of long-term debt.............. -- 750,486 1,027,479 Cash flows from continuing operating activities: Ca Ca Payments of long-term debt................................ (30,119) (662,565) (87,166) Net proceeds from the issuance of 20.5 million common shares.................................................. -- -- 410,001 Proceeds from issuance of stock through employee stock purchase plan and stock options......................... 11,488 11,698 9,622 Payment received from stockholder......................... 389 -- -- Net cash provided by (used in) financing activities... (11,382) 114,686 1,365,911 Effect of exchange rate fluctuations on cash and cash equivalents related to continuing operations.............. 1,333 (397) -- --------- --------- ----------- Cash flows from discontinued operations: Net cash provided by operating activities................. 63,302 19,502 26,144 Net cash used in investing activities..................... -- (105) (1,124) Net cash used in financing activities..................... (671) -- -- --------- --------- ----------- Net cash provided by discontinued operations.......... 62,631 19,397 25,020 --------- --------- ----------- Net increase (decrease) in cash and cash equivalents........ 111,192 106,540 (4,528) Cash and cash equivalents, beginning of period.............. 200,057 93,517 98,045 --------- --------- ----------- Cash and cash equivalents, end of period.................... $ 311,249 $ 200,057 $ 93,517 ========= ========= =========== Supplemental disclosures of cash flow information: Xxxx paid (received) during the period for: Interest................................................ $ 142,299 $ 144,345 $ 111,429 Income taxes............................................ $ (845) $ (642) $ 18,092 The accompanying notes are in integral part of these financial statements 52 AMKOR TECHNOLOGY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Comprehensive loss. Issuance of stock for acquisitions............ Issuance of stock through employee stock purchase plan and stock options................. 1,547 2 11,486 -- -- -- 11,488 stockholder............. -- ------- -- ---- -- ---------- -- --------- 389 ------- -- ------- 389 ---------- 2002...................... 165,156 Balances at June 30, 2000........... $166 67 $1,170,227 146,817 $(933,734) $(2,887) $(2,405) $ 231,367 ======= =50,953)======== === ========== =The accompanying notes are an integral part of these consolidated financial statements. XXXX.XXX CONSOLIDATED STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 2000 1999 1998 (IN U.S. DOLLARS, IN THOUSANDS) Net loss attributable to ordinary shareholders $(51,067) Adjustments to reconcile net loss to net cash used in $(9,394) $ (253) Minority interests in losses of consolidated subsidiary............................................ (119) (47) (11) Loss on equity investment............................... 501 -- -- Provisions for doubtful accounts........................ 555 130 12 Depreciation and amortization........................... 1,476 312 124 Stock-based compensation................................ 19,065 3,392 -- Amortization of intangible assets....................... 6,807 1,745 43 Accretion on Mandatorily Redeemable Convertible Preference Shares..................................... 84 98 71 Changes in assets and liabilities, net of effect of Sinanet acquisition: Accounts receivable................................... (3,235) (631) (417) Inventories........................................... 15 (136) 43 Prepaid expenses and other current Assets............. (996) (91) 128 Receivable from related parties....................... (268) -- -- Other assets.......................................... 128 (9) (261) Accounts payable...................................... 375 145 47 Accrued liabilities................................... 6,576 812 189 Net cash used in operating Activities.............. (20,103) (3,674) (285) Cash flows from investing activities: Cash acquired upon merger with Sinanet.................... -- 289 -- Acquisition of property and equipment..................... (7,019) (1,285) (557) Investment in joint ventures.............................. (1,395) -- -- Purchase of short-term investments........................ (26,447) (4,037) -- Net cash used in investing Activities.............. (34,861) (5,033) (557) Cash flows from financing activities: Proceeds from issuance of Preference Shares, net.......... 63,920 24,185 5,933 Proceeds from initial public offering, net of $3,907 issuance costs.......................................... 68,819 -- -- Proceeds from notes receivables from shareholders......... 562 -- -- Proceeds from exercise of stock options................... 241 3 Repayment of notes payable................................ -- -- (241) Net cash provided by financing activities.......... 