MAGNACHIP SEMICONDUCTOR CORPORATION 
By SEOUL, South Korea and CUPERTINO, Calif., Jan. 30, 2013 /PRNewswire/ -- MagnaChip Semiconductor Corporation ("MagnaChip") (NYSE: MX), a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products, today announced financial results for the quarter and year ended December 31, 2012.
(Logo: http://photos.prnewswire.com/prnh/20120305/NY61184LOGO )
Revenue for the fourth quarter of 2012 was $218.1 million, a 1.7% decrease compared to $221.9 million for the third quarter of 2012, and a 20.6% increase compared to $180.8 million for the fourth quarter of 2011. For the full year 2012, revenue was $819.6 million compared to $772.8 million for 2011, a 6.1% increase.
Gross margin was $74.3 million or 34.1%, as a percent of revenue, for the fourth quarter of 2012. This compares to gross profit of $76.4 million or 34.5 % for the third quarter of 2012 and $51.5 million or 28.5% for the fourth quarter of 2011. For the full year 2012, gross profit was $263.5 million or 32.2% compared to $234.3 million or 30.3% for 2011.
Net income, on a GAAP basis, for the fourth quarter of 2012 totaled $125.3 million or $3.38 per diluted share. This compares to net income of $48.4 million or $1.30 per diluted share for the third quarter of 2012 and a net income of $23.7 million or $0.61 per diluted share for the fourth quarter of 2011. For the full year 2012, net income was $193.3 million or $5.16 per diluted share compared to $21.8 million or $0.55 per diluted share for 2011. Net income for 2012 was impacted primarily by a gross margin of $263.5 million compared to $234.3 million for 2011, recognition of deferred tax assets of $64.7 million in 2012, and a foreign currency gain of $56.0 million compared to a foreign currency loss of $11.6 million for 2011, which was primarily related to non-cash foreign currency translation for intercompany balances that were denominated in U.S. dollars.
"I am very pleased that we ended 2012 with revenue of $819.6 million dollars, up 6.1% from 2011 and outpacing the semiconductor industry, which declined 3.0% this year. While the macro environment remained weak, we have successfully aligned with the growing smartphone and tablet PC market, leveraged our strong relationships with blue chip customers, and delivered 30% more new products in 2012 from the previous year," said Sang Park, MagnaChip Chairman and CEO. "I believe that this will help differentiate us from our competitors and allow us to perform better than the market in 2013. Compared to the same quarter last year, Q4 revenue and gross margin maintained better momentum due to a successful mix shift of products and customers and improved utilization from our mixed business model. Our revenue and margin performance this quarter represents our eighth consecutive quarter of meeting or exceeding guidance."
Adjusted net income, a non-GAAP measurement, for the fourth quarter of 2012 totaled $28.7 million or $0.77 per diluted share compared to $30.4 million or $0.81 per diluted share for the third quarter of 2012 and $10.0 million or $0.26 per diluted share for the fourth quarter of 2011. For the full year 2012, adjusted net income was $83.5 million or $2.23 per diluted share compared to $66.4 million or $1.67 per diluted share for 2011.
Management believes that non-GAAP financial measures, when viewed in conjunction with GAAP results, can provide a more meaningful understanding of the factors and trends affecting MagnaChip's business and operations. However, such non-GAAP financial measures have limitations and should not be considered as a substitute for net income or as a better indicator of our operating performance than measures that are presented in accordance with GAAP.
Combined cash balances (cash and cash equivalents plus restricted cash) totaled $182.4 million at the end of the fourth quarter of 2012, an increase of $16.6 million from the end of the prior quarter. Cash provided from operations totaled approximately $31.5 million for the fourth quarter of 2012.
Revenue by Segment
In thousands of US
dollars Three Months Ended Year Ended
December 31, 2012 September 30, 2012 December 31, December 31, 2012 December 31,
2011 2011
Semiconductor
Manufacturing
Services $112,654 $117,978 $67,973 $389,812 $338,268
Display Solutions 72,806 69,415 90,045 302,230 338,995
Power Solutions 31,949 33,849 22,039 124,750 92,547
Other 675 630 769 2,800 3,021
Total Revenue $218,084 $221,872 $180,826 $819,592 $772,831
Fourth Quarter and Recent Company Highlights
-- Power Solutions 2012 Revenue Grew 34.8% for the Full Year.
-- AMOLED 2012 Revenue from Smartphones Grew 47.0% for the Full Year.
-- Eighth Consecutive Quarter of Achieving Financial Guidance.
-- Repurchased 406 Thousand Shares in Q4 under MagnaChip's 2011 Stock
Repurchase Program.
