☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of each class |
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Common Stock, par value $0.01 per share | MX | New York Stock Exchange |
Large accelerated filer | ☐ | Accelerated filer | ☒ | |||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||
Emerging growth company | ☐ |
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56 |
Item 1. | Interim Consolidated Financial Statements (Unaudited) |
Assets Current assets Cash and cash equivalents Accounts receivable, net Inventories, net Other receivables Prepaid expenses Hedge collateral (Note 9) Other current assets (Notes 10 and 18) Current assets held for sale (Note 2) Total current assets Property, plant and equipment, net Operating leaseright-of-use assets Intangible assets, net Long-term prepaid expenses Othernon-current assets Non-current assets held for sale (Note 2) Total assets Liabilities and Stockholders’ Equity Current liabilities Accounts payable Other accounts payable Accrued expenses Operating lease liabilities Current portion of long-term borrowings, net Other current liabilities (Note 10) Current liabilities held for sale (Note 2) Total current liabilities Long-term borrowings, net Accrued severance benefits, net Othernon-current liabilities Non-current liabilities held for sale (Note 2) Total liabilities Commitments and contingencies (Note 18) Stockholders’ equity Common stock, $0.01 par value, 150,000,000 shares authorized, 44,160,355 shares issued and 35,054,682 outstanding at March 31, 2020 and 43,851,991 shares issued and 34,800,312 outstanding at December 31, 2019 Additionalpaid-in capital Accumulated deficit Treasury stock, 9,105,673 shares at March 31, 2020 and 9,051,679 shares at December 31, 2019, respectively Accumulated other comprehensive income (loss) Total stockholders’ deficit Total liabilities and stockholders’ equity March 31,
2020 December 31,
2019 (In thousands of US dollars,
except share data) $ 157,293 $ 151,657 60,688 47,447 37,130 41,404 8,297 10,200 11,148 9,003 13,270 9,820 6,762 10,013 201,619 99,821 496,207 379,365 67,201 73,068 1,413 1,876 2,583 2,769 4,117 5,757 8,439 9,059 — 123,434 $ 579,960 $ 595,328 $ 40,206 $ 40,376 6,379 6,410 41,489 44,799 1,301 1,625 82,328 — 6,982 3,583 142,013 37,040 320,698 133,833 223,012 304,743 48,765 51,181 8,641 9,671 — 110,881 601,116 610,309 442 439 153,286 152,404 (81,880 ) (58,131 ) (107,649 ) (107,033 ) 14,645 (2,660 ) (21,156 ) (14,981 ) $ 579,960 $ 595,328
June 30, 2020 | December 31, 2019 | |||||||
(In thousands of US dollars, except share data) | ||||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 192,824 | $ | 151,657 | ||||
Accounts receivable, net | 48,548 | 47,447 | ||||||
Inventories, net | 45,511 | 41,404 | ||||||
Other receivables | 10,406 | 10,200 | ||||||
Prepaid expenses | 8,598 | 9,003 | ||||||
Hedge collateral (Note 9) | 11,740 | 9,820 | ||||||
Other current assets (Notes 10 and 18) | 7,405 | 10,013 | ||||||
Current assets held for sale (Note 2) | 205,086 | 99,821 | ||||||
Total current assets | 530,118 | 379,365 | ||||||
Property, plant and equipment, net | 69,110 | 73,068 | ||||||
Operating lease right-of-use | 1,182 | 1,876 | ||||||
Intangible assets, net | 2,590 | 2,769 | ||||||
Long-term prepaid expenses | 2,936 | 5,757 | ||||||
Other non-current assets | 9,212 | 9,059 | ||||||
Non-current assets held for sale (Note 2) | — | 123,434 | ||||||
Total assets | $ | 615,148 | $ | 595,328 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 42,366 | $ | 40,376 | ||||
Other accounts payable | 4,049 | 6,410 | ||||||
Accrued expenses (Note 8) | 45,735 | 44,799 | ||||||
Operating lease liabilities | 1,053 | 1,625 | ||||||
Current portion of long-term borrowings, net | 82,706 | — | ||||||
Other current liabilities (Note 10) | 5,481 | 3,583 | ||||||
Current liabilities held for sale (Note 2) | 146,569 | 37,040 | ||||||
Total current liabilities | 327,959 | 133,833 | ||||||
Long-term borrowings, net | 223,242 | 304,743 | ||||||
Accrued severance benefits, net | 49,927 | 51,181 | ||||||
Other non-current liabilities | 7,845 | 9,671 | ||||||