133,542 24,188 5,692 Net increase in cash and cash equivalents................... 78,578 15,481 4,850 Cash and cash equivalents at beginning of year.............. 20,571 5,090 240 Cash and cash equivalents at end of year.................... $ 99,149 $20,571 $5,090 Supplemental disclosure of cash flow information: Cash flows from operating activities: operating activities: Cash paid for interest $ -- $ 1 $ 22 Supplemental schedule of noncash investing and financing activities: Shares, warrants and options issued for Sinanet Acquisition $ -- $17,269 $ -- ======== ======= ======= ========== Payment received from BALANCE AT DECEMBER 31, The accompanying Ordinary Shares issued for notes are an integral part of these financial statements. 51 AMKOR TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, ----------------------------------- 2002 2001 2000 --------- --------- (IN THOUSANDS) ----------- Income (loss) from continuing operations $(835,089) $(456,487) receivable............... $ 137,801 Adjustments to reconcile income (loss) from continuing operations to net cash by operating activities 2,629 $ -- Depreciation and amortization........................... 323,265 440,591 323,811 Amortization of deferred debt issuance costs............ 8,251 22,321 7,013 Debt conversion expense................................. $ -- -- 272 Provision for accounts receivable....................... 500 4,000 (17) Provision for excess and obsolete inventory............. 5,841 17,869 10,000 Deferred income taxes................................... 72,719 (85,022) (8,255) Equity in loss of investees............................. 33,865 100,706 20,991 Loss on impairment of equity investment................. 172,533 -- -- Loss on disposition of equity investment................ 1,767 -- -- Loss on disposal of fixed assets, net................... 2,496 14,515 1,355 Asset impairment charges and facility closure costs..... 284,602 3,600 -- Minority interest....................................... Changes in assets and liabilities excluding effects of acquisitions -- Accounts receivable..................................... 1,932 (39,328) 1,896 84,641 -- (62,556) Repurchase of accounts receivable and settlement of security agreement.................................... -- -- (71,500) Other receivables....................................... 719 (2,488) 2,884 Inventories............................................. 218 31,372 (23,871) Due to/from affiliates, net............................. 529 (2,447) (17,616) Other current assets.................................... (2,210) 6,034 (18,047) Other non-current assets................................ 19,433 (214) (17,612) Accounts payable........................................ 28,313 (23,808) 15,682 Accrued expenses........................................ 24,394 (24,126) 40,238 Other long-term liabilities............................. Net cash provided by operating activities............. 8,425 --------- 113,175 --------- 8,011 --------- 140,964 --------- 7,108 ----------- 347,681 ----------- sh flows from continuing investing activities: Purchases of property, plant and equipment................ (95,104) (158,595) (478,950) Acquisitions, net of cash acquired........................ (18,459) (11,057) (17,602) Acquisitions of K1, K2 and K3 and K4, net of cash acquired................................................ -- -- (927,290) Investment in ASI......................................... -- -- (459,000) Proceeds from the sale of property, plant and equipment... 2,870 1,863 2,823 Proceeds from disposition of equity investment............ 58,139 -- -- Proceeds from the sale (purchase) of investments.......... Net cash used in investing activities................. (2,011) --------- (54,565) --------- (321) --------- (168,110) --------- 136,879 ----------- (1,743,140) ----------- sh flows from continuing financing activities: Net change in bank overdrafts and short-term borrowings... 6,860 15,067 5,975 Net proceeds from issuance of long-term debt.............. -- 750,486 1,027,479 Cash flows from continuing operating activities: Ca Ca Payments of long-term debt................................ (30,119) (662,565) (87,166) Net proceeds from the issuance of 20.5 million common shares.................................................. -- -- 410,001 Proceeds from issuance of stock through employee stock purchase plan and stock options......................... 11,488 11,698 9,622 Payment received from stockholder......................... 389 -- -- Net cash provided by (used in) financing activities... (11,382) 114,686 1,365,911 Effect of exchange rate fluctuations on cash and cash equivalents related to continuing operations.............. 1,333 (397) -- --------- --------- ----------- Cash flows from discontinued operations: Net cash provided by operating activities................. 