UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): February 17, 2016

MagnaChip Semiconductor Corporation
(Exact name of Registrant as specified in its charter)

 
 	 	 	 	 	
Delaware	 	001-34791	 	83-0406195	
(State or Other Jurisdiction
of Incorporation)	 	(Commission
File Number)	 	(IRS Employer
Identification No.)	
 	 	
c/o MagnaChip Semiconductor S.A.
1, Allée Scheffer, L-2520
Luxembourg, Grand Duchy of Luxembourg	 	Not Applicable	
(Address of Principal Executive Offices)	 	(Zip Code)	
Registrant’s telephone number, including area code: (352) 45-62-62

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
 
¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
 
¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	
 
¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

 

Item 2.02.	Results of Operations and Financial Condition.	
Attached hereto as Exhibit 99.1 and incorporated by reference herein is financial information for MagnaChip Semiconductor Corporation and its consolidated subsidiaries for the fourth quarter and full year ended December 31, 2015, as presented in a press release dated February 17, 2016.
The information disclosed under this Item 2.02, including Exhibit 99.1 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.
 
Item 9.01.	Financial Statements and Exhibits.	
 
(d)	Exhibits.	
The following exhibit is furnished as part of this report:

Exhibit
No.	  	Description	
 	 	
99.1	  	Press release for MagnaChip Semiconductor Corporation dated February 17, 2016, announcing the results for the fourth quarter and full year ended December 31, 2015.	

SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 	 	 	 	MAGNACHIP SEMICONDUCTOR CORPORATION	
 	 	 	 	
Dated: February 17, 2016	 	 	 	By:	 	/s/ Theodore Kim	
 	 	 	 	 	 	Theodore Kim	
 	 	 	 	 	 	Chief Compliance Officer, Executive Vice President, General Counsel and Secretary	

Exhibit Index

Exhibit
No.	  	Description	
 	 	
99.1	  	Press release for MagnaChip Semiconductor Corporation dated February 17, 2016, announcing the results for the fourth quarter and full year ended December 31, 2015.	

Exhibit 99.1

 	 	 	  	 
 
Press Release	

MagnaChip Reports Fourth Quarter and Full Year 2015 Financial Results
SEOUL, South Korea and SAN JOSE, Calif., February, 17 2016 — 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 fourth quarter and full year ended December 31, 2015.
Revenue for the fourth quarter of 2015 was $152.4 million, a 1.3% decline compared to $154.4 million for the third quarter of 2015, and down 9.1% compared to $167.7 million for the fourth quarter of 2014. Foundry Services revenue in the fourth quarter of 2015 was $65.8 million and Standard Products Group revenue was $86.5 million. For the full year 2015, revenue was $633.7 million compared to $698.2 million for 2014, a 9.2% decrease.
Gross profit was $29.9 million, or 19.6% as a percent of revenue for the fourth quarter of 2015. This compared with gross profit of $34.7 million, or 22.5%, for the third quarter of 2015 and $34.5 million, or 20.6%, for the fourth quarter of 2014. Foundry gross profit was 22.7% and Standard Products Group gross profit was 17.2% in the fourth quarter of 2015. For the full year 2015, gross profit was $134.9 million, or 21.3%, compared to $152.9 million, or 21.9%, for 2014.
Net income, on a GAAP basis, for the fourth quarter of 2015 totaled $22.9 million, or $0.66 per basic and diluted share, compared to a net loss of $57.1 million, or $1.65 per basic share, for the third quarter of 2015 and net loss of $63.8 million, or $1.87 per basic share, for the fourth quarter of 2014. Net income included a tax benefit and a foreign currency translation gain on intercompany loans payable as well as spending reductions. For the full year 2015, net loss was $84.9 million, or $2.47 per basic share, compared to $117.2 million or $3.44 per basic share, for 2014.
“Revenue in the fourth quarter was at the high end of our guidance range and gross margin was better than expected, driven primarily by an increase in demand for AMOLED display drivers consumed by smartphone makers in China,” said YJ Kim, Chief Executive Officer of MagnaChip. “Despite a weak macro environment, our foundry pipeline is filling, AMOLED demand is improving and our business is showing early signs of stabilizing.”
Chief Financial Officer Jonathan Kim commented, “During 2015, we embarked on a comprehensive plan to reduce total normalized spending by more than $40 million for the year. In fact, we far exceeded our goal and reduced total normalized spending by over $50 million, including approximately $13 million in the fourth quarter of 2015 alone. We will continue to explore opportunities to control spending in 2016.”
Adjusted Net Income, a non-GAAP measurement, for the fourth quarter of 2015 totaled $5.2 million, or $0.15 per basic and diluted share, compared to an Adjusted Net Loss, a non-GAAP measurement, of $10.4 million, or $0.30 per basic share, in the third quarter of 2015 and an Adjusted Net Loss of $10.8 million, or $0.32 per basic share, for the fourth quarter of 2014. For the full year 2015, Adjusted Net Loss was $26.7 million, or $0.78 per basic share compared to an Adjusted Net Loss of $38.1 million or $1.12 per basic share for 2014.

