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 27, 2011

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, 2011, as presented in a press release dated April 27, 2011.
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 27, 2011, announcing the results for the first quarter ended March 31, 2011.	

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 27, 2011	 	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 27, 2011, announcing the results for the first quarter ended March 31, 2011.	

Exhibit 99.1

 	 	Press Release    	

MagnaChip Reports First Quarter 2011 Financial Results
 
 	•	 	Revenue of $188 Million up Sequentially and Year-over-Year	
 	•	 	Power Solutions Revenue Grew 126% over Q1 2010	
 	•	 	Net Income $22 Million or $0.57 per diluted share	
SEOUL, South Korea and CUPERTINO, Calif., April 27, 2011 -- MagnaChip Semiconductor Corporation (NYSE: MX) today announced financial results for the first quarter ended March 31, 2011.
Revenue for the first quarter of 2011 was $187.9 million, a 4.7% increase compared to $179.5 million for the first quarter of 2010, and a 0.6% increase compared to $186.8 million for the fourth quarter of 2010.
Gross profit was $56.5 million or 30.1%, as a percent of revenue, for the first quarter of 2011. This compares to gross profit of $49.4 million or 27.5% for the first quarter of 2010 and $60.4 million or 32.3% for the fourth quarter of 2010.
“I am very pleased with our performance in what is typically a seasonally down quarter for MagnaChip and the industry,” said Sang Park, MagnaChip’s Chairman and Chief Executive Officer. “Our Power Solutions business segment grew 11 percent sequentially and more than doubled over the same period last year. Our foundry business was down less than expected for this seasonally weaker quarter and our Display Solutions segment was up for the quarter. All indications point to 2011 being another solid year for growth in revenue and margin expansion for MagnaChip.”
Net income, on a GAAP basis, for the first quarter of 2011 totaled $22.5 million or $0.57 per diluted share. This compares to net income of $31.1 million or $0.81 per diluted share for the first quarter of 2010 and net income of $12.3 million or $0.31 per diluted share for the fourth quarter of 2010.
Adjusted net income, a non-GAAP measurement, for the first quarter of 2011 totaled $15.7 million or $0.40 per diluted share compared to $19.9 million or $0.52 per diluted share for the first quarter of 2010 and $17.4 million or $0.44 per diluted share for the fourth quarter of 2010.
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 Semiconductor Corporation’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 short-term investments) totaled $194.2 million at the end of the first quarter of 2011, an increase of $22.0 million from the end of the prior quarter. Cash provided from operations totaled approximately $19.2 million for the first quarter of 2011.
Revenue by Segment

In thousands of US dollars	  	Three Months Ended	 	
 	  	March 31, 2011	 	  	December 31, 2010	 	  	March 31, 2010	 	
Semiconductor Manufacturing Services	  	$	92,266	  	  	$	97,261	  	  	$	93,201	  	
Display Solutions	  	 	74,464	  	  	 	70,581	  	  	 	76,730	  	
Power Solutions	  	 	20,412	  	  	 	18,398	  	  	 	9,034	  	
Other	  	 	779	  	  	 	532	  	  	 	520	  	
Total Revenue	  	$	187,921	  	  	$	186,772	  	  	$	179,485	  	
First Quarter and Recent Company Highlights
 
 	•	 	Successfully completed our initial public offering and listing on the New York Stock Exchange on March 11, 2011.	
 
 	•	 	Signed a wafer foundry agreement with a major US provider of microcontroller and touch solutions.	
 
 	•	 	Launched a US-based power solutions design center in Cupertino, California, to expand our technology offerings.	
 
 	•	 	Introduced a cost-competitive copper wire bonding solution for foundry customers.	
Business Outlook
For the second quarter of 2011, the company expects:
 
 	•	 	Revenue to increase 5% to 9% on a sequential basis.	
 
 	•	 	Gross profit, as a percent of revenue, to increase 1.5% to 3.0% quarter-over-quarter.	
Non-GAAP Metrics
Adjusted EBITDA excludes charges related to depreciation and amortization, interest expense, income tax expense (benefit), restructuring and impairment activities, inventory step-up, equity-based compensation, foreign currency (gain) loss, derivative valuation (gain) loss and special expense for the IPO employee incentive payment. Adjusted net income (loss) excludes charges related to restructuring and impairment, inventory step-up, equity-based compensation, amortization of intangible assets associated with continuing operations, foreign currency (gain) loss, derivative valuation (gain) loss and special expense for the IPO employee incentive payment. A reconciliation of GAAP results to non-GAAP results is included following the financial statements below.
About MagnaChip Semiconductor Corporation
Headquartered in South Korea, MagnaChip Semiconductor Corporation is a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products for high-volume consumer applications. MagnaChip Semiconductor 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 Semiconductor’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 Semiconductor Corporation’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 2011 revenue and gross profit. 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 Semiconductor Corporation’s filings with the SEC, including our Form 10-K filed on March 18, 2011 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 Semiconductor Corporation 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. +82-3-6903-3195
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,
2011	 	 	December 31,
2010	 	 	March 31,
2010	 	
Net sales	  	$	187,921	  	 	$	186,772	  	 	$	179,485	  	
Cost of sales	  	 	131,447	  	 	 	126,421	  	 	 	130,127	  	

