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): April 25, 2012

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., 74, rue de Merl,
B.P. 709, L-2017 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 first quarter ended March 31, 2012, as presented in a press release dated April 25, 2012.
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 exhibits are furnished as part of this report:

Exhibit
No.	  	Description	
 	 	
99.1	  	Press release for MagnaChip Semiconductor Corporation dated April 25, 2012,
announcing the results for the first quarter ended March 31, 2012.	

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: April 25, 2012	 	 	 	By:	 	    /s/ Margaret Sakai	
 	 	 	 	 	 	Margaret Sakai
Executive Vice President and Chief Financial Officer	

Exhibit Index

Exhibit
No.	  	Description	
 	 	
99.1	  	Press release for MagnaChip Semiconductor Corporation dated April 25, 2012,
announcing the results for the first quarter ended March 31, 2012.	

Exhibit 99.1

Press Release
 
MagnaChip Reports First Quarter 2012 Financial Results
 
 	•	 	Power Solutions Revenue Grew 14.6% Sequentially and 23.7% Year-over-Year	
 
 	•	 	Achieved GAAP EPS of $0.40 and Adjusted EPS of $0.17	
 
 	•	 	Expects Q2 Revenue to Increase 11% to 15% on a Sequential Basis	
SEOUL, South Korea and CUPERTINO, Calif., April 25, 2012 — 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 first quarter ended March 31, 2012.
Revenue for the first quarter of 2012 was $177.0 million, a 2.1% decrease compared to $180.8 million for the fourth quarter of 2011, and a 5.8% decrease compared to $187.9 million for the first quarter of 2011.
Gross profit was $49.9 million or 28.2%, as a percent of revenue, for the first quarter of 2012. This compares to gross profit of $51.5 million or 28.5 % for the fourth quarter of 2011 and $56.5 million or 30.1% for the first quarter of 2011.
“I am very pleased that since going public in March 2011, we have met our revenue and gross margin guidance each quarter for 5 consecutive quarters in what has been a very challenging period for the industry,” said Sang Park, MagnaChip’s Chairman and Chief Executive Officer. “As our Q2 guidance suggests, the first quarter of 2012 was indeed our bottom during this current semiconductor downturn. We have been seeing renewed customer order strength and wafer loading since early March as a result of increased demand from smartphone and tablet PC customers and expect this trend to continue into the second half of this year. In anticipation of this growing demand, we have allocated additional fab capacity to support expansion.”
Net income, on a GAAP basis, for the first quarter of 2012 totaled $15.3 million or $0.40 per diluted share. This compares to net income of $23.7 million or $0.61 per diluted share for the fourth quarter of 2011 and a net income of $22.5 million or $0.57 per diluted share for the first quarter of 2011. Net income was impacted primarily by a foreign currency gain of $11.1 million during the quarter which was primarily related to non-cash translation gains for intercompany balances that were denominated in U.S. dollars.
Adjusted net income, a non-GAAP measurement, for the first quarter of 2012 totaled $6.5 million or $0.17 per diluted share compared to $10.0 million or $0.26 per diluted share for the fourth quarter of 2011 and $15.7 million or $0.40 per diluted share for the first quarter of 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 $160.6 million at the end of the first quarter of 2012, a decrease of $8.4 million from the end of the prior quarter. Cash provided from operations totaled approximately $39.9 million for the first quarter of 2012.
Revenue by Segment

In thousands of US dollars	  	Three Months Ended	 	
 	  	March 31, 2012	 	  	December 31, 2011	 	  	March 31, 2011	 	
Semiconductor Manufacturing Services	  	$	67,863	  	  	$	67,973	  	  	$	92,266	  	
Display Solutions	  	 	83,225	  	  	 	90,045	  	  	 	74,464	  	
Power Solutions	  	 	25,253	  	  	 	22,039	  	  	 	20,412	  	
Other	  	 	661	  	  	 	769	  	  	 	779	  	
Total Revenue	  	$	177,002	  	  	$	180,826	  	  	$	187,921	  	
First Quarter and Recent Company Highlights
 
 	•	 	Power Solutions Revenue Grew 14.6% Sequentially and 23.7% Year-over-Year.	
 
 	•	 	Fab loading rate exceeded 90% in March 2012.	
 
 	•	 	Achieved GAAP EPS of $0.40 and Adjusted EPS of $0.17.	
 
 	•	 	Repurchased 1.04 Million Shares under MagnaChip’s Stock Repurchase Program Announced October 11, 2011.	
Business Outlook
For the second quarter of 2012, MagnaChip expects:
 
 	•	 	Revenue will increase 11% to 15% ($197 million to $203 million) on a sequential basis.	
 
