MagnaChip Reports Fourth Quarter and Full Year 2011 Financial

MagnaChip Reports Fourth Quarter and Full Year 2011 Financial Results

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) the increase in cost of sales resulting from the fresh-start accounting inventory step-up, (vi) stock-based compensation expense, (vii) foreign currency loss (gain), net, (viii) derivative valuation loss, net, (ix) Special expense for IPO incentive, and (x) 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) the increase in cost of sales resulting from the fresh-start accounting inventory step-up, (iii) stock-based compensation expense, (iv) amortization of intangibles, (v) foreign currency loss (gain), net, (vi) derivative valuation loss, net, (vii) Special expense for IPO incentive and (viii) loss on early extinguishment of senior notes.



MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands of US dollars, except share data) (Unaudited)
	December 31, 2011		December 31, 2010
Assets
Current assets
Cash and cash equivalents	$	162,111	$	172,172
Restricted cash		6,830		—
Accounts receivable, net		125,922		119,054
Inventories, net		62,836		68,435
Other receivables		256		2,919
Prepaid expenses		6,032		8,207
Other current assets		15,909		18,920

Total current assets		379,896		389,707

Property, plant and equipment, net		182,663		179,012
Intangible assets, net		16,787		27,538
Long-term prepaid expenses		4,790		8,235
Other non-current assets		18,539		21,252

Total assets	$	602,675	$	625,744

Liabilities and Stockholder s' Equity
Current liabilities
Accounts payable	$	77,848	$	58,264
Other accounts payable		13,452		14,645
Accrued expenses		31,723		32,635
Current portion of capital lease obligations		2,852		5,557
Other current liabilities		11,764		5,048

Total current liabilities		137,639		116,149

Long-term borrowings , net		201,389		246,882
Long-term o bligation s under capital lease		—		3,105
Accrued severance benefits, net		90,755		87,778
Other non-current liabilities		6,222		8,979

Total liabilities		436,005		462,893

Commitments and contingencies

Stockholder ' equity
Common stock , $0.01 par value , 150 ,000,000 shares authorized, 39,439,115 shares issued and 37,907,575 outstanding at December 31, 2011 and 38,401,989 shares issued and outstanding at December 31, 20 10		394		384
Additional paid-in capital		98,929		95,585
Retained earnings		93,950		72,157
Treasury stock		(11,793)		—
Accumulated other comprehensive loss		(14,810)		(5,275)

Total stockholders ' equity		166,670		162,851

Total liabilities and stockholders ' equity	$	602,675	$	625,744



MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (I n thousands of US dollars) (Unaudited)
	Three Months Ended		Year E nded
	December 31 , 20 1 1		December 31 , 20 1 1		December 31 , 20 10
Cash flows from operating activities
Net income	$	23,705	$	21,793	$	74,120
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		8,856		51,224		58,395
Provision for severance benefits		1,561		14,698		19,684
Amortization of debt issuance costs and original issue discount		242		970		925
Loss (gain) on foreign currency translation, net		(18,080)		15,140		(17,084)
Loss (gain) on disposal of property, plant and equipment, net		(107)		(122)		39
Loss on disposal of intangible assets, net		8		25		13
Restructuring and impairment charges		(1,597)		2,499		2,003
Stock -based compensation		287		2,085		5,239
Cash used for reorganization items		—		—		1,573
Loss on early extinguishment of senior notes		—		5,459		—
Other		1,030		1,682		4,177
Changes in operating assets and liabilities
Accounts receivable		(1,834)		(6,234)		(41,370)
Inventories		8,674		4,274		(3,172)
Other receivables		1,821		2,657		297
Other current assets		(1,885)		(5,081)		2,997
Deferred tax assets		(71)		1,412		1,543
Accounts payable		3,012		18,084		(5,049)
Other accounts payable		9,396		16,553		8,483
Accrued expenses		(10,743)		(29,021)		3,992
Other current liabilities		(1,841)		(3,050)		962
Payment of severance benefits		(3,929)		(10,478)		(6,673)
Other		(179)		(38)		(3,129)

Net cash provided by operating activities before reorganization items		18,326		104,531		107,965

Cash used for reorganization items		—		—		(1,573)

Net cash provided by operating activities		18,326		104,531		106,392

Cash flows from investing activities
Decrease (increase) in restricted cash		2,512		(7,199)		—
Proceeds from disposal of plant, property and equipment		190		219		10
Purchase of plant, property and equipment		(5,228)		(48,173)		(43,616)
Payment for intellectual property registration		(175)		(696)		(553)
Decrease in short-term financial instruments		—		—		329
Collection of g uarantee deposits		567		1,544		1,198
Payment of guarantee deposits		—		(2,482)		(1,090)
Other		254		(371)		(6)

Net cash used in investing activities		(1,880)		(57,158)		(43,728)

Cash flows from financing activities
Proceeds from i ssuance of common stock		501		9,336		—
Proceeds from issuance of senior notes		—		—		246,685
Debt issuance costs paid		—		—		(8,313)
Distribution to stockholders		—		—		(130,689)
Repayment of long-term borrowings		—		—		(61,750)
Repurchase of senior notes		—		(50,307)		—
Repayment of obligation s under capital lease		(1,481)		(6,312)		(3,476)
Acquisition of treasury stock		(11,793)		(11,793)		—

Net cash provided by (used in) financing activities		(12,773)		(59,076)		42,457
Effect of exchange rates on cash and cash equivalents		(1,030)		1,642		2,126

Net increase (de crease ) in cash and cash equivalents		2,643		(10,061)		107,247

Cash and cash equivalents
Beginning of the period		159,468		172,172		64,925

End of the period	$	162,111	$	162,111	$	172,172

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