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– Power Solutions Revenue Grew 14.6% Sequentially and 23.7% Year-over-Year
– Achieved GAAP EPS of $0.40 and Adjusted EPS of $0.17
– Expects Q2 Revenue to Increase 11% to 15% on a Sequential Basis

SEOUL, South Korea and CUPERTINO, Calif., April 25, 2012 /PRNewswire via COMTEX/ –MagnaChip Semiconductor Corporation (“MagnaChip”) (NYSE: MX), a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products, today announced financial results for the first quarter ended March 31, 2012.

(Logo: http://photos.prnewswire.com/prnh/20120305/NY61184LOGO )

Revenue for the first quarter of 2012 was $177.0 million, a 2.1% decrease compared to $180.8 million for the fourth quarter of 2011, and a 5.8% decrease compared to $187.9 million for the first quarter of 2011.

Gross profit was $49.9 million or 28.2%, as a percent of revenue, for the first quarter of 2012. This compares to gross profit of $51.5 million or 28.5 % for the fourth quarter of 2011 and $56.5 million or 30.1% for the first quarter of 2011.

“I am very pleased that since going public in March 2011, we have met our revenue and gross margin guidance each quarter for 5 consecutive quarters in what has been a very challenging period for the industry,” said Sang Park, MagnaChip’s Chairman and Chief Executive Officer. “As our Q2 guidance suggests, the first quarter of 2012 was indeed our bottom during this current semiconductor downturn. We have been seeing renewed customer order strength and wafer loading since early March as a result of increased demand from smartphone and tablet PC customers and expect this trend to continue into the second half of this year. In anticipation of this growing demand, we have allocated additional fab capacity to support expansion.”

Net income, on a GAAP basis, for the first quarter of 2012 totaled $15.3 million or $0.40 per diluted share. This compares to net income of $23.7 million or $0.61 per diluted share for the fourth quarter of 2011 and a net income of $22.5 million or $0.57 per diluted share for the first quarter of 2011. Net income was impacted primarily by a foreign currency gain of $11.1 million during the quarter which was primarily related to non-cash translation gains for intercompany balances that were denominated in U.S. dollars.

Adjusted net income, a non-GAAP measurement, for the first quarter of 2012 totaled $6.5 million or $0.17 per diluted share compared to $10.0 million or $0.26 per diluted share for the fourth quarter of 2011 and $15.7 million or $0.40 per diluted share for the first quarter of 2011.

Management believes that non-GAAP financial measures, when viewed in conjunction with GAAP results, can provide a more meaningful understanding of the factors and trends affecting MagnaChip’s business and operations. However, such non-GAAP financial measures have limitations and should not be considered as a substitute for net income or as a better indicator of our operating performance than measures that are presented in accordance with GAAP.

Combined cash balances (cash and cash equivalents plus restricted cash) totaled $160.6 million at the end of the first quarter of 2012, a decrease of $8.4 million from the end of the prior quarter. Cash provided from operations totaled approximately $39.9 million for the first quarter of 2012.

Revenue by Segment
In thousands of US dollars	Three Months Ended
	March 31, 2012	December 31, 2011	March 31, 2011
Semiconductor Manufacturing Services	$ 67,863	$ 67,973	$ 92,266
Display Solutions	83,225	90,045	74,464
Power Solutions	25,253	22,039	20,412
Other	661	769	779
Total Revenue	$ 177,002	$ 180,826	$ 187,921

First Quarter and Recent Company Highlights

 

• Power Solutions Revenue Grew 14.6% Sequentially and 23.7% Year-over-Year.
• Fab loading rate exceeded 90% in March 2012.
• Achieved GAAP EPS of $0.40 and Adjusted EPS of $0.17.
• Repurchased 1.04 Million Shares under MagnaChip’s Stock Repurchase Program Announced October 11, 2011.

Business Outlook For the second quarter of 2012, MagnaChip expects:

 

• Revenue will increase 11% to 15% ($197 million to $203 million) on a sequential basis.
• Gross Profit, as a percent of revenue, will be in the range of 29.5% to 30.5%.

Non-GAAP Metrics Adjusted EBITDA excludes charges related to depreciation and amortization, interest expense, net, income tax expense, stock-based compensation expense, foreign currency gain, net, derivative valuation loss (gain), net, and special expense for an IPO employee incentive payment. Adjusted net income (loss) excludes charges related to, stock-based compensation expense, amortization of intangible assets associated with continuing operations, foreign currency gain, net, derivative valuation loss (gain), net, and special expense for an IPO employee incentive payment. A reconciliation of GAAP results to non-GAAP results is included following the financial statements.