63,302 19,502 26,144 Net cash used in investing activities..................... -- (105) (1,124) Net cash used in financing activities..................... (671) -- -- --------- --------- ----------- Net cash provided by discontinued operations.......... 62,631 19,397 25,020 --------- --------- ----------- Net increase (decrease) in cash and cash equivalents........ 111,192 106,540 (4,528) Cash and cash equivalents, beginning of period.............. 200,057 93,517 98,045 --------- --------- ----------- Cash and cash equivalents, end of period.................... $ 311,249 $ 200,057 $ 93,517 ========= ======= ====== Conversion of notes payable to Preference Shares.......... $ -- $ 3,509 $ -- ======== ======= ====== Supplemental disclosures of cash flow information: Xxxx paid (received) during the period for: Interest................................................ $ 142,299 $ 144,345 $ 111,429 Income taxes............................................ $ (845) $ (642) $ 18,092 The accompanying notes are in an integral part of these consolidated financial statements 52 AMKOR TECHNOLOGY, INCstatements. 42 XXXX.XXX NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSTATEMENTS (IN U.S. DOLLARS)

Comprehensive loss. Issuance of stock for acquisitions............ Issuance of stock through employee stock purchase plan and stock options................. 1,547 Balance at December 31, ------ ---------- -------- ------- -------- ------ -------- 1999....................... 17,226 $ 2 11,486 -- -- -- 11,488 stockholder............. -- ------- -- ---- -- ---------- -- --------- 389 ------- -- ------- 389 ---------- 2002...................... 165,156 $166 $1,170,227 181,154 $(933,7341,530) $(2,88794,466) $(2,405) 1,469 $ 231,367 86,629 ======= ==== ========== ========= ======= ======= ======== ====== Payment received from BALANCE AT DECEMBER 31, The ======== See accompanying notes are an integral part of these financial statements. 51 AMKOR TECHNOLOGYF-5 INHALE THERAPEUTIC SYSTEMS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEAR INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (IN THOUSANDS) YEARS ENDED DECEMBER 31, ----------------------------------- 2002 2001 2000 --------------------------------- 1999 1998 1997 --------- --------- --------- CASH FLOWS FROM (IN THOUSANDSUSED IN) ----------- Income OPERATING ACTIVITIES Net loss.................................................... $ (loss) from continuing operations $(835,089) $(456,48738,448) $ 137,801 (18,356) $ (9,983) Adjustments to reconcile income (loss) from continuing operations net loss to net cash by used in operating activities -- activities: Depreciation and amortization........................... 323,265 440,591 323,811 ............................. 6,889 3,415 2,337 Amortization of deferred debt issuance costs............ 8,251 22,321 7,013 Debt conversion expense................................. compensation..................... 365 183 101 Issuance of common stock for services..................... 798 -- -- 272 Provision for accounts receivable....................... 500 4,000 (17) Provision for excess Issuance of common stock and obsolete inventory............. 5,841 17,869 10,000 Deferred income taxes................................... 72,719 (85,022) (8,255) Equity stock options in loss of investees............................. 33,865 100,706 20,991 Loss on impairment of equity investment................. 172,533 connection with licensing agreements............................... -- 284 600 Acquired in-process research and development.............. 9,890 -- -- Loss on disposition of equity investment................ 1,767 -- -- Loss on disposal of fixed assets, net................... 2,496 14,515 1,355 Asset impairment charges and facility closure costs..... 284,602 3,600 -- Minority interest....................................... Changes in assets and liabilities excluding effects of acquisitions -- Accounts liabilities: Decrease (increase) in accounts receivable..................................... 1,932 , other current assets, and other assets................................ (39,328) 1,896 84,641 -- (62,556) Repurchase of accounts receivable and settlement of security agreement.................................... -- -- (71,500) Other receivables....................................... 719 (2,488) 2,884 Inventories............................................. 218 31,372 (23,871) Due to/from affiliates, net............................. 529 (2,4478,004) (17,616876) Other current assets.................................... 518 Increase (2,210decrease) 6,034 in accounts payable and accrued liabilities............................................. 12,724 (18,0471,546) Other non-current assets................................ 19,433 7,443 Increase (214decrease) in deferred revenue................... 