
18.	Commitments and Contingencies

We 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 of December 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. Such standby letters of credit are used in the ordinary course of our business and are collateralized by our cash balances.

We generally warrant that our services will be performed in a professional and workmanlike manner and in compliance with our customers’ specifications. We accrue costs for known warranty issues. Historically, our warranty costs have been immaterial.

Legal Proceedings

We are involved in claims and legal proceedings and may become involved in other legal matters arising in the ordinary course of our business. We evaluate these claims and legal matters on a case-by-case basis to make a determination as to the impact, if any, on our business, liquidity, results of operations, financial condition or cash flows. We believe that the ultimate outcome of these claims and proceedings, individually and in the aggregate, will not have a material adverse impact to us. Our evaluation of the potential impact of these claims and legal proceedings on our business, liquidity, results of operations, financial condition or cash flows could change in the future.

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 royalties under 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 and 2011, 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 Appeal Board 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. In October 2014, the Superior Court for San Francisco County formally confirmed the arbitration panel's award and entered judgment against Amkor for $128 million 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 continuing through the fourth quarter of 2018, and the parties agreed to a mutual release and dismissal of all claims relating to their pending litigation and arbitration proceedings, including the previously awarded judgment of $128 million plus interest. The settlement agreement also provides that Tessera and Amkor will look 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 previously reserved. 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 rate that reflects the estimated rate at which we could obtain financing with similar terms. The remaining amount of the gross settlement charge of $18.1 million will 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 term nature of the obligation and related payment terms. The current portion is recorded in accrued expenses (Note 13) and the non-current portion is recorded in other non-current liabilities in our consolidated financial statements.

Leases

Future 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	$	13,116
2016	7,792
2017	6,336
2018	6,029
2019	6,194
Thereafter	12,624
Total	$	52,091

Rent 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 under these contracts for the period 2015 through 2025 are $19.4 million.