Seoul, July 27, 2005
hynix Semiconductor Inc. (‘hynix’ or ‘the Company’, www.hynix.com) today announced the earnings results for its second quarter of 2005, ended June 30, 2005.
The Company recorded the consolidated revenue of 1,272 billion won and operating profit of 266 billion won which are flat and down by 17% respectively from the previous quarter’s revenue of 1,270 billion won and operating profit of 321 billion won. The company also recorded net income of 237 billion won for the second quarter which is a 26% decrease from the previous quarter’s 321 billion won.
The sequential decrease in the operating profit was mainly due to a precipitous price decline in DRAM market that could not be completely offset by increased bit growth and reduced unit cost. Contrary to reduced DRAM sales, hynix’s NAND flash sales has increased, mainly attributable to the Company’s flexible use of its capacity and more favorable NAND Flash market condition than DRAM during the quarter.
As a result of its successful expansion of NAND flash business and competitive cost structure, hynix recorded relatively high operating profit margin of 21%, which is comparable with worsened financial results from some of its peers due to tough business environment. In parent basis, revenue for the second quarter was 1,235 billion won, operating profit was 214 billion won, which is a sequential decline of 4% and 29% respectively, while net income was 238 billion won, which is a decrease of 25% sequentially.
As of end of June 2005, consolidated cash and short-term financial instruments remained at 564 billion won which is decreased by approximately 230 billion won from 794 billion won in the previous quarter as the payments for first quarter’s capex has been reflected in the second quarter. Meanwhile, the debt level at the end of second quarter has declined by 70 billion won sequentially to 1.874 trillion won. Thus, our debt to equity ratio has improved to 37% at the end of second quarter which compares to 41% at the end of previous quarter. To date, hynix has continuously reduced its debt with operating cashflow and through disposition of its non-core assets.
Most recently, hynix successfully refinanced 1.2 trillion won of the 1.5 trillion won of debt under the Corporate Restructuring Promotion Act that was previously scheduled to mature in December 2006. The Company has obtained Syndication Loan which consists of a US dollar facility in the amount of US$ 500 million and a Won facility in the amount of 250 billion won from domestic and international financial institutions, and financed US$ 500 million of unsecured senior Notes from international capital market. As a result, the Company emerged from the Corporate Restructuring Promotion Act 1.5 years ahead of schedule since being placed under the joint management of the Creditors Council in October 2001.
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Please note that the financial results discussed herein are preliminary and speak only as of June 30, 2005. Readers should not assume that this information remains operative at a later time. In addition, this information may include forward-looking statements that involve a variety of risks and uncertainties that could cause actual results to differ materially. For further discussion of these risks and uncertainties, readers should refer to hynix Semiconductor Inc.’s filings with the Korean Securities and Exchange Commission. This document is neither an offer to sell nor a solicitation of an offer to sell any security of hynix. hynix securities may not be sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended.