452 (17,6122,327) Accounts payable........................................ 28,313 (23,808) 15,682 Accrued expenses........................................ 24,394 (24,126) 40,238 Other long-term liabilities............................. 3,963 --------- --------- --------- Net cash (used in) provided by operating activities............. 8,425 ......... (15,334) (19,223) 4,979 CASH FLOWS USED IN INVESTING ACTIVITIES Acquisition of PulmoSpheres-Registered Trademark- --------- 113,175 --------- 8,011 --------- 140,964 --------- 7,108 ----------- 347,681 ----------- sh flows from continuing investing activities: technology................................................ (15,288) -- -- Purchases of property, plant short-term investments......................... (122,481) (219,414) (483,247) Sales of short-term investments............................. 28,658 65,189 80,662 Maturities of short-term investments........................ 47,174 182,309 334,289 Purchases of property and equipment................ , net.................... (95,10420,502) (158,59534,584) (478,95017,261) Acquisitions, net of cash acquired........................ (18,459) (11,057) (17,602) Acquisitions of K1, K2 and K3 and K4, net of cash acquired................................................ -- -- (927,290) Investment in ASI......................................... -- -- (459,000) Proceeds from the sale of property, plant and equipment... 2,870 1,863 2,823 Proceeds from disposition of equity investment............ 58,139 -- -- Proceeds from the sale (purchase) of investments.......... --------- --------- --------- Net cash used in investing activities................. ....................... (2,01182,439) (6,500) (85,557) CASH FLOWS FROM FINANCING ACTIVITIES --------- (54,565) --------- (321) --------- (168,110) --------- 136,879 ----------- (1,743,140) ----------- sh flows from continuing financing activities: Net change in bank overdrafts and short-term borrowings... 6,860 15,067 5,975 Net proceeds from issuance Issuance of long-term debt.............. convertible subordinated debentures, net........ 104,806 -- 750,486 1,027,479 Cash flows from continuing operating activities: Ca Ca -- Payments of long-term debt................................ loan and capital lease and obligations.......... (30,11964) (662,565181) (87,166168) Net proceeds Proceeds from the issuance of 20.5 million common shares.................................................. tenant improvement loan....................... -- -- 410,001 Proceeds from 5,000 Issuance of common stock, net of issuance of stock through employee stock purchase plan and stock options......................... 11,488 11,698 9,622 Payment received from stockholder......................... 389 -- -- costs............. 1,545 36,716 71,282 --------- --------- --------- Net cash provided by (used in) financing activities... (11,382) 114,686 1,365,911 Effect of exchange rate fluctuations on cash and cash equivalents related to continuing operations.............. 1,333 (397) -- ................... 106,287 36,535 76,114 --------- --------- ----------- Cash flows from discontinued operations: Net cash provided by operating activities................. 63,302 19,502 26,144 Net cash used in investing activities..................... -- (105) (1,124) Net cash used in financing activities..................... (671) -- -- --------- --------- ----------- Net cash provided by discontinued operations.......... 62,631 19,397 25,020 --------- --------- ----------- Net increase (decrease) in cash and cash equivalents........ 111,192 106,540 8,514 10,812 (4,5284,464) Cash and cash equivalents, equivalents at beginning of periodyear.............. 200,057 93,517 98,045 24,916 14,104 18,568 --------- --------- ----------- --------- Cash and cash equivalents, equivalents at end of periodyear.................... $ 311,249 33,430 $ 200,057 24,916 $ 93,517 14,104 ========= ========= =========== Supplemental disclosures of cash flow information: Xxxx paid (received) during the period for: Interest................................................ $ 142,299 $ 144,345 $ 111,429 Income taxes............................................ $ (845) $ (642) $ 18,092 The See accompanying notes are in integral part of these financial statements 52 AMKOR TECHNOLOGYF-6 INHALE THERAPEUTIC SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSTATEMENTS DECEMBER 31, 1999 NOTE 1--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION AND BASIS OF PRESENTATION Inhale Therapeutic Systems, Inc. ("Inhale", the "Company") was incorporated in the State of California in July 1990 and reincorporated in the State of Delaware in July 1998. Since inception, Inhale has been engaged in the development of a system to deliver drugs to the bloodstream through the lungs by inhaling a powdered version of the drug. The system is applicable to a wide range of peptides, proteins and other molecules. Inhale expects increasing losses over the next several years as research and development and manufacturing scale-up efforts continue, and as Inhale expands its facilities for commercial manufacturing. Management plans to continue to finance Inhale primarily through issuances of equity or debt securities, research and development contract revenue, and in the longer term, revenue from product sales and royalties. