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Amkor Technology Reports Financial Results for the Third Quarter 2012

  Amkor Technology Reports Financial Results for the Third Quarter 2012

Third Quarter 2012

  *Net sales $695 million
  *Gross margin 17%
  *Net income $22 million
  *Earnings per diluted share $0.11

Business Wire

CHANDLER, Ariz. -- October 25, 2012

Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of semiconductor
packaging and test services, today announced financial results for the third
quarter ended September 30, 2012, with net sales of $695million, net income
of $22million, and earnings per diluted share of $0.11.

"Solid demand for wireless communications in both packaging and test was the
key driver of our business in the third quarter," said Ken Joyce, Amkor's
president and chief executive officer. "Lower than anticipated supply of 28
nanometer wafers in the early part of the quarter and the overall weakness in
the semiconductor market and general economy constrained our growth."

Selected financial information for the third quarter 2012, is as follows:

  *Net Sales: $695million, up 1% from $687million in the prior quarter, and
    down 6% from $740million in the third quarter of 2011
  *Gross Margin: 17%, compared to adjusted gross margin of 17% in the prior
    quarter, and 17% in the third quarter of 2011
  *Net Income: $22million, down from adjusted net income of $33million in
    the prior quarter, and down from $27million in the third quarter of 2011
  *Earnings Per Diluted Share: $0.11, down from adjusted earnings per diluted
    share of $0.15 in the prior quarter, and flat with $0.11 in the third
    quarter of 2011

The adjusted gross margin, adjusted net income and adjusted earnings per
diluted share presented above for the second quarter 2012 are non-GAAP
measures. Selected operating data for the third quarter 2012, and a
reconciliation of the second quarter 2012 non-GAAP measures presented above to
the comparable GAAP measures, are included in a section below before the
financial statements.

“Capital additions were $173 million during the third quarter, primarily in
support of customers in smartphones and tablets,” said Joanne Solomon, Amkor's
executive vice president and chief financial officer. "We accelerated the
purchase of some 28 nanometer test equipment to meet the ramp in demand for
communications at the end of the quarter. Capital additions for the year are
expected to remain around $500 million as we continue to support the growing
demand for communications in the fourth quarter and beyond."

Amkor's Board of Directors previously authorized $300 million for the
repurchase of our common stock. During the third quarter 2012 the company
repurchased 8.3 million shares at a purchase price of $41.8 million, for a
total of 45.0 million shares at a purchase price of $208.4 million since the
program commenced.

“We took advantage of favorable conditions in the capital markets to refinance
certain debt of our subsidiaries,” continued Solomon. “Our new 10-year note
extends our maturities and mitigates future refinancing and liquidity risks.”

Cash and cash equivalents were $549 million, and net debt was $1.1 billion, at
September 30, 2012.

Business Outlook

Based upon currently available information, we have the following expectations
for the fourth quarter 2012:

  *Net sales of $675 million to $725 million, down 3% to up 4% from the prior
    quarter
  *Gross margin of 16% to 19%
  *Net income of $11million to $35million, or $0.07 to $0.16 per diluted
    share
  *Capital additions of around $50 million for the fourth quarter, and around
    $500 million for the full year (excluding $100 million for the acquisition
    of land relating to our previously announced new factory and R&D center in
    Incheon, South Korea)

“We expect solid growth in wireless communications in the fourth quarter of
2012 as our investment in this market continues to gain momentum,” noted
Joyce. “The anticipated growth in communications during the quarter is
expected to offset the general softening in demand we see in the other end
markets due to the weak and uncertain macroeconomic environment and the normal
seasonal decline in gaming."

Conference Call Information

Amkor will conduct a conference call on Thursday, October 25, 2012, at 5:00
p.m. Eastern Time. This call may include material information not included in
this press release. This call is being webcast and can be accessed at Amkor's
website: www.amkor.com. You may also access the call by dialing 1-877-941-8631
or 1-480-629-9723. A replay of the call will be made available at Amkor's
website or by dialing 1-800-406-7325 or 1-303-590-3030 (access pass code
#4568999). The webcast is also being distributed over Thomson Reuters'
Investor Distribution Network to both institutional and individual investors.
Individual investors can listen to the call through Thomson Reuters'
individual investor center at www.companyboardroom.com or by visiting any of
the investor sites in Thomson Reuters' Individual Investor Network.
Institutional investors can access the call via Thomson Reuters'
password-protected event management site, Street Events
(www.streetevents.com).

