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MagnaChip Semiconductor Reports First Quarter Results

SEOUL, South Korea, April 24 /PRNewswire/ -- MagnaChip Semiconductor today announced results for the first quarter ended March 30, 2008.

Revenue for the three months ended March 30, 2008 was $203.1 million, compared to $151.8 million in the first quarter of 2007.

Gross margin was $47.9 million or 23.6% of revenue for the quarter ended March 30, 2008, compared to $14.9 million or 9.8% of revenue for the first quarter of 2007.

Operating expenses for the first quarter of 2008 were $54.7 million or 26.9% of revenue, compared to $57.8 million or 38.1% of revenue for the first quarter of 2007.

Operating loss was $6.8 million during the current quarter, compared to an operating loss of $42.9 million in the prior year quarter.

Net interest expense for the first quarter of 2008 was $15.7 million, compared to $14.4 million in the first quarter of 2007.

Net loss for the three months ended March 30, 2008 was $67.9 million, compared to a net loss of $67.0 million in the first quarter of 2007. The net loss results were negatively impacted by a foreign currency loss of $42.9 million in the first quarter of 2008, compared to a foreign currency loss of $7.4 million in the first quarter of 2007. A substantial portion of this net foreign currency loss resulted from a non-cash translation loss recorded for intercompany borrowings at our Korea subsidiary that are denominated in U.S. dollars.

Sang Park, Chairman and CEO of MagnaChip Semiconductor, commented, "We continued to make progress in 2008 vs. 2007, with an increase in revenues of 33.8% vs. the first quarter of 2007. During the quarter, we began sampling our new line of power management products as part of an overall strategy to leverage our analog and mixed signal technology platform to expand our market opportunities. We expanded our image solutions business to new end markets and increased our account penetration in our display solutions business. In our Semiconductor Manufacturing Services business, we strengthened our specialty technology portfolio and achieved a design win at a recognized leader in the microcontroller market. Our product pipeline is strong, and our design win activity is at an all-time high as we enter into the second quarter."

Robert Krakauer, President and CFO of MagnaChip Semiconductor, said, "We continued to make progress in the first quarter of 2008. Our gross margin and operating profit improved year over year, as we focused on maintaining our cost competitiveness. Though some of our markets are slower than expected, we believe we are well-positioned for continued performance improvement throughout 2008."

Investor Conference Call / Webcast Details

MagnaChip will report full results for the first quarter 2008 on Thursday, April 24, 2008 at 10:00 a.m. in New York (11:00 p.m., Thursday, April 24, 2008 in Seoul). The conference call will be available at www.magnachip.com and by telephone at +1-(877) 407-0784 (domestic) or +1-(201) 689-8560 (International). A replay of the call will be available in two hours after the call through midnight on Thursday, May 1, 2008 in New York (1 p.m. on Friday, May 2, 2008 in Seoul) at www.magnachip.com and by telephone at +1-(201) 612-7415. The account number to access the replay is 3055 and the conference ID number is 279852, respectively.

About MagnaChip Semiconductor

Headquartered in Seoul, South Korea, MagnaChip Semiconductor is a leading, Asia-based designer and manufacturer of analog and mixed-signal semiconductor products for high volume consumer applications, such as mobile phones, digital televisions, flat panel displays, notebook computers, mobile multimedia devices and digital cameras. The Company has a broad range of analog and mixed-signal semiconductor technology, supported by its 28-year operating history, large portfolio of registered and pending patents and extensive engineering and manufacturing process expertise. For more information, visit www.magnachip.com.

Forward-Looking Statements:

Certain statements contained in this press release contain forward-looking statements regarding MagnaChip Semiconductor's operations, economic performance and financial condition. Although MagnaChip Semiconductor believes that the expectations reflected in these statements are reasonable, no assurance can be given that such expectations will prove to have been correct as a result of many factors, including those described in our annual report on Form 10-K for the year ended December 31, 2007, which was filed with the Securities and Exchange Commission on March 31, 2008.


     CONTACT:

     In Korea:                           In the U.S.:
     Mi-Jeong Han, PR Manager            Joseph Villalta at The Ruth Group
     Tel: 82-2-6903-3195                 Tel: +646-536-7003
     mj.han@magnachip.com                jvillalta@theruthgroup.com



                           MagnaChip Semiconductor
               Condensed Consolidated Statements of Operations
             (In thousands of U.S. Dollars, except per unit data)
                                 (Unaudited)

                                                       Three Months Ended
                                                     March 30,      April 1,
                                                       2008           2007

    Net sales                                        $203,052       $151,783

    Cost of sales                                     155,186        136,860

    Gross profit                                       47,866         14,923

    Operating expenses:
      Selling, general and administrative              19,224         22,729
      Research and development                         36,347         35,118
      Restructuring and impairment charges               (875)             -

    Operating loss                                     (6,830)       (42,924)

Other income (expenses):

     Interest expenses, net                           (15,695)       (14,416)
     Foreign currency loss, net                       (42,864)        (7,391)

    Loss before income taxes                          (65,389)       (64,731)
    Income tax expenses                                 2,508          2,251
    Net loss                                         $(67,897)      $(66,982)

    Dividends accrued on preferred units                3,118          2,870
    Net loss attributable to common units            $(71,015)      $(69,852)

Net loss per common unit

    Basic and Diluted                                  $(1.35)        $(1.32)

Common units used in per common unit

calculation: Basic and Diluted

     (in thousands)                                    52,580         52,721

Key Ratios & Information:

    Gross Margin                                         23.6%           9.8%
    Operating Expenses as a % of Revenue                 26.9%          38.1%
    Operating Margin                                     (3.4)%        (28.3)%

    Depreciation & Amortization Expense                21,277         43,942

    Capital Expenditures                               10,070          8,348


MagnaChip Semiconductor

   Reconciliation of US GAAP Gross Profit, Operating Income (Loss) and Net
                               Income (Loss) to

   Non-US GAAP Gross Profit, Operating Income (Loss) and Net Income (Loss)
                         (In thousands of US Dollars)
                                 (Unaudited)

Use of Non-US GAAP Financial Information

To supplement our condensed consolidated financial statements presented on a US GAAP basis, MagnaChip Semiconductor uses non-US GAAP measures of gross profit, operating income (loss) and net income (loss), that are US GAAP gross profit, operating income (loss) and net income (loss) adjusted to exclude certain costs, expenses or gains, referred to as special items. Non-US GAAP adjusted gross profit; operating income (loss) and net income (loss) measure give an indication of our baseline performance before other charges that are considered by management to be outside of our core operating results. In addition, our non-US GAAP adjusted measure of gross profit, operating income (loss) and net income (loss) are among the primary indicators management uses as a basis for our planning and forecasting of future periods. The presentation of this additional information should not be considered in isolation or as a substitute for gross profit, operating income (loss) and net income (loss) prepared in accordance with generally accepted accounting principles in the United States of America.



                           Three Months Ended         Three Months Ended
                             March 30, 2008              April 1, 2007

                                Operat-                     Operat-
                        Gross    ing       Net      Gross     ing      Net
                       Profit   Income    Income   Profit   Income    Income
                                (Loss)    (Loss)            (Loss)    (Loss)

    US GAAP Amounts  $47,866  $(6,830)  $(67,897) $14,923 $(42,924) $(66,982)

    Special items
     (1) Restructuring
      and impairment
      charges              -     (875)      (875)       -         -        -


    Non-US GAAP
     Profit          $47,866  $(7,705)  $(68,772) $14,923 $(42,924) $(66,982)

    Adjusted Gross
     Margin                                 23.6%                        9.8%
    Adjusted Operating
     Expense - % of
     Revenue                                27.4%                       38.1%
    Adjusted Operating
     Margin                                 (3.8%)                     (28.3%)

Non-US GAAP adjusted condensed consolidated statements of operations are intended to present the Company's operating results, excluding special items. The special items excluded for the three months ended March 30, 2008 are as follows:

     (1) Unused restructuring charges recorded in the second quarter 2007
         under SFAS 144



                           MagnaChip Semiconductor
                    Condensed Consolidated Balance Sheets
                         (In thousands of US Dollars)
                                 (Unaudited)
                                                  March 30,    December 31,
                                                    2008          2007
    Assets
    Current assets
      Cash and cash equivalents                    $53,476       $64,345
      Accounts receivable, net                     147,275       123,789
      Inventories, net                              64,925        75,867
      Other current assets                          24,796        16,722
                   Total current assets            290,472       280,723

    Property, plant and equipment, net             260,978       279,669
    Goodwill and intangible assets, net             92,522       104,725
    Other non-current assets                        49,971        42,766
                   Total assets                   $693,943      $707,883

    Liabilities & Unitholders' Equity
    Current liabilities
      Accounts and other payable                  $143,392      $120,638
      Short-term borrowings                         80,000        80,000
      Other current liabilities                     28,924        24,477
                  Total current liabilities        252,316       225,115

    Long-term borrowings                           750,000       750,000
    Other non-current liabilities                   86,994        80,842
                  Total liabilities              1,089,310     1,055,957

    Redeemable convertible preferred units         132,523       129,405

    Unitholders' equity                           (527,890)     (477,479)

    Total liabilities, redeemable convertible
     preferred units and unitholders' equity      $693,943      $707,883



                              MagnaChip Semiconductor
                  Condensed Consolidated Statements of Cash Flows
                           (In thousands of US Dollars)
                                   (Unaudited)
                                                    Three Months Ended
                                                 March 30,       April 1,
                                                    2008           2007
      Cash flows from operating activities
      Net loss                                   $(67,897)      $(66,982)
      Adjustments to reconcile net loss
       to net cash provided by (used in)
       operating activities
        Depreciation and amortization              21,277         43,942
        Provision for severance benefits            3,734          4,182
        Gain(loss) on foreign currency             43,276          7,849
         translation, net
        Changes in accounts and other
         receivable                               (24,708)        (4,667)
        Changes in inventories                      7,072        (12,183)
        Changes in accounts and other
         payable                                   16,089         (2,996)
        Changes in accrued expenses                 6,563         11,410
        Other                                      (8,912)          (753)
           Net cash used in operating
            activities                             (3,506)       (20,198)

      Cash flows from investing activities
        Capital expenditures                      (10,070)        (8,348)
        Other                                       3,373           (538)
           Net cash used in investing
            activities                             (6,697)        (8,886)

      Cash flows from financing activities
        Exercise of unit options                       28              -

        Repurchase of common units                    (68)             -
        Proceeds from short-term
         borrowings                                90,000              -
        Repayment of short-term borrowings        (90,000)             -
          Net cash used in financing
           activities                                 (40)             -
          Effect of exchange rates on cash
           and cash equivalents                      (626)          (825)
          Net increase decrease in cash and
           cash equivalents                       (10,869)       (29,909)

      Cash and cash equivalents
      Beginning of the period                      64,345         89,173
      End of the period                           $53,476        $59,264

Web site: http://www.magnachip.com//