Gross profit	  	 	56,474	  	 	 	60,351	  	 	 	49,358	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Gross profit %	  	 	30.1	% 	 	 	32.3	% 	 	 	27.5	% 	
 	 	 	 	
Selling, general and administrative expenses	  	 	15,401	  	 	 	16,566	  	 	 	17,908	  	
Research and development expenses	  	 	18,498	  	 	 	19,331	  	 	 	20,531	  	
Restructuring and impairment charges	  	 	—  	  	 	 	958	  	 	 	336	  	
Special expense for IPO incentive	  	 	12,146	  	 	 	—  	  	 	 	—  	  	

Operating income	  	 	10,429	  	 	 	23,496	  	 	 	10,583	  	
 	 	 	 	
Other income (expense)	  	 	 	 	 	 	 	 	 	 	 	 	
Interest expense, net	  	 	(7,111	) 	 	 	(6,981	) 	 	 	(2,049	) 	
Foreign currency gain (loss), net	  	 	21,359	  	 	 	(19	) 	 	 	21,616	  	
Other	  	 	166	  	 	 	(16	) 	 	 	(52	) 	
 	  	 	 	 	 	 	 	 	 	 	 	 	
 	  	 	14,414	  	 	 	(7,016	) 	 	 	19,515	  	

Income before income taxes	  	 	24,843	  	 	 	16,480	  	 	 	30,098	  	

Income tax expense (benefits)	  	 	2,375	  	 	 	4,209	  	 	 	(1,003	) 	

Net income	  	$	22,468	  	 	$	12,271	  	 	$	31,101	  	

Earnings per common share :	  	 	 	 	 	 	 	 	 	 	 	 	
- Basic	  	$	0.59	  	 	$	0.32	  	 	$	0.82	  	
- Diluted	  	$	0.57	  	 	$	0.31	  	 	$	0.81	  	
 	  	 	 	 	 	 	 	 	 	 	 	 	
Weighted average number of shares—Basic	  	 	38,332,750	  	 	 	37,898,912	  	 	 	37,805,445	  	
Weighted average number of shares—Diluted	  	 	39,570,522	  	 	 	39,269,465	  	 	 	38,441,991	  	

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,
2011	 	 	December 31,
2010	 	  	March 31,
2010	 	
Net income	  	$	22,468	  	 	$	12,271	  	  	$	31,101	  	
Adjustments:	  	 	 	 	 	 	 	 	  	 	 	 	
 	 	 	 	
 Depreciation and amortization	  	 	13,903	  	 	 	14,063	  	  	 	15,477	  	
 Interest expense, net	  	 	7,111	  	 	 	6,981	  	  	 	2,049	  	
 Income tax expense	  	 	2,375	  	 	 	4,209	  	  	 	(1,003	) 	
 Restructuring and impairment charges	  	 	—  	  	 	 	958	  	  	 	336	  	
 Inventory step-up	  	 	—  	  	 	 	—  	  	  	 	867	  	
 Equity-based compensation expense	  	 	641	  	 	 	1,167	  	  	 	1,473	  	
 Foreign currency (gain) loss, net	  	 	(21,359	) 	 	 	19	  	  	 	(21,616	) 	
 Derivative valuation (gain) loss, net	  	 	(158	) 	 	 	16	  	  	 	57	  	
 Special expense for IPO incentive	  	 	12,146	  	 	 	—  	  	  	 	—  	  	
 	  	 	 	 	 	 	 	 	  	 	 	 	
Adjusted EBITDA	  	$	37,127	  	 	$	39,684	  	  	$	28,741	  	
 	  	 	 	 	 	 	 	 	  	 	 	 	
Adjusted EBITDA per common share:	  	 	 	 	 	 	 	 	  	 	 	 	
 - Basic	  	$	0.97	  	 	 	1.05	  	  	 	0.76	  	
 - Diluted	  	$	0.94	  	 	 	1.01	  	  	 	0.75	  	
 	 	 	 	