Non-current liabilities held for sale (Note 2) | — | 110,881 | ||||||
Total liabilities | 608,973 | 610,309 | ||||||
Commitments and contingencies (Note 18) | ||||||||
Stockholders’ equity | ||||||||
Common stock, $0.01 par value, 150,000,000 shares authorized, 44,248,706 shares issued and 35,143,033 outstanding at June 30, 2020 and 43,851,991 shares issued and 34,800,312 outstanding at December 31, 2019 | 443 | 439 | ||||||
Additional paid-in capital | 155,591 | 152,404 | ||||||
Accumulated deficit | (52,709 | ) | (58,131 | ) | ||||
Treasury stock, 9,105,673 shares at June 30, 2020 and 9,051,679 shares at December 31, 2019, respectively | (107,649 | ) | (107,033 | ) | ||||
Accumulated other comprehensive income (loss) | 10,499 | (2,660 | ) | |||||
Total stockholders’ equity (deficit) | 6,175 | (14,981 | ) | |||||
Total liabilities and stockholders’ equity | $ | 615,148 | $ | 595,328 | ||||
Three Months Ended | ||||||||
March 31, 2020 | March 31, 2019 | |||||||
(In thousands of US dollars, except share data) | ||||||||
Revenues: | ||||||||
Net sales – standard products business | $ | 110,736 | $ | 100,264 | ||||
Net sales – transitional Fab 3 foundry services | 9,737 | 7,003 | ||||||
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Total revenues | 120,473 | 107,267 | ||||||
Cost of sales: | ||||||||
Cost of sales – standard products business | 81,606 | 81,241 | ||||||
Cost of sales – transitional Fab 3 foundry services | 9,737 | 7,003 | ||||||
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Total cost of sales | 91,343 | 88,244 | ||||||
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Gross profit | 29,130 | 19,023 | ||||||
Operating expenses: | ||||||||
Selling, general and administrative expenses | 12,102 | 12,036 | ||||||
Research and development expenses | 10,509 | 12,044 | ||||||
Other charges | 554 | — | ||||||
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Total operating expenses | 23,165 | 24,080 | ||||||
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Operating income (loss) | 5,965 | (5,057 | ) | |||||
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Interest expense | (5,607 | ) | (5,637 | ) | ||||
Foreign currency loss, net | (30,971 | ) | (10,610 | ) | ||||
Loss on early extinguishment of long-term borrowings, net | — | (42 | ) | |||||
Other income, net | 838 | 587 | ||||||
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Loss from continuing operations before income tax expense | (29,775 | ) | (20,759 | ) | ||||
Income tax expense | 1,303 | 796 | ||||||
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Loss from continuing operations | (31,078 | ) | (21,555 | ) | ||||
Income (loss) from discontinued operations, net of tax | 7,329 | (12,570 | ) | |||||
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Net loss | $ | (23,749 | ) | $ | (34,125 | ) | ||
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Basic and diluted earnings (loss) per common share— | ||||||||
Continuing operations | $ | (0.89 | ) | $ | (0.63 | ) | ||
Discontinued operations | 0.21 | (0.37 | ) | |||||
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Total | $ | (0.68 | ) | $ | (1.00 | ) | ||
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Weighted average number of shares – basic and diluted | 34,893,157 | 34,194,878 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | |||||||||||||
(In thousands of US dollars, except share data) | ||||||||||||||||
Revenues: | ||||||||||||||||
Net sales – standard products business | $ | 108,955 | $ | 132,006 | $ | 219,691 | $ | 232,270 | ||||||||
Net sales – transitional Fab 3 foundry services | 9,873 | 8,879 | 19,610 | 15,882 | ||||||||||||
Total revenues | 118,828 | 140,885 | 239,301 | 248,152 | ||||||||||||
Cost of sales: | ||||||||||||||||
Cost of sales – standard products business | 76,817 | 100,384 | 158,423 | 181,625 | ||||||||||||
Cost of sales – transitional Fab 3 foundry services | 9,873 | 8,879 | 19,610 | 15,882 | ||||||||||||
Total cost of sales | 86,690 | 109,263 | 178,033 | 197,507 | ||||||||||||