About Amkor

Amkor is a leading provider of semiconductor packaging and test services to
semiconductor companies and electronics OEMs. More information about Amkor is
available from the company's filings with the Securities and Exchange
Commission and on Amkor's website: www.amkor.com.

Forward-Looking Statement Disclaimer

This press release contains forward-looking statements within the meaning of
federal securities laws. All statements other than statements of historical
fact are considered forward-looking statements including, without limitation,
statements regarding our expectations for 2012 capital expenditures, growing
demand for smartphones and tablets, the impact of our new 10-year note on
future liquidity and all of the statements made under "Business Outlook"
above. These forward-looking statements involve a number of risks,
uncertainties, assumptions and other factors that could affect future results
and cause actual results and events to differ materially from historical and
expected results and those expressed or implied in the forward-looking
statements, including, but not limited to, the following:

  *the highly unpredictable nature and costs of litigation and other legal
    activities and the risk of adverse results of such matters, including the
    final ruling in the Tessera arbitration and the impact of other
    proceedings involving Tessera, Inc.;
  *the highly unpredictable nature of the semiconductor industry;
  *the effect of the global economy on credit markets, financial
    institutions, customers, suppliers and consumers, including the
    increasingly uncertain macroeconomic environment;
  *timing and volume of orders relative to production capacity and inability
    to achieve high capacity utilization rates;
  *volatility of consumer demand and weakness in forecasts from our customers
    for products incorporating our semiconductor packages;
  *dependence on key customers;
  *the performance of our business, economic and market conditions, the cash
    needs and investment opportunities for the business, the need for
    additional capacity and facilities to service customer demand and the
    availability of cash flow from operations or financing;
  *the supply of 28 nanometer wafers;
  *customer modification of and follow through with respect to forecasts
    provided to us, including delays in forecasts with respect to smartphones
    and tablets;
  *changes in tax rates and taxes as a result of changes in tax law, the
    jurisdictions in which our income is determined to be earned and taxed,
    the outcome of tax audits and tax ruling requests, our ability to realize
    deferred tax assets and the expiration of tax holidays;
  *curtailment of outsourcing by our customers;
  *our substantial indebtedness and restrictive covenants;
  *failure to realize sufficient cash flow or access to other sources of
    liquidity to fund capital additions;
  *the effects of a recession or other downturn in the U.S. and other
    economies worldwide;
  *disruptions or deficiencies in our controls resulting from the
    implementation of our new enterprise resource planning system;
  *worldwide economic effects of terrorist attacks, natural disasters and
    military conflict;
  *our ability to control costs and improve profitability;
  *competition, competitive pricing and declines in average selling prices;
  *fluctuations in manufacturing yields;
  *dependence on international operations and sales;
  *dependence on raw material and equipment suppliers and changes in raw
    material and precious metal costs;
  *exchange rate fluctuations;
  *dependence on key personnel;
  *difficulties in managing growth;
  *enforcement of and compliance with intellectual property rights;
  *environmental and other governmental regulations; and
  *technological challenges.

Other important risk factors that could affect the outcome of the events set
forth in these statements and that could affect our operating results and
financial condition are discussed in the company's Annual Report on Form 10-K
for the year ended December31, 2011 and in the company's subsequent filings
with the Securities and Exchange Commission made prior to or after the date
hereof. Amkor undertakes no obligation to review or update any forward-looking
statements to reflect events or circumstances occurring after the date of this
press release.