Business Outlook
For the first quarter of 2013, MagnaChip expects:
-- Revenue will be in the range of $201 million to $209 million.
-- Gross margin will be 31.0% to 33.0% as a percent of revenue.
Non-GAAP Metrics
Adjusted EBITDA excludes charges related to depreciation and amortization, interest expense, net, income tax expense (benefit), restructuring and impairment charges, stock-based compensation expense, foreign currency loss (gain), net, derivative valuation loss (gain), net, secondary offering and others, special expense for an IPO employee incentive payment, and loss on early extinguishment of senior notes. Adjusted net income excludes charges related to restructuring and impairment, stock-based compensation expense, amortization of intangible assets associated with continuing operations, foreign currency loss (gain), net, derivative valuation loss (gain), net, secondary offering and others, GAAP and cash tax expense difference, special expense for an IPO employee incentive payment, and loss on early extinguishment of senior notes. A reconciliation of GAAP results to non-GAAP results is included following the financial statements.
Conference Call
MagnaChip will hold a conference call at 2 p.m. PST today to discuss the fourth quarter 2012 financial results. The conference call will be webcast live and is also available by dialing 1-866-776-2061 in the U.S. or 1-706-679-0298 for all other locations. The conference ID number is 86473379 and participants are encouraged to initiate their calls at least 10 minutes in advance of the 2 p.m. PST start time to ensure a timely connection. The webcast and earnings release will be accessible at www.magnachip.com.
A replay of the conference call will be available the same day and will run for 72 hours. The replay access numbers are 1-855-859-2056 or 1-404-537-3406. The access code is 86473379.
About MagnaChip Semiconductor Corporation
Headquartered in South Korea, MagnaChip is a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products for high-volume consumer applications. MagnaChip believes it has one of the broadest and deepest ranges of analog and mixed-signal semiconductor platforms in the industry, supported by its 30-year operating history, a large portfolio of registered and pending patents, and extensive engineering and manufacturing process expertise. For more information, please visit www.magnachip.com. Information on or accessible through, MagnaChip's website is not a part of, and is not incorporated into, this release.
Safe Harbor for Forward-Looking Statements
Information in this release regarding MagnaChip's forecasts, business outlook, expectations and beliefs are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. These statements include statements about our ability to capitalize on improving market dynamics and future operating and financial performance including first quarter 2013 revenue and gross margin. All forward-looking statements included in this release are based upon information available to MagnaChip Semiconductor as of the date of this release, which may change, and we assume no obligation to update any such forward-looking statements. These statements are not guarantees of future performance and actual results could differ materially from our current expectations. Factors that could cause or contribute to such differences include general economic conditions, the impact of competitive products and pricing, timely design acceptance by our customers, timely introduction of new products and technologies, ability to ramp new products into volume production, industry wide shifts in supply and demand for semiconductor products, industry and/or company overcapacity, effective and cost efficient utilization of manufacturing capacity, financial stability in foreign markets and the impact of foreign exchange rates, unanticipated costs and expenses or the inability to identify expenses which can be eliminated, compliance with U.S. and international trade and export laws and regulations by us and our distributors, and other risks detailed from time to time in MagnaChip's filings with the SEC, including our Form 10-K filed on March 8, 2012 and subsequent registration statements, amendments or other reports that we may file from time to time with the SEC and/or make available on our website. MagnaChip assumes no obligation and does not intend to update the forward-looking statements provided, whether as a result of new information, future events or otherwise.