Gross profit | 32,138 | 31,622 | 61,268 | 50,645 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative expenses | 12,408 | 11,095 | 24,510 | 23,131 | ||||||||||||
Research and development expenses | 11,108 | 11,772 | 21,617 | 23,816 | ||||||||||||
Other charges | — | — | 554 | — | ||||||||||||
Total operating expenses | 23,516 | 22,867 | 46,681 | 46,947 | ||||||||||||
Operating income: | 8,622 | 8,755 | 14,587 | 3,698 | ||||||||||||
Interest expense | (5,430 | ) | (5,439 | ) | (11,037 | ) | (11,076 | ) | ||||||||
Foreign currency gain (loss), net | 8,469 | (11,571 | ) | (22,502 | ) | (22,181 | ) | |||||||||
Loss on early extinguishment of long-term borrowings, net | — | — | — | (42 | ) | |||||||||||
Other income, net | 791 | 551 | 1,629 | 1,138 | ||||||||||||
Income (loss) from continuing operations before income tax expense | 12,452 | (7,704 | ) | (17,323 | ) | (28,463 | ) | |||||||||
Income tax expense | 678 | 786 | 1,981 | 1,582 | ||||||||||||
Income (loss) from continuing operations | 11,774 | (8,490 | ) | (19,304 | ) | (30,045 | ) | |||||||||
Income (loss) from discontinued operations, net of tax | 17,397 | (1,030 | ) | 24,726 | (13,600 | ) | ||||||||||
Net income (loss) | $ | 29,171 | $ | (9,520 | ) | $ | 5,422 | $ | (43,645 | ) | ||||||
Basic earnings (loss) per common share— | ||||||||||||||||
Continuing operations | $ | 0.34 | $ | (0.25 | ) | $ | (0.55 | ) | $ | (0.88 | ) | |||||
Discontinued operations | 0.50 | (0.03 | ) | 0.71 | (0.40 | ) | ||||||||||
Total | $ | 0.84 | $ | (0.28 | ) | $ | 0.16 | $ | (1.28 | ) | ||||||
Diluted earnings (loss) per common share— | ||||||||||||||||
Continuing operations | $ | 0.28 | $ | (0.25 | ) | $ | (0.55 | ) | $ | (0.88 | ) | |||||
Discontinued operations | 0.37 | (0.03 | ) | 0.71 | (0.40 | ) | ||||||||||
Total | $ | 0.65 | $ | (0.28 | ) | $ | 0.16 | $ | (1.28 | ) | ||||||
Weighted average number of shares— | ||||||||||||||||
Basic | 35,092,312 | 34,245,127 | 34,992,734 | 34,220,141 | ||||||||||||
Diluted | 46,474,237 | 34,245,127 | 34,992,734 | 34,220,141 |
Three Months Ended | ||||||||
March 31, 2020 | March 31, 2019 | |||||||
(In thousands of US dollars) | ||||||||
Net loss | $ | (23,749 | ) | $ | (34,125 | ) | ||
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Other comprehensive income (loss) | ||||||||
Foreign currency translation adjustments | 22,251 | 7,304 | ||||||
Derivative adjustments | ||||||||
Fair valuation of derivatives | (5,004 | ) | (499 | ) | ||||
Reclassification adjustment for loss on derivatives included in net loss | 58 | 187 | ||||||
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Total other comprehensive income | 17,305 | 6,992 | ||||||
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Total comprehensive loss | $ | (6,444 | ) | $ | (27,133 | ) | ||
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Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | |||||||||||||
(In thousands of US dollars) | ||||||||||||||||
Net income (loss) | $ | 29,171 | $ | (9,520 | ) | $ | 5,422 | $ | (43,645 | ) | ||||||
Other comprehensive income (loss) | ||||||||||||||||
Foreign currency translation adjustments | (6,543 | ) | 7,680 | 15,708 | 14,984 | |||||||||||
Derivative adjustments | ||||||||||||||||
Fair valuation of derivatives | 2,204 | (2,499 | ) | (2,800 | ) | (2,900 | ) | |||||||||
Reclassification adjustment for loss on derivatives included in net income (loss) | 193 | 1,864 | 251 | 1,953 | ||||||||||||
Total other comprehensive income (loss) | (4,146 | ) | 7,045 | 13,159 | 14,037 | |||||||||||
Total comprehensive income (loss) | $ | 25,025 | $ | (2,475 | ) | $ | 18,581 | $ | (29,608 | ) | ||||||
Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | |||||||||||||||||||||||||||
Common Stock | Accumulated Deficit | Treasury Stock | Total | |||||||||||||||||||||||||
(In thousands of US dollars, except share data) | Shares | Amount | ||||||||||||||||||||||||||
Three Months Ended March 31, 2020: | ||||||||||||||||||||||||||||
Balance at December 31, 2019, as previously reported | 34,800,312 | $ | 439 | $ | 152,404 | $ | (58,131 | ) | $ | (107,033 | ) | $ | (2,660 | ) | $ | (14,981 | ) | |||||||||||
Stock-based compensation | — | — | 885 | — | — | — | 885 | |||||||||||||||||||||