AMKOR TECHNOLOGY, INC.
Selected Operating Data
                                                                 
                                             Q3 2012     Q2 2012     Q3 2011
Sales Data (prior periods were revised for
a refinement of our classifications):
Packaging services (in millions):
Chip scale package                           $ 235       $ 244       $ 247
Leadframe                                    171         176         179
Ball grid array                              148         137         190
Other packaging                              62         54         52    
Packaging services                           616         611         668
Test services                                79         76         72    
Total sales                                  $ 695      $ 687      $ 740 
                                                                             
Packaging services:
Chip scale package                           34      %   35      %   33      %
Leadframe                                    25      %   26      %   24      %
Ball grid array                              21      %   20      %   26      %
Other packaging                              9      %   8      %   7      %
Packaging services                           89      %   89      %   90      %
Test services                                11     %   11     %   10     %
Total sales                                  100    %   100    %   100    %
                                                                             
Packaged units (in millions):
Chip scale package                           603         480         461
Leadframe                                    1,499       1,589       1,511
Ball grid array                              47          45          57
Other packaging                              51         11         28    
Total packaged units                         2,200      2,125      2,057 
                                                                             
Net sales from top ten customers             62      %   64      %   63      %
                                                                             
Capacity Utilization
Packaging                                    76      %   79      %   79      %
Test                                         77      %   80      %   76      %
                                                                             
End Market Distribution Data (an
approximation including representative
devices and applications based on a
sampling of our largest customers):
Communications (cell phones, tablets,        44      %   45      %   40      %
wireless LAN, handheld devices)
Consumer (gaming, television, set top        24      %   23      %   27      %
boxes, portable media, digital cameras)
Computing (PCs, laptops, hard disk drives,   11      %   12      %   12      %
servers, displays, printers, peripherals)
Networking (network servers, routers,        12      %   11      %   12      %
switches)
Other (auto, industrial)                     9      %   9      %   9      %
Total                                        100    %   100    %   100    %
                                                                             
Gross Margin Data:
Net sales                                    100     %   100     %   100     %
Cost of sales:
Materials                                    43      %   43      %   45      %
Labor                                        15      %   15      %   15      %
Other manufacturing                          25      %   25      %   23      %
Loss contingency accrual                     —      %  4      %   —      %
Gross margin                                 17     %   13     %   17     %

                                         Q3 2012       Q2 2012   Q3 2011
                                          (In millions, except per share data)
Capital Investment Data:
Property, plant and equipment additions   $  173          $ 149       $ 123
Net change in related accounts payable    (25      )      (38   )     (23    )
and deposits
Purchases of property, plant and          $  148         $ 111      $ 100  
equipment
Depreciation and amortization             $  94           $ 91        $ 83
                                                                      
Free Cash Flow Data:
Net cash provided by operating            $  142          $ 86        $ 142
activities
Less purchases of property, plant and     (148     )      (111  )     (100   )
equipment
Free cash flow*                           $  (6    )      $ (25 )     $ 42   
                                                                      
Earnings per Share Data:
Net income attributable to Amkor -        $  22           $ 1         $ 27
basic
                                                                      
Adjustment for dilutive securities on
net income:
Interest on 6.0% convertible notes due    4              —          4      
2014, net of tax
Net income attributable to Amkor -        $  26          $ 1        $ 31   
diluted
                                                                      
Weighted average shares outstanding -     154             166         195
basic**
Effect of dilutive securities:
6.0% convertible notes due 2014           83             —          83     
Weighted average shares outstanding -     237            166        278    
diluted
                                                                      
Net income attributable to Amkor per
common share:
Basic                                     $  0.14        $ —        $ 0.14 
Diluted                                   $  0.11        $ —        $ 0.11 

*We define free cash flow as net cash provided by operating activities less
purchases of property, plant and equipment. Free cash flow is not defined by
U.S. generally accepted accounting principles ("U.S. GAAP"). We believe free
cash flow to be relevant and useful information to our investors because it
provides them with additional information in assessing our liquidity, capital
resources and financial operating results. Our management uses free cash flow
in evaluating our liquidity, our ability to service debt and our ability to
fund capital additions. However, free cash flow has certain limitations,
including that it does not represent the residual cash flow available for
discretionary expenditures since other, non-discretionary expenditures, such
as mandatory debt service, are not deducted from the measure. The amount of
mandatory versus discretionary expenditures can vary significantly between
periods. This measure should be considered in addition to, 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 cash provided
by operating activities. Furthermore, our definition of free cash flow may not
be comparable to similarly titled measures reported by other companies.