CONTACTS:
In the United States: In Korea:
Robert Pursel Chankeun Park
Director of Investor Relations Senior Manager, Public Relations
Tel. +1-408-625-1262 Tel. +82-2-6903-3195
robert.pursel@magnachip.com chankeun.park@magnachip.com
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of US dollars, except share data)
(Unaudited)
Three Months Ended Year Ended
------------------
December 31, September 30, December 31, December 31, December 31,
2012 2012 2011 2012 2011
---- ---- ---- ---- ----
Net sales $218,084 $221,872 $180,826 $819,592 $772,831
Cost of sales 143,796 145,432 129,287 556,091 538,515
------- ------- ------- ------- -------
Gross profit 74,288 76,440 51,539 263,501 234,316
------ ------ ------ ------- -------
Gross profit % 34.1% 34.5% 28.5% 32.2% 30.3%
Selling, general and administrative expenses 19,281 21,388 17,627 78,971 68,367
Research and development expenses 19,660 19,470 18,652 78,723 76,767
Restructuring and impairment charges - - - - 4,096
Special expense for IPO incentive - - - - 12,146
--- ---
Operating income 35,347 35,582 15,260 105,807 72,940
Other income (expenses)
Interest expense, net (5,655) (5,746) (5,644) (22,600) (24,984)
Foreign currency gain (loss), net 33,656 21,782 16,832 55,961 (11,633)
Loss on early extinguishment of senior notes - - - - (5,459)
Other 634 695 (862) 2,119 (1,052)
--- --- ---- ----- ------
28,635 16,731 10,326 35,480 (43,128)
------ ------ ------ ------ -------
Income before income taxes 63,982 52,313 25,586 141,287 29,812
------ ------ ------ ------- ------
Income tax expense (benefit) (61,304) 3,901 1,881 (52,014) 8,019
------- ----- ----- ------- -----
Net income $125,286 $48,412 $23,705 $193,301 $21,793
======== ======= ======= ======== =======
Earnings per common share :
- Basic $3.50 $1.34 $0.61 $5.29 $0.56
- Diluted $3.38 $1.30 $0.61 $5.16 $0.55
===== ===== ===== ===== =====
Weighted average number of shares-Basic 35,845,367 36,199,655 38,632,975 36,567,684 38,775,642
Weighted average number of shares-Diluted 37,074,657 37,324,787 39,110,759 37,496,965 39,774,898
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA AND ADJUSTED NETINCOME
(In thousands of US dollars, except share data)
(Unaudited)
Three Months Ended Year Ended
------------------
December 31, September 30, December 31, December 31, December 31,
2012 2012 2011 2012 2011
---- ---- ---- ---- ----
Net income $125,286 $48,412 $23,705 $193,301 $21,793
Adjustments:
Depreciation and amortization 8,550 8,443 8,856 32,390 51,224
Interest expense, net 5,655 5,746 5,644 22,600 24,984
Income tax expense (benefit) (61,304) 3,901 1,881 (52,014) 8,019
Restructuring and impairment charges - - - - 4,096
Stock-based compensation expense 546 535 287 1,996 2,085
Foreign currency loss (gain), net (33,656) (21,782) (16,832) (55,961) 11,633
Derivative valuation loss (gain), net (634) (695) 862 (2,115) 1,059
Secondary offering and others - 2,119 - 3,335 -
Special expense for IPO incentive - - - - 12,146
Loss on early extinguishment of senior notes - - - - 5,459
--- --- --- --- -----
Adjusted EBITDA $44,443 $46,679 $24,403 $143,532 $142,498
======= ======= ======= ======== ========
Adjusted EBITDA per common share:
- Diluted $1.20 $1.25 $0.62 $3.83 $3.58
Weighted average number of shares - Diluted 37,074,657 37,324,787 39,110,759 37,496,965 39,774,898
Net income $125,286 $48,412 $23,705 $193,301 $21,793
Adjustments:
Restructuring and impairment charges - - - - 4,096
Stock-based compensation expense 546 535 287 1,996 2,085
Amortization of intangibles 1,893 1,829 1,985 7,695 8,147
Foreign currency loss (gain), net (33,656) (21,782) (16,832) (55,961) 11,633
Derivative valuation loss (gain), net (634) (695) 862 (2,115) 1,059
Secondary offering and others - 2,119 - 3,335 -
GAAP and cash tax expense difference (64,749) - - (64,749) -
Special expense for IPO incentive - - - - 12,146
Loss on early extinguishment of senior notes - - - - 5,459
--- --- --- --- -----
Adjusted net income $28,686 $30,418 $10,007 $83,502 $66,418
======= ======= ======= ======= =======
Adjusted net income per common share:
- Diluted $0.77 $0.81 $0.26 $2.23 $1.67
Weighted average number of shares - Diluted 37,074,657 37,324,787 39,110,759 37,496,965 39,774,898
We define Adjusted EBITDA as net income adjusted to exclude (i) depreciation and amortization, (ii) interest expense, net, (iii) income tax expense (benefit), (iv) restructuring and impairment charges, (v) stock-based compensation expense, (vi) foreign currency loss (gain), net, (vii) derivative valuation loss (gain), net, (viii) secondary offering and others, (ix) Special expense for IPO incentive, and (x) loss on early extinguishment of senior notes.
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) restructuring and impairment charges, (ii) stock-based compensation expense, (iii) amortization of intangibles, (iv) foreign currency loss (gain), net, (v) derivative valuation loss (gain), net, (vi) secondary offering and others, (vii) GAAP and cash tax expense difference, (viii) Special expense for IPO incentive, and (ix) loss on early extinguishment of senior notes.