Management believes that non-GAAP financial measures, when viewed in conjunction with GAAP results, can provide a 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. A reconciliation of GAAP results to non-GAAP results is included following the financial statements.
Cash and cash equivalents totaled $90.9 million at the end of the fourth quarter of 2015, an increase of $22.4 million from the end of the prior quarter primarily due to one-time receipts of pre-paid deposits for the planned sale of our 6” fab equipment and prepayment received for end-of-life products produced in our 6” fab.
As disclosed in MagnaChip’s 2015 proxy statement, the Board of Directors established a Strategic Review Committee (“SRC”) to assist the Board in reviewing, considering and evaluating strategic alternatives that may be available to MagnaChip. The SRC and the Board of Directors are still actively involved in an ongoing process of reviewing various strategic alternatives and will continue to evaluate alternatives consistent with their obligation to act in the best interest of stockholders. No decision has been made to enter into a transaction at this time and MagnaChip can offer no assurance that it will enter into any transaction in the future.
The following table sets forth information relating to our operating segments:

 	  	Three Months Ended	 	  	Year Ended	 	
 	  	December 31,
2015	 	  	December 31,
2014	 	  	December 31,
2015	 	  	December 31,
2014	 	
Net Sales	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Foundry Services Group	  	$	65,822	  	  	$	78,949	  	  	$	290,775	  	  	$	360,549	  	
Standard Products Group	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Display Solutions	  	 	53,895	  	  	 	55,455	  	  	 	207,480	  	  	 	199,861	  	
Power Solutions	  	 	32,576	  	  	 	33,108	  	  	 	134,814	  	  	 	137,246	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total Standard Products Group	  	 	86,471	  	  	 	88,563	  	  	 	342,294	  	  	 	337,107	  	
All other	  	 	137	  	  	 	140	  	  	 	643	  	  	 	562	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total net sales	  	$	152,430	  	  	$	167,652	  	  	$	633,712	  	  	$	698,218	  	

 	  	Three Months Ended	 	  	Year Ended	 	
 	  	December 31,
2015	 	  	December 31,
2014	 	  	December 31,
2015	 	  	December 31,
2014	 	
Gross Profit	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Foundry Services Group	  	$	14,935	  	  	$	15,630	  	  	$	66,175	  	  	$	75,739	  	
Standard Products Group	  	 	14,878	  	  	 	18,728	  	  	 	68,094	  	  	 	76,561	  	
All other	  	 	89	  	  	 	140	  	  	 	595	  	  	 	562	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total gross profit	  	$	29,902	  	  	$	34,498	  	  	$	134,864	  	  	$	152,862	  	
 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Fourth Quarter and Recent Company Highlights
 
 	•	 	Surpassed 160 Million Mark in AMOLED Display Driver IC Units Shipped	
 
 	•	 	Selected for the “2015 Excellence Supplier Award” by LG Display	
 
 	•	 	Hosted a Foundry Technology Symposium in Shenzhen, China, on November 10, 2015	
 
 	•	 	Announced a 2016 Foundry Technology Symposium in Beijing, China, on March 15, 2016	

Business Outlook
For the first quarter of 2016, MagnaChip anticipates:
 
 	•	 	Revenue in the first quarter, typically our seasonally weakest period, will be in the range of $141 million to $147 million. This would represent a sequential decline of between 3-7% – despite a sequential loss of more than $10 million in revenue from our 6” fab, which will close at the end of February.	
 