 	•	 	Gross Profit, as a percent of revenue, will be in the range of 29.5% to 30.5%.	
Non-GAAP Metrics
Adjusted EBITDA excludes charges related to depreciation and amortization, interest expense, net, income tax expense, stock-based compensation expense, foreign currency gain, net, derivative valuation loss (gain), net, and special expense for an IPO employee incentive payment. Adjusted net income (loss) excludes charges related to, stock-based compensation expense, amortization of intangible assets associated with continuing operations, foreign currency gain, net, derivative valuation loss (gain), net, and special expense for an IPO employee incentive payment. A reconciliation of GAAP results to non-GAAP results is included following the financial statements.

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 second quarter 2012 revenue and gross profit. 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 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:
Robert Pursel
Director of Investor Relations
Tel. 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	 	
 	  	March 31,
2012	 	 	December 31,
2011	 	 	March 31,
2011	 	
Net sales	  	$	177,002	  	 	$	180,826	  	 	$	187,921	  	
Cost of sales	  	 	127,087	  	 	 	129,287	  	 	 	131,447	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	  	 	49,915	  	 	 	51,539	  	 	 	56,474	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Gross profit %	  	 	28.2	% 	 	 	28.5	% 	 	 	30.1	% 	
Selling, general and administrative expenses	  	 	18,209	  	 	 	17,627	  	 	 	15,401	  	
Research and development expenses	  	 	19,831	  	 	 	18,652	  	 	 	18,498	  	
Special expense for IPO incentive	  	 	—  	  	 	 	—  	  	 	 	12,146	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Operating income	  	 	11,875	  	 	 	15,260	  	 	 	10,429	  	
Other income (expense)	  	 	 	 	 	 	 	 	 	 	 	 	
Interest expense, net	  	 	(5,580	) 	 	 	(5,644	) 	 	 	(7,111	) 	
Foreign currency gain, net	  	 	11,109	  	 	 	16,832	  	 	 	21,359	  	
Other	  	 	89	  	 	 	(862	) 	 	 	166	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
 	  	 	5,618	  	 	 	10,326	  	 	 	14,414	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Income before income taxes	  	 	17,493	  	 	 	25,586	  	 	 	24,843	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Income tax expense	  	 	2,230	  	 	 	1,881	  	 	 	2,375	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	15,263	  	 	$	23,705	  	 	$	22,468	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Earnings per common share :	  	 	 	 	 	 	 	 	 	 	 	 	
—Basic	  	$	0.41	  	 	$	0.61	  	 	$	0.59	  	
—Diluted	  	$	0.40	  	 	$	0.61	  	 	$	0.57	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Weighted average number of shares—Basic	  	 	37,524,127	  	 	 	38,632,975	  	 	 	38,332,750	  	
Weighted average number of shares—Diluted	  	 	38,298,336	  	 	 	39,110,759	  	 	 	39,570,522	  	

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA AND ADJUSTED NET INCOME
(In thousands of US dollars, except share data)
(Unaudited)