About MagnaChip Semiconductor Corporation Headquartered in South Korea, MagnaChip is a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products for high-volume consumer applications. MagnaChip believes it has one of the broadest and deepest ranges of analog and mixed-signal semiconductor platforms in the industry, supported by its 30-year operating history, a large portfolio of registered and pending patents, and extensive engineering and manufacturing process expertise. For more information, please visit www.magnachip.com. Information on or accessible through, MagnaChip’s website is not a part of, and is not incorporated into, this release.

Safe Harbor for Forward-Looking Statements Information in this release regarding MagnaChip’s forecasts, business outlook, expectations and beliefs are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. These statements include statements about our ability to capitalize on improving market dynamics and future operating and financial performance including second quarter 2012 revenue and gross profit. All forward-looking statements included in this release are based upon information available to MagnaChip as of the date of this release, which may change, and we assume no obligation to update any such forward-looking statements. These statements are not guarantees of future performance and actual results could differ materially from our current expectations. Factors that could cause or contribute to such differences include general economic conditions, the impact of competitive products and pricing, timely design acceptance by our customers, timely introduction of new products and technologies, ability to ramp new products into volume production, industry wide shifts in supply and demand for semiconductor products, industry and/or company overcapacity, effective and cost efficient utilization of manufacturing capacity, financial stability in foreign markets and the impact of foreign exchange rates, unanticipated costs and expenses or the inability to identify expenses which can be eliminated, compliance with U.S. and international trade and export laws and regulations by us and our distributors, and other risks detailed from time to time in MagnaChip’s filings with the SEC, including our Form 10-K filed on March 8, 2012 and subsequent registration statements, amendments or other reports that we may file from time to time with the SEC and/or make available on our website. MagnaChip assumes no obligation and does not intend to update the forward-looking statements provided, whether as a result of new information, future events or otherwise.

CONTACTS:
In the United States: Robert Pursel Director of Investor Relations Tel. 408-625-1262 robert.pursel@magnachip.com	In Korea: Chankeun Park Senior Manager, Public Relations Tel. +82-2-6903-3195 chankeun.park@magnachip.com

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands of US dollars, except share data) (Unaudited)
								Three Months Ended
								March 31, 2012					December 31, 2011								March 31, 2011
Net sales								$	177,002				$				180,826				$	187,921
Cost of sales									127,087								129,287					131,447
Gross profit									49,915								51,539					56,474
Gross profit %									28.2%								28.5%					30.1%
Selling, general and administrative expenses									18,209								17,627					15,401
Research and development expenses									19,831								18,652					18,498
Special expense for IPO incentive									—								—					12,146
Operating income									11,875								15,260					10,429
Other income (expense)
Interest expense, net									(5,580)								(5,644)					(7,111)
Foreign currency gain, net									11,109								16,832					21,359
Other									89								(862)					166
									5,618								10,326					14,414
Income before income taxes									17,493								25,586					24,843
Income tax expense									2,230								1,881					2,375
Net income								$	15,263				$				23,705				$	22,468
Earnings per common share :
– Basic								$	0.41				$				0.61				$	0.59
– Diluted								$	0.40				$				0.61				$	0.57
Weighted average number of shares–Basic									37,524,127								38,632,975					38,332,750
Weighted average number of shares–Diluted									38,298,336								39,110,759					39,570,522

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA AND ADJUSTED NET INCOME (In thousands of US dollars, except share data) (Unaudited)
	Three Months Ended
	March 31,			December 31,				March 31,
	2012			2011				2011
Net income	$	15,263		$	23,705			$	22,468
Adjustments:
Depreciation and amortization		7,474			8,856				13,903
Interest expense, net		5,580			5,644				7,111
Income tax expense		2,230			1,881				2,375
Stock-based compensation expense		458			287				641
Foreign currency gain, net		(11,109)			(16,832)				(21,359)
Derivative valuation loss (gain), net		(85)			862				(158)
Special expense for IPO incentive		—			—				12,146
Adjusted EBITDA	$	19,811		$	24,403			$	37,127
Adjusted EBITDA per common share:
– Diluted	$	0.52		$	0.62			$	0.94
Weighted average number of shares – Diluted		38,298,336			39,110,759				39,570,522
Net income	$	15,263		$	23,705			$	22,468
Adjustments:
Stock-based compensation expense		458			287				641
Amortization of intangibles		1,993			1,985				1,990
Foreign currency gain, net		(11,109)			(16,832)				(21,359)
Derivative valuation loss (gain), net		(85)			862				(158)
Special expense for IPO incentive		—			—				12,146
Adjusted net income	$	6,520		$	10,007			$	15,728
Adjusted net income per common share:
– Diluted	$	0.17		$	0.26			$	0.40
Weighted average number of shares – Diluted		38,298,336			39,110,759				39,570,522

We define Adjusted EBITDA as net income adjusted to exclude (i) depreciation and amortization, (ii) interest expense, net, (iii) income tax expense, (iv) stock-based compensation expense, (v) foreign currency gain, net, (vi) derivative valuation loss (gain), net, and (vii) special expense for IPO incentive.