 	•	 	Gross profit to be 21% to 24% as a percent of revenue.	
Conference Call
MagnaChip will hold a conference call at 5 p.m. EST today (February 17, 2016) to discuss the fourth quarter and full year 2015 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 24897567 and participants are encouraged to initiate their calls at least 10 minutes in advance of the 5 p.m. EST 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 24897567.
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 future operating and financial performance, including first quarter 2016 revenue and gross profit and expectations related to future spending and cost reduction initiatives. All forward-looking statements included in this release are based upon information available to MagnaChip 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 May 28, 2015 and our Form 10-Q filed on November 6, 2015 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:
Robert Pursel
Director of Investor Relations
Tel. +1-408-625-1262
robert.pursel@magnachip.com	  	In Korea:
Chankeun Park
Senior Manager, Public Relations
Tel. +82-2-6903-3195
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,
2015	 	 	September 30,
2015	 	 	December 31,
2014	 	 	December 31,
2015	 	 	December 31,
2014	 	
Net sales	  	$	152,430	  	 	$	154,382	  	 	$	167,652	  	 	$	633,712	  	 	$	698,218	  	
Cost of sales	  	 	122,528	  	 	 	119,683	  	 	 	133,154	  	 	 	498,848	  	 	 	545,356	  	
Gross profit	  	 	29,902	  	 	 	34,699	  	 	 	34,498	  	 	 	134,864	  	 	 	152,862	  	
Gross profit %	  	 	19.6	% 	 	 	22.5	% 	 	 	20.6	% 	 	 	21.3	% 	 	 	21.9	% 	
Operating expenses	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Selling, general and administrative expenses	  	 	18,653	  	 	 	22,107	  	 	 	32,491	  	 	 	94,378	  	 	 	126,954	  	
Research and development expenses	  	 	18,879	  	 	 	20,450	  	 	 	22,147	  	 	 	83,420	  	 	 	92,765	  	
Restructuring and impairment charges	  	 	—  	 	 	 	—  	 	 	 	10,269	  	 	 	—  	 	 	 	10,269	  	
Total operating expenses	  	 	37,532	  	 	 	42,557	  	 	 	64,907	  	 	 	177,798	  	 	 	229,988	  	
Operating loss	  	 	(7,630	) 	 	 	(7,858	) 	 	 	(30,409	) 	 	 	(42,934	) 	 	 	(77,126	) 	
Interest expense	  	 	(4,081	) 	 	 	(4,075	) 	 	 	(4,252	) 	 	 	(16,268	) 	 	 	(16,833	) 	
Foreign currency gain (loss), net	  	 	17,080	  	 	 	(44,139	) 	 	 	(30,160	) 	 	 	(42,531	) 	 	 	(24,650	) 	
Other income, net	  	 	617	  	 	 	256	  	 	 	744	  	 	 	1,779	  	 	 	2,900	  	
Income (loss) before income tax expenses	  	 	5,986	  	 	 	(55,816	) 	 	 	(64,077	) 	 	 	(99,954	) 	 	 	(115,709	) 	
Income tax expenses (benefits)	  	 	(16,868	) 	 	 	1,250	  	 	 	(247	) 	 	 	(15,087	) 	 	 	1,523	  	
Net income (loss)	  	$	22,854	  	 	$	(57,066	) 	 	$	(63,830	) 	 	$	(84,867	) 	 	$	(117,232	) 	
Earnings (loss) per common share :	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
- Basic	  	$	0.66	  	 	$	(1.65	) 	 	$	(1.87	) 	 	$	(2.47	) 	 	$	(3.44	) 	
- Diluted	  	$	0.66	  	 	$	(1.65	) 	 	$	(1.87	) 	 	$	(2.47	) 	 	$	(3.44	) 	
Weighted average number of shares—Basic	  	 	34,698,777	  	 	 	34,664,246	  	 	 	34,056,413	  	 	 	34,380,517	  	 	 	34,055,513	  	
Weighted average number of shares—Diluted	  	 	34,713,034	  	 	 	34,664,246	  	 	 	34,056,413	  	 	 	34,380,517	  	 	 	34,055,513	  	