 	  	Three Months Ended	 	
 	  	March 31,
2012	 	 	December 31,
2011	 	 	March 31,
2011	 	
Net income	  	$	15,263	  	 	$	23,705	  	 	$	22,468	  	
Adjustments:	  	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	  	 	7,474	  	 	 	8,856	  	 	 	13,903	  	
Interest expense, net	  	 	5,580	  	 	 	5,644	  	 	 	7,111	  	
Income tax expense	  	 	2,230	  	 	 	1,881	  	 	 	2,375	  	
Stock-based compensation expense	  	 	458	  	 	 	287	  	 	 	641	  	
Foreign currency gain, net	  	 	(11,109	) 	 	 	(16,832	) 	 	 	(21,359	) 	
Derivative valuation loss (gain), net	  	 	(85	) 	 	 	862	  	 	 	(158	) 	
Special expense for IPO incentive	  	 	—  	  	 	 	—  	  	 	 	12,146	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Adjusted EBITDA	  	$	19,811	  	 	$	24,403	  	 	$	37,127	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Adjusted EBITDA per common share:	  	 	 	 	 	 	 	 	 	 	 	 	
- Diluted	  	$	0.52	  	 	$	0.62	  	 	$	0.94	  	
Weighted average number of shares - Diluted	  	 	38,298,336	  	 	 	39,110,759	  	 	 	39,570,522	  	
Net income	  	$	15,263	  	 	$	23,705	  	 	$	22,468	  	
Adjustments:	  	 	 	 	 	 	 	 	 	 	 	 	
Stock-based compensation expense	  	 	458	  	 	 	287	  	 	 	641	  	
Amortization of intangibles	  	 	1,993	  	 	 	1,985	  	 	 	1,990	  	
Foreign currency gain, net	  	 	(11,109	) 	 	 	(16,832	) 	 	 	(21,359	) 	
Derivative valuation loss (gain), net	  	 	(85	) 	 	 	862	  	 	 	(158	) 	
Special expense for IPO incentive	  	 	—  	  	 	 	—  	  	 	 	12,146	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Adjusted net income	  	$	6,520	  	 	$	10,007	  	 	$	15,728	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Adjusted net income per common share:	  	 	 	 	 	 	 	 	 	 	 	 	
- Diluted	  	$	0.17	  	 	$	0.26	  	 	$	0.40	  	
Weighted average number of shares - Diluted	  	 	38,298,336	  	 	 	39,110,759	  	 	 	39,570,522	  	
We define Adjusted EBITDA as net income adjusted to exclude (i) depreciation and amortization, (ii) interest expense, net, (iii) income tax expense, (iv) stock-based compensation expense, (v) foreign currency gain, net, (vi) derivative valuation loss (gain), net, and (vii) special expense for IPO incentive.
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) stock-based compensation expense, (ii) amortization of intangibles, (iii) foreign currency gain, net, (iv) derivative valuation loss (gain), net, and (v) special expense for IPO incentive.

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

 	  	March 31,
2012	 	 	December 31,
2011	 	
Assets	  	 	 	 	 	 	 	 	
Current assets	  	 	 	 	 	 	 	 	
Cash and cash equivalents	  	$	156,623	  	 	$	162,111	  	
Restricted cash	  	 	3,934	  	 	 	6,830	  	
Accounts receivable, net	  	 	127,332	  	 	 	125,922	  	
Inventories, net	  	 	68,105	  	 	 	62,836	  	
Other receivables	  	 	4,343	  	 	 	256	  	
Prepaid expenses	  	 	8,112	  	 	 	6,032	  	
Other current assets	  	 	5,578	  	 	 	15,909	  	
 	  	 	 	 	 	 	 	 	
Total current assets	  	 	374,027	  	 	 	379,896	  	
 	  	 	 	 	 	 	 	 	
Property, plant and equipment, net	  	 	206,206	  	 	 	182,663	  	
Intangible assets, net	  	 	20,348	  	 	 	16,787	  	
Long-term prepaid expenses	  	 	4,107	  	 	 	4,790	  	
Other non-current assets	  	 	17,972	  	 	 	18,539	  	
 	  	 	 	 	 	 	 	 	
Total assets	  	$	622,660	  	 	$	602,675	  	
 	  	 	 	 	 	 	 	 	
Liabilities and Stockholders’ Equity	  	 	 	 	 	 	 	 	
Current liabilities	  	 	 	 	 	 	 	 	
Accounts payable	  	$	90,902	  	 	$	77,848	  	
Other accounts payable	  	 	13,772	  	 	 	13,452	  	
Accrued expenses	  	 	39,649	  	 	 	31,723	  	
Current portion of capital lease obligations	  	 	1,458	  	 	 	2,852	  	
Derivative liabilities	  	 	8,308	  	 	 	9,757	  	
Other current liabilities	  	 	3,266	  	 	 	2,007	  	
 	  	 	 	 	 	 	 	 	
Total current liabilities	  	 	157,355	  	 	 	137,639	  	
Long-term borrowings, net	  	 	201,452	  	 	 	201,389	  	
Accrued severance benefits, net	  	 	94,352	  	 	 	90,755	  	
Other non-current liabilities	  	 	5,596	  	 	 	6,222	  	
 	  	 	 	 	 	 	 	 	
Total liabilities	  	 	458,755	  	 	 	436,005	  	
 	  	 	 	 	 	 	 	 	
Commitments and contingencies	  	 	 	 	 	 	 	 	
Stockholder’ equity	  	 	 	 	 	 	 	 	
Common stock, $0.01 par value, 150,000,000 shares authorized, 39,457,063 shares issued and 36,880,879 outstanding at March 31, 2012 and 39,439,115 shares issued and 37,907,575 outstanding at December 31, 2011	  	 	394	  	 	 	394	  	
Additional paid-in capital	  	 	99,495	  	 	 	98,929	  	
Retained earnings	  	 	109,213	  	 	 	93,950	  	
Treasury stock, 2,576,184 shares at March 31, 2012	  	 	(23,728	) 	 	 	(11,793	) 	
Accumulated other comprehensive loss	  	 	(21,469	) 	 	 	(14,810	) 	
 	  	 	 	 	 	 	 	 	