**Amkor's Board of Directors previously authorized $300 million for the
repurchase of our common stock. During the third quarter, we repurchased 8.4
million shares of common stock for a purchase price of $41.8 million. As of
September 30, 2012, we had repurchased a total of 45.0 million shares under
the stock repurchase program for a purchase price of $208.4 million.

In the press release above we provide adjusted gross margin, adjusted net
income and adjusted earnings per diluted share for the second quarter 2012. We
present these non-GAAP amounts to demonstrate the impact of the loss
contingency accrual for the second quarter 2012. However, these measures have
limitations, including that they exclude the accrual for the Tessera
arbitration panel award, which is an amount that the company may ultimately
have to pay in cash. Furthermore, the factors affecting the calculation of the
arbitration award are complex and subject to determination by the arbitration
panel. Therefore, the final amount of the loss may be more than the amount of
the current accrual. Accordingly, these measures that exclude the loss
contingency accrual should be considered in addition to, and not as a
substitute for, or superior to, gross margin, net income and earnings per
diluted share prepared in accordance with U.S. GAAP. Below is the
reconciliation of adjusted gross margin, adjusted net income and adjusted
earnings per diluted share to U.S. GAAP gross margin, net income and earnings
per diluted share.

Non-GAAP Financial Measures Reconciliation:               
                                                               Q2 2012
Gross margin                                                   13            %
Plus: Loss contingency accrual divided by net sales            4            %
Adjusted gross margin                                          17           %
                                                                             
                                                               Q2 2012
                                                               (In millions)
Net income                                                     $   1
Plus: Loss contingency accrual, net of tax                     32         
Adjusted net income                                            $   33     
                                                                             
                                                               Q2 2012
Earnings per diluted share                                     $   —
Plus: Loss contingency accrual per diluted share               0.13
Plus: Adjustment for dilutive effect of interest on            0.02       
6.0% convertible notes due 2014, net of tax
Adjusted earnings per diluted share                            $   0.15   


AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
                                                       
                                                                 
                    For the Three Months Ended   For the Nine Months Ended
                    September 30,                September 30,
                    2012           2011          2012            2011
                    (In thousands, except per share data)
Net sales           $  695,353     $ 740,007     $ 2,036,890     $ 2,092,590
Cost of sales       578,566       617,768      1,725,802      1,713,848   
Gross profit        116,787        122,239       311,088         378,742
Operating
expenses:
Selling, general
and                 49,297         65,011        160,041         190,853
administrative
Research and        13,472        13,233       40,764         37,921      
development
Total operating     62,769        78,244       200,805        228,774     
expenses
Operating income    54,018        43,995       110,283        149,968     
Other expense
(income):
Interest expense    19,689         17,594        60,727          55,992
Interest expense,   3,493          3,492         10,477          8,902
related party
Interest income     (772       )   (648      )   (2,489      )   (1,788      )
Foreign currency    2,394          (3,005    )   4,461           1,658
loss (gain)
Loss on debt        —              —             —               15,531
retirement, net
Equity in
earnings of         (2,541     )   (3,034    )   (5,421      )   (6,641      )
unconsolidated
affiliate
Other income, net   (359       )   (226      )   (1,511      )   (695        )
Total other         21,904        14,173       66,244         72,959      
expense, net
Income before       32,114         29,822        44,039          77,009
income taxes
Income tax          9,538         2,499        9,009          9,475       
expense
Net income          22,576         27,323        35,030          67,534
Net (income) loss
attributable to     (259       )   44           (358        )   (576        )
noncontrolling
interests
Net income
attributable to     $  22,317     $ 27,367     $ 34,672       $ 66,958    
Amkor
                                                                 
Net income
attributable to
Amkor per common
share:
Basic               $  0.14       $ 0.14       $ 0.21         $ 0.34      
Diluted             $  0.11       $ 0.11       $ 0.19         $ 0.28      
                                                                 