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,
2015	 	 	September 30,
2015	 	 	December 31,
2014	 	 	December 31,
2015	 	 	December 31,
2014	 	
Net income (loss)	  	$	22,854	  	 	$	(57,066	) 	 	$	(63,830	) 	 	$	(84,867	) 	 	$	(117,232	) 	
Adjustments:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	  	 	6,424	  	 	 	6,399	  	 	 	7,072	  	 	 	26,490	  	 	 	29,989	  	
Interest expense, net	  	 	4,020	  	 	 	4,023	  	 	 	4,134	  	 	 	16,039	  	 	 	16,289	  	
Income tax expenses (benefits)	  	 	(16,868	) 	 	 	1,250	  	 	 	(247	) 	 	 	(15,087	) 	 	 	1,523	  	
Restructuring and impairment charges	  	 	—  	 	 	 	—  	  	 	 	10,269	  	 	 	—  	  	 	 	10,269	  	
Equity-based compensation expense	  	 	398	  	 	 	393	  	 	 	407	  	 	 	2,768	  	 	 	2,072	  	
Foreign currency loss (gain), net	  	 	(17,080	) 	 	 	44,139	  	 	 	30,160	  	 	 	42,531	  	 	 	24,650	  	
Derivative valuation loss (gain), net	  	 	(61	) 	 	 	270	  	 	 	(49	) 	 	 	516	  	 	 	12	  	
Restatement related expenses	  	 	(891	) 	 	 	1,891	  	 	 	12,145	  	 	 	12,372	  	 	 	40,897	  	
Adjusted EBITDA	  	$	(1,204	) 	 	$	1,299	  	 	$	61	  	 	$	762	  	 	$	8,469	  	
Adjusted EBITDA per common share:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
- Diluted	  	$	(0.03	) 	 	$	0.04	  	 	$	0.00	  	 	$	0.02	  	 	$	0.24	  	
Weighted average number of shares—Diluted	  	 	34,698,777	  	 	 	35,002,896	  	 	 	35,006,862	  	 	 	34,663,593	  	 	 	35,172,755	  	
Net income (loss)	  	$	22,854	  	 	$	(57,066	) 	 	$	(63,830	) 	 	$	(84,867	) 	 	$	(117,232	) 	
Adjustments:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Restructuring and impairment charges	  	 	—  	  	 	 	—  	  	 	 	10,269	  	 	 	—  	  	 	 	10,269	  	
Equity-based compensation expense	  	 	398	  	 	 	393	  	 	 	407	  	 	 	2,768	  	 	 	2,072	  	
Amortization of intangibles	  	 	—  	  	 	 	—  	  	 	 	120	  	 	 	—  	  	 	 	1,221	  	
Foreign currency loss (gain), net	  	 	(17,080	) 	 	 	44,139	  	 	 	30,160	  	 	 	42,531	  	 	 	24,650	  	
Derivative valuation loss (gain), net	  	 	(61	) 	 	 	270	  	 	 	(49	) 	 	 	516	  	 	 	12	  	
Restatement related expenses	  	 	(891	) 	 	 	1,891	 	 	 	12,145	 	 	 	12,372	  	 	 	40,897	  	
Adjusted net income (loss)	  	$	5,220	  	 	$	(10,373	) 	 	$	(10,778	) 	 	$	(26,680	) 	 	$	(38,111	) 	
Adjusted net income (loss) per common share:	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
- Diluted	  	$	0.15	  	 	$	(0.30	) 	 	$	(0.32	) 	 	$	(0.78	) 	 	$	(1.12	) 	
Weighted average number of shares—Diluted	  	 	34,713,034	  	 	 	34,664,246	  	 	 	34,056,413	  	 	 	34,380,517	  	 	 	34,055,513	  	
We define Adjusted EBITDA as net income adjusted to exclude (i) depreciation and amortization, (ii) interest expense, net, (iii) income tax expenses (benefits), (iv) restructuring and impairment charges, (v) equity-based compensation expense, (vi) foreign currency loss (gain), net, (vii) derivative valuation loss (gain), net, and (viii) restatement related expenses.
We present Adjusted Net Income (Loss) as a further supplemental measure of our performance. We prepare Adjusted Net Income (Loss) 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 (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) as net income adjusted to exclude (i) restructuring and impairment charges, (ii) equity-based compensation expense, (iii) amortization of intangibles, (iv) foreign currency loss (gain), net, (v) derivative valuation loss (gain), net, and (vi) restatement related expenses.