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. CASH, CASH EQUIVALENTS AND INVESTMENTS Inhale considers all highly liquid investments with a maturity from date of purchase of three months or less to be cash equivalents. Cash and cash equivalents include demand deposits held in banks and interest bearing money market funds. All other liquid investments are classified as short-term investments. Short-term investments consist of federal and municipal government securities, repurchase agreements or corporate commercial paper with A1 or P1 short-term ratings and A or better long-term ratings with remaining maturities at date of purchase of greater than 90 days and less than one year. Inhale limits its concentration of risk by diversifying its investments among a variety of industries and issuers. Inhale has experienced no material losses on its investments. At December 31, 1999, all short-term investments are designated as available-for-sale and are carried at fair value, with material unrealized gains and losses, if any, reported in stockholders' equity. The amortized cost of securities is adjusted for amortization of material premiums and accretion of discounts to maturity. Such amortization, if any, is included in interest income. Realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities, if any, are included in interest income. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in interest income. INHALE THERAPEUTIC SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1999 NOTE 1--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The following is a summary of available-for-sale debt securities as of December 31, 1999: AVAILABLE-FOR-SALE DEBT SECURITIES ----------------------------------------------- GROSS GROSS UNREALIZED UNREALIZED ESTIMATED COST GAINS LOSSES FAIR VALUE -------- ---------- ---------- ---------- (IN THOUSANDS) Obligations of U.S. government agencies............. $ 81,692 $108 $ -- $ 81,800 U.S. corporate commercial paper..................... 41,081 33 -- 41,114 Repurchase agreements, secured by U.S. Government securities........................................ 3,845 -- -- 3,845 Other............................................... 7,872 -- -- 7,872 -------- ---- --------- -------- $134,490 $141 $ -- $134,631 ======== ==== ========= ======== Amounts included in cash and cash equivalents....... $ 29,822 $ 54 $ -- $ 29,876 Amounts included in short-term investments.......... 104,668 87 -- 104,755 -------- ---- --------- -------- $134,490 $141 $ -- $134,631 ======== ==== ========= ======== The following is a summary of available-for-sale debt securities as of December 31, 1998: AVAILABLE-FOR-SALE DEBT SECURITIES ----------------------------------------------- GROSS GROSS UNREALIZED UNREALIZED ESTIMATED COST GAINS LOSSES FAIR VALUE -------- ---------- ---------- ---------- (IN THOUSANDS) Obligations of U.S. government agencies.............. $20,758 $ -- $ -- $ 20,758 U.S. corporate commercial paper...................... 42,773 -- (19) 42,754 Repurchase agreements, secured by U.S. Government securities......................................... 17,704 -- -- 17,704 Other................................................ 105 -- -- 105 ------- --------- ---- -------- $81,340 $ -- $(19) $ 81,321 ======= ========= ==== ======== Amounts included in cash and cash equivalents........ $23,375 $ -- $ -- $ 23,375 Amounts included in short-term investments........... 57,965 -- (19) 57,946 ------- --------- ---- -------- $81,340 $ -- $(19) $ 81,321 ======= ========= ==== ======== The gross realized losses and gains on the sale of debt securities available-for-sale during the years ended December 31, 1999 and 1998 were not material. At December 31, 1999 and 1998, the average portfolio duration was approximately five months and three months, respectively, and the contractual maturity of any single investment did not exceed eleven months at December 31, 1999 and 1998. The estimated fair value amounts have been determined by Inhale using available market information and appropriate valuation methodologies. However, market data must be interpreted to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that Inhale could realize in a current market exchange. INHALE THERAPEUTIC SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1999 NOTE 1--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Inhale owns common stock in one technology company. These shares of Alliance Pharmaceutical Corp. ("Alliance") are accounted for as long-term available-for-sale securities. Due to restrictions on the sale of this stock, the Company carries that portion of its investment in Alliance that can be sold within one year at market value, with material unrealized gains and losses, if any, reported in stockholders' equity. That portion which cannot be sold within one year is carried at cost. PROPERTY AND EQUIPMENT Property and equipment consist of the following at December 31: 1999 1998 -------- -------- (IN THOUSANDS)