Net income	  	$	22,468	  	 	$	12,271	  	  	$	31,101	  	
Adjustments:	  	 	 	 	 	 	 	 	  	 	 	 	
 Restructuring and impairment charges	  	 	—  	  	 	 	958	  	  	 	336	  	
 Inventory step-up	  	 	—  	  	 	 	—  	  	  	 	867	  	
 Equity based compensation expense	  	 	641	  	 	 	1,167	  	  	 	1,473	  	
 Amortization of intangibles	  	 	1,990	  	 	 	2,937	  	  	 	7,697	  	
 Foreign currency (gain) loss, net	  	 	(21,359	) 	 	 	19	  	  	 	(21,616	) 	
 Derivative valuation (gain) loss, net	  	 	(158	) 	 	 	16	  	  	 	57	  	
 Special expense for IPO incentive	  	 	12,146	  	 	 	—  	  	  	 	—  	  	
 	  	 	 	 	 	 	 	 	  	 	 	 	
Adjusted net income	  	$	15,728	  	 	$	17,368	  	  	$	19,915	  	

Adjusted net income per common share:	  	 	 	 	 	 	 	 	  	 	 	 	
 - Basic	  	$	0.41	  	 	$	0.46	  	  	$	0.53	  	
 - Diluted	  	$	0.40	  	 	$	0.44	  	  	$	0.52	  	
We define Adjusted EBITDA as net income adjusted to exclude (i) depreciation and amortization (ii) interest expense, net, (iii) income tax expense, (iv) restructuring and impairment charges, (v) the increase in cost of sales resulting from the fresh-start accounting inventory step-up, (vi) equity-based compensation expense, (vii) foreign currency (gain) loss, net, (viii) derivative valuation (gain) loss, net and (ix) 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) restructuring and impairment charges, (ii) the increase in cost of sales resulting from the fresh-start accounting inventory step-up, (iii) equity-based compensation expense, (iv) amortization of intangibles, (v) foreign currency gain (loss), net, (vi) derivative valuation gain (loss), net and (vii) special expense for IPO incentive.

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

 	  	March 31,
2011	 	 	December 31,
2010	 	
Assets	  	 	 	 	 	 	 	 	
Current assets	  	 	 	 	 	 	 	 	
Cash and cash equivalents	  	$	194,179	  	 	$	172,172	  	
Accounts receivable, net	  	 	131,020	  	 	 	119,054	  	
Inventories, net	  	 	73,879	  	 	 	68,435	  	
Other receivables	  	 	4,006	  	 	 	2,919	  	
Prepaid expenses	  	 	11,082	  	 	 	8,207	  	
Other current assets	  	 	9,937	  	 	 	18,920	  	

Total current assets	  	 	424,103	  	 	 	389,707	  	

Property, plant and equipment, net	  	 	179,240	  	 	 	179,012	  	
Intangible assets, net	  	 	26,154	  	 	 	27,538	  	
Long-term prepaid expenses	  	 	7,456	  	 	 	8,235	  	
Other non-current assets	  	 	21,357	  	 	 	21,252	  	

Total assets	  	$	658,310	  	 	$	625,744	  	

Liabilities and Stockholders’ Equity	  	 	 	 	 	 	 	 	
Current liabilities	  	 	 	 	 	 	 	 	
Accounts payable	  	$	74,040	  	 	$	58,264	  	
Other accounts payable	  	 	10,869	  	 	 	14,645	  	
Accrued expenses	  	 	43,710	  	 	 	32,635	  	
Current portion of capital lease obligation	  	 	5,850	  	 	 	5,557	  	
Other current liabilities	  	 	3,932	  	 	 	5,048	  	

Total current liabilities	  	 	138,401	  	 	 	116,149	  	
 	 	 	
Long-term borrowings	  	 	246,952	  	 	 	246,882	  	
Obligation under capital lease	  	 	1,665	  	 	 	3,105	  	
Accrued severance benefits, net	  	 	91,503	  	 	 	87,778	  	
Other non-current liabilities	  	 	7,902	  	 	 	8,979	  	

Total liabilities	  	 	486,423	  	 	 	462,893	  	

Commitments and contingencies	  	 	 	 	 	 	 	 	
 	 	 	
Stockholder’ equity	  	 	 	 	 	 	 	 	
Common stock, $0.01 par value, 150,000,000 shares authorized, 39,356,749 and 38,401,985 shares issued and outstanding at March 31, 2011 and December 31, 2010, respectively	  	 	394	  	 	 	384	  	
Additional paid-in capital	  	 	97,812	  	 	 	95,585	  	
Retained earnings	  	 	94,625	  	 	 	72,157	  	
Accumulated other comprehensive loss	  	 	(20,944	) 	 	 	(5,275	) 	

