MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA AND ADJUSTED NET INCOME (LOSS)
(In thousands of US dollars, except share data)
(Unaudited)

Three Months Ended

Year Ended

December 31,

2017

September 30,

2017

December 31,

2016

December 31,

2017

December 31,

2016

Net income (loss)

$

43,653

$

5,604

$

(49,790)

$

84,936

$

(29,615)

Adjustments:

Interest expense, net

5,149

5,193

3,987

20,505

15,983

Income tax expenses (benefits)

(1,173)

937

1,899

1,155

3,744

Depreciation and amortization

7,457

7,158

6,625

28,146

25,416

EBITDA

55,086

18,892

(37,279)

134,742

15,528

Restructuring and other charges (gain), net

—

—

—

(17,010)

(5,526)

Early termination charges

—

—

—

13,369

4,240

Equity-based compensation expense

722

435

877

2,336

3,843

Foreign currency loss (gain), net

(39,297)

3,662

49,627

(65,516)

15,360

Derivative valuation loss (gain), net

(436)

370

273

(236)

272

Restatement related expenses

4,319

828

597

10,306

6,970

Secondary offering expenses

154

515

—

669

—

Adjusted EBITDA

$

20,548

$

24,702

$

14,095

$

78,660

$

40,687

Net income (loss)

$

43,653

$

5,604

$

(49,790)

$

84,936

$

(29,615)

Adjustments:

Restructuring and other charges (gain), net

—

—

—

(17,010)

(5,526)

Early termination charges

—

—

—

13,369

4,240

Equity-based compensation expense

722

435

877

2,336

3,843

Foreign currency loss (gain), net

(39,297)

3,662

49,627

(65,516)

15,360

Derivative valuation loss (gain), net

(436)

370

273

(236)

272

Restatement related expenses

4,319

828

597

10,306

6,970

Secondary offering expenses

154

515

—

669

—

Adjusted Net Income (Loss)

$

9,115

$

11,414

$

1,584

$

28,854

$

(4,456)

Adjusted Net Income (Loss) per common share:

- Basic

$

0.27

$

0.33

$

0.05

$

0.85

$

(0.13)

- Diluted

$

0.23

$

0.28

$

0.04

$

0.76

$

(0.13)

Weighted average number of shares – Basic

34,176,812

34,103,029

35,068,330

33,943,264

34,833,967

Weighted average number of shares – Diluted

45,573,889

45,542,418

35,503,993

44,755,137

34,833,967

We present Adjusted EBITDA and Adjusted Net Income (Loss) as supplemental measures of our performance. We define Adjusted EBITDA for the periods indicated as EBITDA (as defined below), adjusted to exclude (i) restructuring and other charges (gain), net, (ii) early termination charges, (iii) equity-based compensation expense, (iv) foreign currency loss (gain), net, (v) derivative valuation loss (gain), net, (vi) restatement related expenses and (vii) secondary offering expenses. EBITDA for the periods indicated is defined as net income (loss) before interest expense, net, income tax expenses (benefits) and depreciation and amortization. We prepare Adjusted Net Income (Loss) 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 (Loss) is particularly useful because it reflects the impact of our asset base and capital structure on our operating performance. We define Adjusted Net Income (Loss) for the periods as net income (loss), adjusted to exclude (i) restructuring and other charges (gain), net, (ii) early termination charges, (iii) equity-based compensation expense, (iv) foreign currency loss (gain), net, (v) derivative valuation loss (gain), net, (vi) restatement related expenses and (vii) secondary offering expenses.