Comprehensive loss. Issuance of stock for acquisitions............ Issuance of stock through employee stock purchase plan and stock options................. 1,547 Balance at December 31, ------ ---------- -------- ------- -------- ------ -------- 1999....................... 17,226 $ 2 11,486 -- -- -- 11,488 stockholder............. -- ------- -- ---- -- ---------- -- --------- 389 ------- -- ------- 389 ---------- 2002...................... 165,156 $166 $1,170,227 181,154 $(933,7341,530) $(2,88794,466) $(2,405) 1,469 $ 231,367 86,629 ======= ==== ========== ========= ======= ======= ======== ====== Payment received from BALANCE AT DECEMBER 31, The ======== See accompanying notes are an integral part of these financial statements. 51 AMKOR TECHNOLOGYF-5 INHALE THERAPEUTIC SYSTEMS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEAR INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (IN THOUSANDS) YEARS ENDED DECEMBER 31, ----------------------------------- 2002 2001 2000 --------------------------------- 1999 1998 1997 --------- --------- --------- CASH FLOWS FROM (IN THOUSANDSUSED IN) ----------- Income OPERATING ACTIVITIES Net loss.................................................... $ (loss) from continuing operations $(835,089) $(456,48738,448) $ 137,801 (18,356) $ (9,983) Adjustments to reconcile income (loss) from continuing operations net loss to net cash by used in operating activities -- activities: Depreciation and amortization........................... 323,265 440,591 323,811 ............................. 6,889 3,415 2,337 Amortization of deferred debt issuance costs............ 8,251 22,321 7,013 Debt conversion expense................................. compensation..................... 365 183 101 Issuance of common stock for services..................... 798 -- -- 272 Provision for accounts receivable....................... 500 4,000 (17) Provision for excess Issuance of common stock and obsolete inventory............. 5,841 17,869 10,000 Deferred income taxes................................... 72,719 (85,022) (8,255) Equity stock options in loss of investees............................. 33,865 100,706 20,991 Loss on impairment of equity investment................. 172,533 connection with licensing agreements............................... -- 284 600 Acquired in-process research and development.............. 9,890 -- -- Loss on disposition of equity investment................ 1,767 -- -- Loss on disposal of fixed assets, net................... 2,496 14,515 1,355 Asset impairment charges and facility closure costs..... 284,602 3,600 -- Minority interest....................................... Changes in assets and liabilities excluding effects of acquisitions -- Accounts liabilities: Decrease (increase) in accounts receivable..................................... 1,932 , other current assets, and other assets................................ (39,328) 1,896 84,641 -- (62,556) Repurchase of accounts receivable and settlement of security agreement.................................... -- -- (71,500) Other receivables....................................... 719 (2,488) 2,884 Inventories............................................. 218 31,372 (23,871) Due to/from affiliates, net............................. 529 (2,4478,004) (17,616876) Other current assets.................................... 518 Increase (2,210decrease) 6,034 in accounts payable and accrued liabilities............................................. 12,724 (18,0471,546) Other non-current assets................................ 19,433 7,443 Increase (214decrease) in deferred revenue................... 452 (17,6122,327) Accounts payable........................................ 28,313 (23,808) 15,682 Accrued expenses........................................ 24,394 (24,126) 40,238 Other long-term liabilities............................. 3,963 --------- --------- --------- Net cash (used in) provided by operating activities............. 8,425 ......... (15,334) (19,223) 4,979 --------- 113,175 --------- 8,011 --------- 140,964 --------- 7,108 ----------- 347,681 ----------- sh flows from continuing investing activities: CASH FLOWS USED IN INVESTING ACTIVITIES Acquisition of PulmoSpheres-Registered Trademark- technology................................................ (15,288) -- -- Purchases of property, plant short-term investments......................... (122,481) (219,414) (483,247) Sales of short-term investments............................. 28,658 65,189 80,662 Maturities of short-term investments........................ 47,174 182,309 334,289 Purchases of property and equipment................ , net.................... (95,10420,502) (158,59534,584) (478,95017,261) Acquisitions, net of cash acquired........................ (18,459) (11,057) (17,602) Acquisitions of K1, K2 and K3 and K4, net of cash acquired................................................ -- -- (927,290) Investment in ASI......................................... -- -- (459,000) Proceeds from the sale of property, plant and equipment... 2,870 1,863 2,823 Proceeds from disposition of equity investment............ 58,139 -- -- Proceeds from the sale (purchase) of investments.......... --------- --------- --------- Net cash used in investing activities................. ....................... (2,01182,439) (6,500) (85,557) --------- (54,565) --------- (321) --------- (168,110) --------- 136,879 ----------- (1,743,140) ----------- sh flows from continuing financing activities: Net change in bank overdrafts and short-term borrowings... 6,860 15,067 5,975 Net proceeds from issuance CASH FLOWS FROM FINANCING ACTIVITIES Issuance of long-term debt.............. convertible subordinated debentures, net........ 104,806 -- 750,486 1,027,479 Cash flows from continuing operating activities: Ca Ca -- Payments of long-term debt................................ loan and capital lease and obligations.......... (30,11964) (662,565181) (87,166168) Net proceeds Proceeds from the issuance of 20.5 million common shares.................................................. tenant improvement loan....................... -- -- 410,001 Proceeds from 5,000 Issuance of common stock, net of issuance of stock through employee stock purchase plan and stock options......................... 11,488 11,698 9,622 Payment received from stockholder......................... 389 -- -- costs............. 1,545 36,716 71,282 --------- --------- --------- Net cash provided by (used in) financing activities... (11,382) 114,686 1,365,911 Effect of exchange rate fluctuations on cash and cash equivalents related to continuing operations.............. 1,333 (397) -- ................... 106,287 36,535 76,114 --------- --------- ----------- Cash flows from discontinued operations: Net cash provided by operating activities................. 63,302 19,502 26,144 Net cash used in investing activities..................... -- (105) (1,124) Net cash used in financing activities..................... (671) -- -- --------- --------- ----------- Net cash provided by discontinued operations.......... 62,631 19,397 25,020 --------- --------- ----------- Net increase (decrease) in cash and cash equivalents........ 111,192 106,540 8,514 10,812 (4,5284,464) Cash and cash equivalents, equivalents at beginning of periodyear.............. 200,057 93,517 98,045 24,916 14,104 18,568 --------- --------- ----------- --------- Cash and cash equivalents, equivalents at end of periodyear.................... $ 311,249 33,430 $ 200,057 24,916 $ 93,517 14,104 ========= ========= =========== Supplemental disclosures of cash flow information: Xxxx paid (received) during the period for: Interest................................................ $ 142,299 $ 144,345 $ 111,429 Income taxes............................................ $ (845) $ (642) $ 18,092 The See accompanying notes are in integral part of these financial statements 52 AMKOR TECHNOLOGYF-6 INHALE THERAPEUTIC SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSTATEMENTS DECEMBER 31, 1999 NOTE 1--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION AND BASIS OF PRESENTATION Inhale Therapeutic Systems, Inc. ("Inhale", the "Company") was incorporated in the State of California in July 1990 and reincorporated in the State of Delaware in July 1998. Since inception, Inhale has been engaged in the development of a system to deliver drugs to the bloodstream through the lungs by inhaling a powdered version of the drug. The system is applicable to a wide range of peptides, proteins and other molecules. Inhale expects increasing losses over the next several years as research and development and manufacturing scale-up efforts continue, and as Inhale expands its facilities for commercial manufacturing. Management plans to continue to finance Inhale primarily through issuances of equity or debt securities, research and development contract revenue, and in the longer term, revenue from product sales and royalties. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. CASH, CASH EQUIVALENTS AND INVESTMENTS Inhale considers all highly liquid investments with a maturity from date of purchase of three months or less to be cash equivalents. Cash and cash equivalents include demand deposits held in banks and interest bearing money market funds. All other liquid investments are classified as short-term investments. Short-term investments consist of federal and municipal government securities, repurchase agreements or corporate commercial paper with A1 or P1 short-term ratings and A or better long-term ratings with remaining maturities at date of purchase of greater than 90 days and less than one year. Inhale limits its concentration of risk by diversifying its investments among a variety of industries and issuers. Inhale has experienced no material losses on its investments. At December 31, 1999, all short-term investments are designated as available-for-sale and are carried at fair value, with material unrealized gains and losses, if any, reported in stockholders' equity. The amortized cost of securities is adjusted for amortization of material premiums and accretion of discounts to maturity. Such amortization, if any, is included in interest income. Realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities, if any, are included in interest income. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in interest income. INHALE THERAPEUTIC SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1999 NOTE 1--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The following is a summary of available-for-sale debt securities as of December 31, 1999: AVAILABLE-FOR-SALE DEBT SECURITIES ----------------------------------------------- GROSS GROSS UNREALIZED UNREALIZED ESTIMATED COST GAINS LOSSES FAIR VALUE -------- ---------- ---------- ---------- (IN THOUSANDS) Obligations of U.S. government agencies............. $ 81,692 $108 $ -- $ 81,800 U.S. corporate commercial paper..................... 41,081 33 -- 41,114 Repurchase agreements, secured by U.S. Government securities........................................ 3,845 -- -- 3,845 Other............................................... 7,872 -- -- 7,872 -------- ---- --------- -------- $134,490 $141 $ -- $134,631 ======== ==== ========= ======== Amounts included in cash and cash equivalents....... $ 29,822 $ 54 $ -- $ 29,876 Amounts included in short-term investments.......... 104,668 87 -- 104,755 -------- ---- --------- -------- $134,490 $141 $ -- $134,631 ======== ==== ========= ======== The following is a summary of available-for-sale debt securities as of December 31, 1998: AVAILABLE-FOR-SALE DEBT SECURITIES ----------------------------------------------- GROSS GROSS UNREALIZED UNREALIZED ESTIMATED COST GAINS LOSSES FAIR VALUE -------- ---------- ---------- ---------- (IN THOUSANDS) Obligations of U.S. government agencies $20,758 $ -- $ -- $ 20,758 U.S. corporate commercial paper 42,773 -- (19) 42,754 Repurchase agreements, secured by U.S. Government securities......................................... 17,704 -- -- 17,704 Other................................................ 105 -- -- 105 ------- --------- ---- -------- $81,340 $ -- $(19) $ 81,321 ======= ========= ==== ======== Amounts included in cash and cash equivalents........ $23,375 $ -- $ -- $ 23,375 Amounts included in short-term investments........... 57,965 -- (19) 57,946 ------- --------- ---- -------- $81,340 $ -- $(19) $ 81,321 ======= ========= ==== ======== The gross realized losses and gains on the sale of debt securities available-for-sale during the years ended December 31, 1999 and 1998 were not material. At December 31, 1999 and 1998, the average portfolio duration was approximately five months and three months, respectively, and the contractual maturity of any single investment did not exceed eleven months at December 31, 1999 and 1998. The estimated fair value amounts have been determined by Inhale using available market information and appropriate valuation methodologies. However, market data must be interpreted to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that Inhale could realize in a current market exchange. INHALE THERAPEUTIC SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1999 NOTE 1--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Inhale owns common stock in one technology company. These shares of Alliance Pharmaceutical Corp. ("Alliance") are accounted for as long-term available-for-sale securities. Due to restrictions on the sale of this stock, the Company carries that portion of its investment in Alliance that can be sold within one year at market value, with material unrealized gains and losses, if any, reported in stockholders' equity. That portion which cannot be sold within one year is carried at cost. PROPERTY AND EQUIPMENT Property and equipment consist of the following at December 31: 1999 1998 -------- -------- (IN THOUSANDS)