MagnaChip Reports First Quarter 2012 Financial Results

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 Stockholder s' 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 M onth s E nded
	March 31 , 20 12		March 31 , 20 11
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

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