Total stockholders’ equity	  	 	171,887	  	 	 	162,851	  	

Total liabilities and stockholders’ equity	  	$	658,310	  	 	$	625,744	  	

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

 	  	Three Months Ended	 	
 	  	March 31,
2011	 	 	March 31,
2010	 	
Cash flows from operating activities	  	 	 	 	 	 	 	 	
Net income	  	$	22,468	  	 	$	31,101	  	
Adjustments to reconcile net income to net cash provided by operating activities	  	 	 	 	 	 	 	 	
Depreciation and amortization	  	 	13,903	  	 	 	15,477	  	
Provision for severance benefits	  	 	2,854	  	 	 	3,166	  	
Amortization of debt issuance costs	  	 	246	  	 	 	25	  	
Gain on foreign currency translation, net	  	 	(23,684	) 	 	 	(23,478	) 	
Gain on disposal of property, plant and equipment, net	  	 	—  	  	 	 	(9	) 	
Loss on disposal of intangible assets, net	  	 	4	  	 	 	2	  	
Restructuring and impairment charges	  	 	—  	  	 	 	336	  	
Stock-based compensation	  	 	641	  	 	 	1,473	  	
Cash used for reorganization items	  	 	—  	  	 	 	1,579	  	
Other	  	 	549	  	 	 	393	  	
Changes in operating assets and liabilities	  	 	 	 	 	 	 	 	
Accounts receivable	  	 	(9,250	) 	 	 	(29,684	) 	
Inventories	  	 	(3,467	) 	 	 	7,206	  	
Other receivables	  	 	(1,041	) 	 	 	(1,238	) 	
Other current assets	  	 	(1,449	) 	 	 	(3,659	) 	
Deferred tax assets	  	 	548	  	 	 	264	  	
Accounts payable	  	 	14,289	  	 	 	18,088	  	
Other accounts payable	  	 	(1,348	) 	 	 	(1,612	) 	
Accrued expenses	  	 	7,153	  	 	 	3,196	  	
Other current liabilities	  	 	(1,518	) 	 	 	(2,107	) 	
Long term other payable	  	 	184	  	 	 	(2,136	) 	
Payment of severance benefits	  	 	(1,610	) 	 	 	(1,092	) 	
Other	  	 	(256	) 	 	 	(788	) 	
 	  	 	 	 	 	 	 	 	
Net cash provided by operating activities before reorganization items	  	 	19,216	  	 	 	16,503	  	
 	  	 	 	 	 	 	 	 	
Cash used for reorganization items	  	 	—  	  	 	 	(1,579	) 	
 	  	 	 	 	 	 	 	 	
Net cash provided by operating activities	  	 	19,216	  	 	 	14,924	  	
 	  	 	 	 	 	 	 	 	
Cash flows from investing activities	  	 	 	 	 	 	 	 	
Proceeds from disposal of plant, property and equipment	  	 	—  	  	 	 	4	  	
Purchase of plant, property and equipment	  	 	(6,779	) 	 	 	(891	) 	
Payment for intellectual property registration	  	 	(165	) 	 	 	(152	) 	
Decrease in short-term financial instruments	  	 	—  	  	 	 	329	  	
Collection of guarantee deposits	  	 	979	  	 	 	972	  	
Payment of guarantee deposits	  	 	(1,004	) 	 	 	(56	) 	
Other	  	 	(44	) 	 	 	33	  	
 	  	 	 	 	 	 	 	 	
Net cash provided by (used in) investing activities	  	 	(7,013	) 	 	 	239	  	
 	  	 	 	 	 	 	 	 	
Cash flows from financing activities	  	 	 	 	 	 	 	 	
Proceeds from issuance of common stock	  	 	11,425	  	 	 	—  	  	
Repayment of current portion of long-term debt	  	 	—  	  	 	 	(154	) 	
Repayment of obligation under capital lease	  	 	(1,562	) 	 	 	 	 	
 	  	 	 	 	 	 	 	 	
Net cash provided by (used in) financing activities	  	 	9,863	  	 	 	(154	) 	
Effect of exchange rates on cash and cash equivalents	  	 	(59	) 	 	 	2,754	  	
 	  	 	 	 	 	 	 	 	
Net increase in cash and cash equivalents	  	 	22,007	  	 	 	17,763	  	
 	  	 	 	 	 	 	 	 	
Cash and cash equivalents	  	 	 	 	 	 	 	 	
Beginning of the period	  	 	172,172	  	 	 	64,925	  	
 	  	 	 	 	 	 	 	 	
End of the period	  	$	194,179	  	 	$	82,688