Revenue for the three months ended June 29, 2008 was $194.7 million, compared to $194.1 million in the second quarter of 2007.
Sang Park, Chairman and CEO of MagnaChip Semiconductor, commented, "Despite challenging market conditions in Q2, revenue came in at $194.7 million, a slight increase as compared to the second quarter of 2007. We achieved this result even though demand was lower than expected as our customers tightened their inventory control due to the current uncertain economic environment. We recorded our first revenues in our power solutions business, which we launched less than one year ago. In our display and imaging solutions business we continued to launch new products, such as display driver ICs for mid-sized panels, and in our SMS business, we added new accounts and specialty technologies. Overall, we are confident with our progress and trajectory as we enter the second half of 2008."
Gross margin was $49.2 million or 25.2% of revenue for the quarter ended June 29, 2008, compared to $27.8 million or 14.3% of revenue for the second quarter of 2007.
Operating expenses for the second quarter of 2008 were $58.5 million or 30.1% of revenue, compared to $70.1 million or 36.1% of revenue for the second quarter of 2007 which included $13.4 million special charges. Excluding special charges, operating expenses for the second quarter of 2007 were $56.8 million or 29.3% of revenue.
Operating loss was $9.4 million during the second quarter, compared to an operating loss of $42.4 million in the prior year quarter.
Net interest expense for the second quarter of 2008 was $15.8 million, compared to $15.0 million in the second quarter of 2007.
Net loss for the three months ended June 29, 2008 was $59.6 million, compared to a net loss of $45.3 million in the second quarter of 2007. The net loss results were negatively impacted by a foreign currency loss of $31.1 million in the second quarter of 2008, compared to a foreign currency gain of $13.9 million in the second 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.
Robert Krakauer, President and CFO of MagnaChip Semiconductor, said, "We continued to make progress in the second quarter of 2008. In spite of the tough environment, we recorded a gross margin of over 25%, and we remain focused on improving profitability as a corporate priority. Though our markets continue to be slower than expected, we believe our new products and customer relationships position us well for performance improvement throughout 2008."
Investor Conference Call / Webcast Details
MagnaChip will report full results for the second quarter 2008 on Friday, July 18, 2008 at 10:00 a.m. in New York (11:00 p.m., Friday, July 18, 2008 in Seoul). The conference call will be available at www.magnachip.com and by telephone at +1-201-689-8560. A replay of the call will be available in two hours after the call through 11:59 pm on Thursday, July 24, 2008 in New York (1 p.m. on Friday, July 25, 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 289147, 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 29-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
June 29, July 1,
2008 2007
Net sales $ 194,676 $ 194,053
Cost of sales 145,522 166,299
Gross profit 49,154 27,754
Operating expenses:
Selling, general and administrative 23,010 25,531
Research and development 35,494 32,534
Restructuring and impairment charges - 12,084
Operating loss (9,350) (42,395)
Other income (expenses):
Interest expenses, net (15,816) (14,952)
Foreign currency gain (loss), net (31,149) 13,868
Loss before income taxes (56,315) (43,479)
Income tax expenses 3,278 1,845
Net loss $ (59,593) $ (45,324)
Dividends accrued on preferred units 3,281 2,983
Net loss attributable to common units $ (62,874) $ (48,307)
Net loss per common unit
Basic and Diluted $ (1.19) $ (0.92)
Common units used in per common unit
calculation: Basic and Diluted
(in thousands) 52,737 52,773
Key Ratios & Information:
Gross Margin 25.2% 14.3%
Operating Expenses as a % of Revenue 30.1% 36.1%
Operating Margin (4.8%) (21.8%)
Depreciation & Amortization Expense 20,605 46,032
Capital Expenditures 11,121 16,612
MagnaChip Semiconductor
Condensed Consolidated Balance Sheets
(In thousands of US Dollars)
(Unaudited)
June 29, December 31,
2008 2007
Assets
Current assets
Cash and cash equivalents $ 36,503 $ 64,345
Accounts receivable, net 149,212 123,789
Inventories, net 63,532 75,867
Other current assets 22,938 16,722
Total current assets 272,185 280,723
Property, plant and equipment, net 246,239 279,669
Goodwill and intangible assets, net 82,079 104,725
Other non-current assets 44,780 42,766
Total assets $ 645,283 $ 707,883
Liabilities & Unitholders' Equity
Current liabilities
Accounts and other payable $ 142,332 $ 120,638
Short-term borrowings 85,000 80,000
Other current liabilities 24,030 24,477
Total current liabilities 251,362 225,115
Long-term borrowings 750,000 750,000
Other non-current liabilities 83,568 80,842
Total liabilities 1,084,930 1,055,957
Redeemable convertible preferred units 135,804 129,405
Unitholders' equity (575,451) (477,479)
Total liabilities, redeemable convertible
preferred units and unitholders' equity $ 645,283 $ 707,883
MagnaChip Semiconductor
Condensed Consolidated Statements of Cash Flows
(In thousands of US Dollars)
(Unaudited)
Six Months Ended
June 29, July 1,
2008 2007
Cash flows from operating activities
Net loss $(127,490) $(112,306)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation and amortization 41,882 89,974
Provision for severance benefits 6,890 9,379
(Gain) loss on foreign currency
translation, net 73,078 (6,326)
Impairment of long-term assets - 10,106
Changes in accounts and other
receivable (37,012) (40,853)
Changes in inventories 5,142 (13,237)
Changes in accounts and other payable 24,822 10,722
Changes in accrued expenses 3,658 392
Other (5,900) 2,182
Net cash used in operating activities (14,930) (49,967)
Cash flows from investing activities
Capital expenditures (21,191) (24,960)
Other 3,256 834
Net cash used in investing activities (17,935) (24,126)
Cash flows from financing activities
Exercise of unit options 172 80
Repurchase of common units (496) -
Proceeds from short-term borrowings 155,000 40,000
Repayment of short-term borrowings (150,000) -
Net cash provided by financing activities 4,676 40,080
Effect of exchange rates on cash
and cash equivalents 347 (426)
Net decrease in cash and cash equivalents (27,842) (34,439)
Cash and cash equivalents
Beginning of the period 64,345 89,173
End of the period $ 36,503 $ 54,734
Web site: http://www.magnachip.com/