MagnaChip Reports Third Quarter 2011 Financial Results

SEOUL, South Korea and CUPERTINO, Calif., Oct. 26, 2011 /PRNewswire/ -- MagnaChip Semiconductor Corporation (NYSE: MX), a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products, today announced financial results for the third quarter ended September 30, 2011.

Revenue for the third quarter of 2011 was $200.4 million, a 1.6% decrease compared to $203.7 million for the second quarter of 2011, and a 4.3% decrease compared to $209.4 million for the third quarter of 2010.

Gross profit was $60.1 million or 30.0%, as a percent of revenue, for the third quarter of 2011. This compares to gross profit of 66.2 million or 32.5 % for the second quarter of 2011 and $69.3 million or 33.1% for the third quarter of 2010.

"Despite continued weakness in the global semiconductor market, we managed to deliver results consistent with our original guidance while growing Power Solutions 11% sequentially and 48% year-over-year," said Sang Park, MagnaChip's Chairman and Chief Executive Officer. "While many of our peers reduced their outlook as the quarter progressed, we delivered on our initial expectations based on the strength of our blue-chip customer relationships, diverse product portfolio and growing Power and Display Solutions businesses. Having a strategy that capitalizes on the strength of our Foundry, Display and Power products better positions us for growth as the macro environment begins its recovery."

Net loss, on a GAAP basis, for the third quarter of 2011 totaled $56.0 million or $1.43 per diluted share. This compares to net income of $31.6 million or $0.78 per diluted share for the second quarter of 2011 and a net income of $61.5 million or $1.57 per diluted share for the third quarter of 2010. Net loss was primarily impacted by a non-cash foreign currency translation loss of $68.1 million due to the appreciation of the US dollar against the Korean won associated with intercompany balances.

Adjusted net income, a non-GAAP measurement, for the third quarter of 2011 totaled $18.2 million or $0.46 per diluted share compared to $22.5 million or $0.56 per diluted share for the second quarter of 2011 and $26.2 million or $0.67 per diluted share for the third quarter of 2010.

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 Semiconductor Corporation'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 $168.7 million at the end of the third quarter of 2011, a decrease of $9.1 million from the end of the prior quarter primarily due to a cash payment of $12.1 million related to the $11.3 million repurchase of senior notes during the quarter. Cash provided from operations totaled approximately $18.7 million for the third quarter of 2011.

Third Quarter and Recent Company Highlights

• Reduced the Aggregate Principal Amount of the Company's Outstanding 10.500% Senior Notes from $215.0M to $203.7M by Repurchasing and Retiring $11.3M of Principal.
• Announced $35 Million Common Stock Repurchase Program.
• Began Supplying AMOLED Display Drivers for Samsung's Galaxy S2 LTE Smartphone.
• Shipped Pre-Production Samples of AC LED Lighting Drivers to a Leading Korean LED Manufacturer.
• Delivered IGBT Engineering Samples to Several Key Asian and Western Power Customers.

Non-GAAP Metrics

Adjusted EBITDA excludes charges related to depreciation and amortization, interest expense, net, income tax expense, restructuring and impairment charges, stock-based compensation expense, foreign currency loss (gain), net, derivative valuation loss (gain), net, and loss on early extinguishment of senior notes. Adjusted net income (loss) excludes charges related to restructuring and impairment, stock-based compensation expense, amortization of intangible assets associated with continuing operations, foreign currency loss (gain), net, derivative valuation loss (gain), net, and loss on early extinguishment of senior notes. A reconciliation of GAAP results to non-GAAP results is included following the financial statements below.

About MagnaChip Semiconductor Corporation

Headquartered in South Korea, MagnaChip Semiconductor Corporation is a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products for high-volume consumer applications. MagnaChip Semiconductor 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 Semiconductor'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 Semiconductor Corporation'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 fourth quarter 2011 revenue. All forward-looking statements included in this release are based upon information available to MagnaChip Semiconductor 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 Semiconductor Corporation's filings with the SEC, including our Form 10-K filed on March 18, 2011 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 Semiconductor Corporation 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.

We define Adjusted EBITDA as net income (loss) adjusted to exclude (i) depreciation and amortization (ii) interest expense, net, (iii) income tax expense, (iv) restructuring and impairment charges (v) stock-based compensation expense, (vi) foreign currency loss (gain), net, (vii) derivative valuation loss (gain), net, and (viii) loss on early extinguishment of senior notes.

We present Adjusted Net Income as a further supplemental measure of our performance. We prepare Adjusted Net Income by adjusting net income(loss) 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 (loss) adjusted to exclude (i) restructuring and impairment charges, (ii) stock-based compensation expense, (iii) amortization of intangible assets associated with continuing operations, (iv) foreign currency loss (gain), net, (v) derivative valuation loss (gain), net, and (vi) loss on early extinguishment of senior notes.

SOURCE MagnaChip Semiconductor Corporation