We present Adjusted Net Income as a further supplemental measure of our performance. We prepare Adjusted Net Income by adjusting net income to eliminate the impact of a number of non-cash expenses and other items that may be either one time or recurring that we do not consider to be indicative of our core ongoing operating performance. We believe that Adjusted Net Income is particularly useful because it reflects the impact of our asset base and capital structure on our operating performance. We define Adjusted Net Income as net income adjusted to exclude (i) stock-based compensation expense, (ii) amortization of intangibles, (iii) foreign currency gain, net, (iv) derivative valuation loss (gain), net, and (v) special expense for IPO incentive.

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands of US dollars, except share data) (Unaudited)
		March 31, 2012			December 31, 2011
Assets
Current assets
Cash and cash equivalents		$	156,623		$	162,111
Restricted cash			3,934			6,830
Accounts receivable, net			127,332			125,922
Inventories, net			68,105			62,836
Other receivables			4,343			256
Prepaid expenses			8,112			6,032
Other current assets			5,578			15,909
Total current assets			374,027			379,896
Property, plant and equipment, net			206,206			182,663
Intangible assets, net			20,348			16,787
Long-term prepaid expenses			4,107			4,790
Other non-current assets			17,972			18,539
Total assets		$	622,660		$	602,675
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable		$	90,902		$	77,848
Other accounts payable			13,772			13,452
Accrued expenses			39,649			31,723
Current portion of capital lease obligations			1,458			2,852
Derivative liabilities			8,308			9,757
Other current liabilities			3,266			2,007
Total current liabilities			157,355			137,639
Long-term borrowings, net			201,452			201,389
Accrued severance benefits, net			94,352			90,755
Other non-current liabilities			5,596			6,222
Total liabilities			458,755			436,005
Commitments and contingencies
Stockholder’ equity
Common stock, $0.01 par value, 150,000,000 shares authorized, 39,457,063 shares issued and 36,880,879 outstanding at March 31, 2012 and 39,439,115 shares issued and 37,907,575 outstanding at December 31, 2011			394			394
Additional paid-in capital			99,495			98,929
Retained earnings			109,213			93,950
Treasury stock, 2,576,184 shares at March 31, 2012			(23,728)			(11,793)
Accumulated other comprehensive loss			(21,469)			(14,810)
Total stockholders’ equity			163,905			166,670
Total liabilities and stockholders’ equity		$	622,660		$	602,675

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of US dollars) (Unaudited)
											Three Months Ended
											March 31, 2012				March 31, 2011
Cash flows from operating activities
Net income											$	15,263			$	22,468
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization												7,474				13,903
Provision for severance benefits												4,703				2,854
Amortization of debt issuance costs and original issue discount												242				246
Gain on foreign currency translation, net												(12,824)				(23,684)
Gain on disposal of property, plant and equipment, net												(269)				—
Loss on disposal of intangible assets, net												11				4
Stock-based compensation												458				641
Other												123				549
Changes in operating assets and liabilities
Accounts receivable												1,339				(9,250)
Inventories												(2,860)				(3,467)
Other receivables												(4,024)				(1,041)
Other current assets												8,536				(1,449)
Deferred tax assets												871				548
Accounts payable												12,581				14,289
Other accounts payable												(298)				(1,348)
Accrued expenses												9,886				7,153
Other current liabilities												2,225				(1,518)
Payment of severance benefits												(2,323)				(1,610)
Other												(1,261)				(72)
Net cash provided by operating activities												39,853				19,216
Cash flows from investing activities
Decrease in restricted cash												2,995				—
Proceeds from disposal of plant, property and equipment												273				—
Purchase of plant, property and equipment												(24,758)				(6,779)
Payment for intellectual property registration												(190)				(165)
Payment for acquisition												(8,642)				—
Decrease in short-term financial instruments												173				—
Collection of guarantee deposits												31				979
Payment of guarantee deposits												(178)				(1,004)
Other												(48)				(44)
Net cash used in investing activities												(30,344)				(7,013)
Cash flows from financing activities
Proceeds from issuance of common stock												108				11,425
Repayment of obligation under capital lease												(1,510)				(1,562)
Acquisition of treasury stock												(11,935)				—
Net cash provided by (used in) financing activities												(13,337)				9,863
Effect of exchange rates on cash and cash equivalents												(1,660)				(59)
Net increase (decrease) in cash and cash equivalents												(5,488)				22,007
Cash and cash equivalents
Beginning of the period												162,111				172,172
End of the period											$	156,623			$	194,179

SOURCE MagnaChip Semiconductor Corporation