MagnaChip Semiconductor Reports Second Quarter Results

SEOUL, South Korea, July 18 /PRNewswire/ -- MagnaChip Semiconductor today announced results for the second quarter ended June 29, 2008.

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 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 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

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.


    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      

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

                                                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)

                                                                                              June  29,                December  31,
                                                                                                  2008                            2007
          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)

                                                                                                        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


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