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of US dollars, except share data)
(Unaudited)

 	  	December 31,
2015	 	 	December 31,
2014	 	
Assets	  	 	 	 	 	 	 	 	
Current assets	  	 	 	 	 	 	 	 	
Cash and cash equivalents	  	$	90,882	  	 	$	102,434	  	
Accounts receivable, net	  	 	63,498	  	 	 	72,957	  	
Inventories, net	  	 	57,619	  	 	 	75,334	  	
Other receivables	  	 	31,932	  	 	 	10,616	  	
Prepaid expenses	  	 	7,075	  	 	 	7,560	  	
Current deferred income tax assets	  	 	34	  	 	 	237	  	
Hedge collateral	  	 	6,000	  	 	 	—  	  	
Other current assets	  	 	3,194	  	 	 	6,898	  	
Total current assets	  	 	260,234	  	 	 	276,036	  	
Property, plant and equipment, net	  	 	191,985	  	 	 	223,766	  	
Intangible assets, net	  	 	2,629	  	 	 	2,451	  	
Long-term prepaid expenses	  	 	12,117	  	 	 	10,916	  	
Deferred income tax assets	  	 	238	  	 	 	415	  	
Other non-current assets	  	 	10,678	  	 	 	14,147	  	
Total assets	  	$	477,881	  	 	$	527,731	  	
Liabilities and Stockholders’ Equity	  	 	 	 	 	 	 	 	
Current liabilities	  	 	 	 	 	 	 	 	
Accounts payable	  	$	55,476	  	 	$	70,767	  	
Other accounts payable	  	 	10,961	  	 	 	10,986	  	
Accrued expenses	  	 	76,721	  	 	 	81,060	  	
Deferred revenue	  	 	10,060	  	 	 	1,990	  	
Deposits received	  	 	8,165	  	 	 	—  	  	
Other current liabilities	  	 	5,128	  	 	 	4,470	  	
Total current liabilities	  	 	166,511	  	 	 	169,273	  	
Long-term borrowings, net	  	 	224,156	  	 	 	224,035	  	
Accrued severance benefits, net	  	 	134,148	  	 	 	139,289	  	
Other non-current liabilities	  	 	15,396	  	 	 	13,636	  	
Total liabilities	  	 	540,211	  	 	 	546,233	  	
Stockholders’ equity	  	 	 	 	 	 	 	 	
Common stock, $0.01 par value, 150,000,000 shares authorized, 41,147,707 shares issued and 34,568,942 outstanding at December 31, 2015 and 40,635,233 shares issued and 34,056,468 outstanding at December 31, 2014	  	 	411	  	 	 	406	  	
Additional paid-in capital	  	 	124,618	  	 	 	118,419	  	
Accumulated deficit	  	 	(96,210	) 	 	 	(11,343	) 	
Treasury stock, 6,578,765 shares at December 31, 2015 and 2014, respectively	  	 	(90,918	) 	 	 	(90,918	) 	
Accumulated other comprehensive loss	  	 	(231	) 	 	 	(35,066	) 	
Total stockholders’ equity (deficit)	  	 	(62,330	) 	 	 	(18,502	) 	
Total liabilities and stockholders’ equity	  	$	477,881	  	 	$	527,731	  	

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of US dollars)
(Unaudited)