Shares used in
computing per
common share
amounts:
Basic               154,365        195,364       162,699         195,510
Diluted             237,060        278,068       245,431         278,529


AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
                                                September 30,  December 31,
                                                 2012            2011
                                                 (In thousands)
ASSETS
Current assets:
Cash and cash equivalents                        $ 549,085       $ 434,631
Restricted cash                                  2,680           2,680
Accounts receivable:
Trade, net of allowances                         359,318         298,543
Other                                            14,550          27,197
Inventories                                      218,343         198,427
Other current assets                             38,965         35,352      
Total current assets                             1,182,941       996,830
Property, plant and equipment, net               1,832,387       1,656,214
Intangibles, net                                 5,490           8,382
Investments                                      42,324          36,707
Restricted cash                                  2,264           4,001
Other assets                                     78,151         70,913      
Total assets                                     $ 3,143,557    $ 2,773,047 
                                                                 
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings and current portion of     $ 40,475        $ 59,395
long-term debt
Trade accounts payable                           500,170         424,504
Accrued expenses                                 197,798        158,287     
Total current liabilities                        738,443         642,186
Long-term debt                                   1,361,665       1,062,256
Long-term debt, related party                    225,000         225,000
Pension and severance obligations                141,062         129,096
Other non-current liabilities                    17,561         13,288      
Total liabilities                                2,483,731      2,071,826   
Equity:
Amkor stockholders' equity:
Preferred stock                                  —               —
Common stock                                     198             197
Additional paid-in capital                       1,613,471       1,611,242
Accumulated deficit                              (763,790    )   (798,462    )
Accumulated other comprehensive income           12,555          10,849
Treasury stock                                   (210,921    )   (130,560    )
Total Amkor stockholders' equity                 651,513         693,266
Noncontrolling interests in subsidiaries         8,313          7,955       
Total equity                                     659,826        701,221     
Total liabilities and equity                     $ 3,143,557    $ 2,773,047 


AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
                                                    For the Nine Months Ended
                                                     September 30,
                                                     2012         2011
                                                     (In thousands)
Cash flows from operating activities:
Net income                                           $ 35,030      $ 67,534
Depreciation and amortization                        272,891       249,543
Loss on debt retirement, net                         —             10,557
Other operating activities and non-cash items        (724      )   1,537
Changes in assets and liabilities                    (22,761   )   46,621    
Net cash provided by operating activities            284,436      375,792   
                                                                   
Cash flows from investing activities:
Purchases of property, plant and equipment           (380,344  )   (324,349  )
Proceeds from the sale of property, plant and        3,759         15,333
equipment
Financing lease payment from unconsolidated          13,684        7,741
affiliate
Other investing activities                           1,451        (5,654    )
Net cash used in investing activities                (361,450  )   (306,929  )
                                                                   
Cash flows from financing activities:
Borrowings under short-term debt                     30,000        26,567
Payments of short-term debt                          (40,000   )   (21,567   )
Proceeds from issuance of long-term debt             562,528       348,236
Proceeds from issuance of long-term debt, related    —             75,000
party
Payments of long-term debt                           (272,976  )   (373,655  )
Payments for debt issuance costs                     (6,007    )   (5,875    )
Payments for repurchase of common stock              (80,946   )   (41,543   )
Proceeds from the issuance of stock through          181           933
share-based compensation plans
Payments of tax withholding for restricted shares    (546      )   (793      )
Net cash provided by financing activities            192,234      7,303     
                                                                   
Effect of exchange rate fluctuations on cash and     (766      )   2,226     
cash equivalents
                                                                   
Net increase in cash and cash equivalents            114,454       78,392
Cash and cash equivalents, beginning of period       434,631      404,998   
Cash and cash equivalents, end of period             $ 549,085    $ 483,390 

Contact:

Amkor Technology, Inc.
Joanne Solomon
Executive Vice President & Chief Financial Officer
480-786-7878
joanne.solomon@amkor.com
Greg Johnson
Senior Director, Corporate Communications
480-786-7594
greg.johnson@amkor.com