Total stockholders’ equity	  	 	163,905	  	 	 	166,670	  	
 	  	 	 	 	 	 	 	 	
Total liabilities and stockholders’ equity	  	$	622,660	  	 	$	602,675	  	

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

 	  	Three Months Ended	 	
 	  	March 31,
2012	 	 	March 31,
2011	 	
Cash flows from operating activities	  	 	 	 	 	 	 	 	
Net income	  	$	15,263	  	 	$	22,468	  	
Adjustments to reconcile net income to net cash provided by operating activities	  	 	 	 	 	 	 	 	
Depreciation and amortization	  	 	7,474	  	 	 	13,903	  	
Provision for severance benefits	  	 	4,703	  	 	 	2,854	  	
Amortization of debt issuance costs and original issue discount	  	 	242	  	 	 	246	  	
Gain on foreign currency translation, net	  	 	(12,824	) 	 	 	(23,684	) 	
Gain on disposal of property, plant and equipment, net	  	 	(269	) 	 	 	—  	  	
Loss on disposal of intangible assets, net	  	 	11	  	 	 	4	  	
Stock-based compensation	  	 	458	  	 	 	641	  	
Other	  	 	123	  	 	 	549	  	
Changes in operating assets and liabilities	  	 	 	 	 	 	 	 	
Accounts receivable	  	 	1,339	  	 	 	(9,250	) 	
Inventories	  	 	(2,860	) 	 	 	(3,467	) 	
Other receivables	  	 	(4,024	) 	 	 	(1,041	) 	
Other current assets	  	 	8,536	  	 	 	(1,449	) 	
Deferred tax assets	  	 	871	  	 	 	548	  	
Accounts payable	  	 	12,581	  	 	 	14,289	  	
Other accounts payable	  	 	(298	) 	 	 	(1,348	) 	
Accrued expenses	  	 	9,886	  	 	 	7,153	  	
Other current liabilities	  	 	2,225	  	 	 	(1,518	) 	
Payment of severance benefits	  	 	(2,323	) 	 	 	(1,610	) 	
Other	  	 	(1,261	) 	 	 	(72	) 	
 	  	 	 	 	 	 	 	 	
Net cash provided by operating activities	  	 	39,853	  	 	 	19,216	  	
 	  	 	 	 	 	 	 	 	
Cash flows from investing activities	  	 	 	 	 	 	 	 	
Decrease in restricted cash	  	 	2,995	  	 	 	—  	  	
Proceeds from disposal of plant, property and equipment	  	 	273	  	 	 	—  	  	
Purchase of plant, property and equipment	  	 	(24,758	) 	 	 	(6,779	) 	
Payment for intellectual property registration	  	 	(190	) 	 	 	(165	) 	
Payment for acquisition	  	 	(8,642	) 	 	 	—  	  	
Decrease in short-term financial instruments	  	 	173	  	 	 	—  	  	
Collection of guarantee deposits	  	 	31	  	 	 	979	  	
Payment of guarantee deposits	  	 	(178	) 	 	 	(1,004	) 	
Other	  	 	(48	) 	 	 	(44	) 	
 	  	 	 	 	 	 	 	 	
Net cash used in investing activities	  	 	(30,344	) 	 	 	(7,013	) 	
 	  	 	 	 	 	 	 	 	
Cash flows from financing activities	  	 	 	 	 	 	 	 	
Proceeds from issuance of common stock	  	 	108	  	 	 	11,425	  	
Repayment of obligation under capital lease	  	 	(1,510	) 	 	 	(1,562	) 	
Acquisition of treasury stock	  	 	(11,935	) 	 	 	—  	  	
 	  	 	 	 	 	 	 	 	
Net cash provided by (used in) financing activities	  	 	(13,337	) 	 	 	9,863	  	
Effect of exchange rates on cash and cash equivalents	  	 	(1,660	) 	 	 	(59	) 	
 	  	 	 	 	 	 	 	 	
Net increase (decrease) in cash and cash equivalents	  	 	(5,488	) 	 	 	22,007	  	
 	  	 	 	 	 	 	 	 	
Cash and cash equivalents	  	 	 	 	 	 	 	 	
Beginning of the period	  	 	162,111	  	 	 	172,172	  	
 	  	 	 	 	 	 	 	 	
End of the period	  	$	156,623	  	 	$	194,179