 	  	Three Months
Ended	 	 	Year Ended	 	
 	  	December 31,
2015	 	 	December 31,
2015	 	 	December 31,
2014	 	
Cash flow from operating activities	  	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss)	  	$	22,854	  	 	$	(84,867	) 	 	$	(117,232	) 	
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities	  	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	  	 	6,424	  	 	 	26,490	  	 	 	29,989	  	
Provision for severance benefits	  	 	1,116	  	 	 	15,289	  	 	 	17,703	  	
Bad debt expenses (reversal of allowance)	  	 	18	  	 	 	(3	)	 	 	3,718	  	
Amortization of debt issuance costs and original issue discount	  	 	169	  	 	 	660	  	 	 	614	  	
Loss (gain) on foreign currency, net	  	 	(18,746	) 	 	 	46,984	  	 	 	32,760	  	
Gain on disposal of investments	  	 	—  	  	 	 	—  	  	 	 	(1,524	) 	
Impairment charges	  	 	—  	  	 	 	—  	  	 	 	10,269	  	
Stock-based compensation	  	 	398	  	 	 	2,768	  	 	 	2,072	  	
Other	  	 	2,768	  	 	 	2,437	  	 	 	1,375	  	
Changes in operating assets and liabilities	  	 	 	 	 	 	 	 	 	 	 	 	
Accounts receivable, net	  	 	(5,373	) 	 	 	3,299	  	 	 	(1,668	) 	
Inventories, net	  	 	1,627	  	 	 	12,929	  	 	 	(3,380	) 	
Other receivables	  	 	(28,578	) 	 	 	(21,463	) 	 	 	(5,052	) 	
Other current assets	  	 	10,670	  	 	 	11,339	  	 	 	9,308	  	
Deferred tax assets	  	 	5	  	 	 	372	  	 	 	1,458	  	
Accounts payable	  	 	6,289	  	 	 	(12,605	) 	 	 	(1,526	) 	
Other accounts payable	  	 	(693	) 	 	 	(10,892	) 	 	 	(13,046	) 	
Accrued expenses	  	 	31,052	  	 	 	(1,679	) 	 	 	208	  	
Deferred revenue	  	 	9,372	  	 	 	8,136	  	 	 	(825	) 	
Other current liabilities	  	 	160	  	 	 	(1,210	) 	 	 	2,004	  	
Other non-current labilities	  	 	2,915	  	 	 	3,105	  	 	 	1,963	  	
Payment of severance benefits	  	 	(3,489	) 	 	 	(11,394	) 	 	 	(6,650	) 	
Other	  	 	187	  	 	 	328	  	 	 	(7	) 	
Net cash provided by (used in) operating activities	  	 	39,145	  	 	 	(9,977	) 	 	 	(37,469	) 	
Cash flow from investing activities	  	 	 	 	 	 	 	 	 	 	 	 	
Proceeds from settlement of hedge collateral	  	 	—  	  	 	 	10,841	  	 	 	—  	  	
Payment of hedge collateral	  	 	—  	  	 	 	(17,182	) 	 	 	—  	  	
Proceeds from disposal of plant, property and equipment	  	 	7,504	  	 	 	9,886	  	 	 	20	  	
Proceeds from disposal of investments	  	 	—  	  	 	 	—  	  	 	 	2,003	  	
Purchase of plant, property and equipment	  	 	(2,100	) 	 	 	(6,350	) 	 	 	(17,419	) 	
Payment for intellectual property registration	  	 	(192	) 	 	 	(742	) 	 	 	(958	) 	
Collection of guarantee deposits	  	 	513	  	 	 	636	  	 	 	—  	  	
Payment of guarantee deposits	  	 	(5	) 	 	 	(675	) 	 	 	(323	) 	
Other	  	 	16	  	 	 	195	  	 	 	(21	) 	
Net cash provided by (used in) investing activities	  	 	5,736	  	 	 	(3,391	) 	 	 	(16,698	) 	
Cash flow from financing activities	  	 	 	 	 	 	 	 	 	 	 	 	
Proceeds from issuance of common stock	  	 	2	  	 	 	3,436	  	 	 	68	  	
Net cash provided by financing activities	  	 	2	  	 	 	3,436	  	 	 	68	  	
Effect of exchange rates on cash and cash equivalents	  	 	(22,511	) 	 	 	(1,620	) 	 	 	2,927	  	
Net increase (decrease) in cash and cash equivalents	  	 	22,372	  	 	 	(11,552	) 	 	 	(51,172	) 	
Cash and cash equivalents	  	 	 	 	 	 	 	 	 	 	 	 	
Beginning of the period	  	 	68,510	  	 	 	102,434	  	 	 	153,606	  	
End of the period	  	$	90,882	  	 	$	90,882	  	 	$	102,434