Seoul, July 20, 2006
hynix Semiconductor Inc. (‘hynix’, ‘the Company’, www.hynix.com) today announced the earnings results for its second quarter 2006, ended June 30, 2006. The Company recorded the consolidated (which is the consolidation of the Company and its overseas subsidiaries) revenues of 1.67 trillion won which is a 15% increase compared to the previous quarter’s 1.45 trillion won, and a 31% increase from 1.27 trillion won in the same period last year. Despite it was traditionally slow season, DRAM price held up relatively firm, primarily due to the industry-wide limited supply that was caused by the difficulties related to the technology shrink and the shift to specialty DRAMs that tend to have larger die sizes. The company’s weighted average selling price for the second quarter, thus has increased by 1% with bit shipment growth of 20% sequentially. On the other hand, the company’s weighted average selling price for NAND flash was down by 44% sequentially in the second quarter primarily due to the mix shift toward higher density and MLC products which yield to lower price per bit. Nevertheless, the price drop was completely offset with 84% of NAND flash bit shipment growth which was driven by the strong production bit growth based on the smooth transition to 70nm SLC and 90nm MLC technologies. As a result, the revenue contribution from DRAM has increased to 67% of total revenue in the second quarter from 63% in the previous quarter while NAND flash has declined to 33% from 37%. The Company recorded operating profit of 387 billion won in the second quarter, an 8% increase from previous quarter’s 360 billion won which resulted in the operating margin of 23% compared to previous quarter’s 25%. As a result, the Company’s EBITDA in the second quarter recorded 742 billion won, with EBITDA margin of 44%, which is an increase by 7% from 691 billion won in the previous quarter. Net income for the second quarter of 2006 increased by 13% to 334 billion won from 294 billion won of the previous quarter. As of end of the second quarter 2006, cash and short-term financial instruments increased slightly to 1.36 trillion won, which is an increase by 97 billion won from previous quarter’s 1.26 trillion won. The increase in the balance of cash and short-term financial instruments represents proceeds of US$300 million from the primary share issuance in the form of GDSs that were offered in last June. Meanwhile, debt level at the end of the quarter also increased by 69 billion won from 1.78 trillion won at the end of first quarter to 1.85 trillion won at the end of second quarter of 2006. Consequently, debt to equity ratio at second quarter end was improved only slightly to 25% from 27% of last quarter-end and net debt to equity ratio to 7% from 8%. As a reference to the consolidated financial results, the revenue of the parent company alone recorded 1.58 trillion won in the second quarter of 2006, which is a 4% increase from the previous quarter’s 1.51 trillion won, and a 28% increase from the 1.24 trillion won of the same period last year. Operating profit, however, was decreased by 14% sequentially to 323 billion won in the second quarter from 376 billion won in the previous quarter, recording operating margin of 20% from 25% in the previous quarter. Consequently, EBITDA also declined by 4% to 648 billion won in the second quarter from 676 billion won in the previous quarter. Net income, however, increased by 12% sequentially to 324 billion won in the second quarter from 289 billion won in the previous quarter.
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Please note that the financial results discussed herein are preliminary and speak only as of June 30, 2006. 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 Korea Exchange. 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.