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of US dollars, except share data)
(Unaudited)
December 31, December 31,
2012 2011
---- ----
Assets
Current assets
Cash and cash equivalents $182,238 $162,111
Restricted cash 133 6,830
Accounts receivable, net 143,331 125,922
Inventories, net 89,363 62,836
Other receivables 1,429 256
Prepaid expenses 7,884 6,032
Current deferred income tax assets 22,768 3,406
Other current assets 9,680 12,503
----- ------
Total current assets 456,826 379,896
------- -------
Property, plant and equipment, net 238,256 182,663
Intangible assets, net 15,260 16,787
Long-term prepaid expenses 18,048 4,790
Deferred income tax assets 46,710 3,537
Other non-current assets 14,866 15,002
------ ------
Total assets $789,966 $602,675
======== ========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $79,236 $77,848
Other accounts payable 15,600 13,452
Accrued expenses 43,486 31,723
Current portion of capital lease obligations - 2,852
Derivative liabilities - 9,757
Other current liabilities 9,973 2,007
----- -----
Total current liabilities 148,295 137,639
Long-term borrowings, net 201,653 201,389
Accrued severance benefits, net 112,446 90,755
Other non-current liabilities 17,263 6,222
------ -----
Total liabilities 479,657 436,005
------- -------
Stockholders' equity
Common stock, $0.01 par value, 150,000,000 shares
authorized, 39,599,374 shares issued and
35,635,357 shares outstanding at December 31,
2012 and 39,439,115 shares issued and 37,907,575
shares outstanding at December 31, 2011 396 394
Additional paid-in capital 101,885 98,929
Retained earnings 287,251 93,950
Treasury stock, 3,964,017 shares at December 31,
2012 and 1,531,540 shares at December 31, 2011 (39,918) (11,793)
Accumulated other comprehensive loss (39,305) (14,810)
------- -------
Total stockholders' equity 310,309 166,670
======= =======
Total liabilities and stockholders' equity $789,966 $602,675
======== ========
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of US dollars)
(Unaudited)
Three Months Ended Year Ended
------------------ ----------
December 31, December 31, December 31,
2012 2012 2011
---- ---- ----
Cash flow from operating activities
Net income $125,286 $193,301 $21,793
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization 8,550 32,390 51,224
Provision for severance benefits 4,158 20,937 14,698
Amortization of debt issuance costs and original issue discount 256 1,009 970
Loss (gain) on foreign currency translation, net (38,263) (63,567) 15,140
Loss (gain) on disposal of property, plant and equipment, net 2 (172) (122)
Loss on disposal of intangible assets, net 1 27 25
Restructuring and impairment charges - - 2,499
Stock-based compensation 546 1,996 2,085
Loss on early extinguishment of senior notes - - 5,459
Other (138) (470) 1,682
Changes in operating assets and liabilities
Accounts receivable 10,634 (7,534) (6,234)
Inventories (10,540) (19,066) 4,274
Other receivables 1,329 (458) 2,657
Other current assets 11,606 10,944 (5,081)
Deferred tax assets (64,257) (62,743) 1,412
Accounts payable (19,310) (1,838) 18,084
Other accounts payable (8,485) (9,185) (6,891)
Accrued expenses 10,651 24,412 (5,577)
Other current liabilities 2,407 11,857 (3,050)
Payment of severance benefits (1,428) (6,997) (10,478)
Other (1,501) (3,740) (38)
------
Net cash provided by operating activities 31,504 121,103 104,531
------ ------- -------
Cash flow from investing activities
Decrease (increase) in restricted cash 9 6,783 (7,199)
Proceeds from disposal of plant, property and equipment - 937 219
Purchase of plant, property and equipment (4,777) (61,522) (48,173)
Payment for intellectual property registration (130) (882) (696)
Payment for acquisition - (8,642) -
Decrease in short-term financial instruments - 173 -
Collection of guarantee deposits 9 81 1,544
Payment of guarantee deposits (9) (320) (2,482)
Other (86) (136) (371)
--- ---- ----
Net cash used in investing activities (4,984) (63,528) (57,158)
------ ------- -------
Cash flow from financing activities
Proceeds from issuance of common stock 526 962 9,336
Repurchase of senior notes - - (50,307)
Repayment of obligations under capital lease - (2,968) (6,312)
Acquisition of treasury stock (5,188) (28,125) (11,793)
------
Net cash used in financing activities (4,662) (30,131) (59,076)
Effect of exchange rates on cash and cash equivalents (5,278) (7,317) 1,642
------ ------ -----
Net increase (decrease) in cash and cash equivalents 16,580 20,127 (10,061)
------ ------ -------
Cash and cash equivalents
Beginning of the period 165,658 162,111 172,172
------- ------- -------
End of the period $182,238 $182,238 $162,111
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SOURCE MagnaChip Semiconductor Corporation