Settlement of restricted stock units | 308,364 | 3 | (3 | ) | — | — | — | — | ||||||||||||||||||||
Acquisition of treasury stock | (53,994 | ) | — | — | — | (616 | ) | — | (616 | ) | ||||||||||||||||||
Other comprehensive income, net | — | — | — | — | — | 17,305 | 17,305 | |||||||||||||||||||||
Net loss | — | — | — | (23,749 | ) | — | — | (23,749 | ) | |||||||||||||||||||
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Balance at March 31, 2020 | 35,054,682 | $ | 442 | $ | 153,286 | $ | (81,880 | ) | $ | (107,649 | ) | $ | 14,645 | $ | (21,156 | ) | ||||||||||||
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Three Months Ended March 31, 2019: | ||||||||||||||||||||||||||||
Balance at December 31, 2018, as previously reported | 34,441,232 | $ | 431 | $ | 142,600 | $ | (36,305 | ) | $ | (103,926 | ) | $ | (20,110 | ) | $ | (17,310 | ) | |||||||||||
Stock-based compensation | — | — | 669 | — | — | — | 669 | |||||||||||||||||||||
Exercise of stock options | 8,624 | 0 | 48 | — | — | — | 48 | |||||||||||||||||||||
Settlement of restricted stock units | 167,453 | 2 | (2 | ) | — | — | — | — | ||||||||||||||||||||
Acquisition of treasury stock | (393,807 | ) | — | — | — | (2,585 | ) | — | (2,585 | ) | ||||||||||||||||||
Other comprehensive income, net | — | — | — | — | — | 6,992 | 6,992 | |||||||||||||||||||||
Net loss | — | — | — | (34,125 | ) | — | — | (34,125 | ) | |||||||||||||||||||
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Balance at March 31, 2019 | 34,223,502 | $ | 433 | $ | 143,315 | $ | (70,430 | ) | $ | (106,511 | ) | $ | (13,118 | ) | $ | (46,311 | ) | |||||||||||
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Common Stock | Additional Paid-In | Accumulated | Treasury | Accumulated Other Comprehensive | ||||||||||||||||||||||||
(In thousands of US dollars, except share data) | Shares | Amount | Capital | Deficit | Stock | Income (Loss) | Total | |||||||||||||||||||||
Three Months Ended June 30, 2020: | ||||||||||||||||||||||||||||
Balance at March 31, 2020 | 35,054,682 | $ | 442 | $ | 153,286 | $ | (81,880 | ) | $ | (107,649 | ) | $ | 14,645 | $ | (21,156 | ) | ||||||||||||
Stock-based compensation | — | — | 1,643 | — | — | — | 1,643 | |||||||||||||||||||||
Exercise of stock options | 88,351 | 1 | 662 | — | — | — | 663 | |||||||||||||||||||||
Other comprehensive loss, net | — | — | — | — | — | (4,146 | ) | (4,146 | ) | |||||||||||||||||||
Net income | — | — | — | 29,171 | — | — | 29,171 | |||||||||||||||||||||
Balance at June 30, 2020 | 35,143,033 | $ | 443 | $ | 155,591 | $ | (52,709 | ) | $ | (107,649 | ) | $ | 10,499 | $ | 6,175 | |||||||||||||
Three Months Ended June 30, 2019: | ||||||||||||||||||||||||||||
Balance at March 31, 2019 | 34,223,502 | $ | 433 | $ | 143,315 | $ | (70,430 | ) | $ | (106,511 | ) | $ | (13,118 | ) | $ | (46,311 | ) | |||||||||||
Stock-based compensation | — | — | 772 | — | — | — | 772 | |||||||||||||||||||||
Exercise of stock options | 15,934 | 0 | 101 | — | — | — | 101 | |||||||||||||||||||||
Settlement of restricted stock units | 1,040 | 0 | (0 | ) | — | — | — | — | ||||||||||||||||||||
Acquisition of treasury stock | (295 | ) | — | — | — | (3 | ) | — | (3 | ) | ||||||||||||||||||
Other comprehensive income, net | — | — | — | — | — | 7,045 | 7,045 | |||||||||||||||||||||
Net loss | — | — | — | (9,520 | ) | — | — | (9,520 | ) | |||||||||||||||||||
Balance at June 30, 2019 | 34,240,181 | $ | 433 | $ | 144,188 | $ | (79,950 | ) | $ | (106,514 | ) | $ | (6,073 | ) | $ | (47,916 | ) | |||||||||||
Common Stock | Additional Paid-In | Accumulated | Treasury | Accumulated Other Comprehensive | ||||||||||||||||||||||||
(In thousands of US dollars, except share data) | Shares | Amount | Capital | Deficit | Stock | Income (Loss) | Total | |||||||||||||||||||||
Six Months Ended June 30, 2020: | ||||||||||||||||||||||||||||
Balance at December 31, 2019 | 34,800,312 | $ | 439 | $ | 152,404 | $ | (58,131 | ) | $ | (107,033 | ) | $ | (2,660 | ) | $ | (14,981 | ) | |||||||||||
Stock-based compensation | — | — | 2,528 | — | — | — | 2,528 | |||||||||||||||||||||
Exercise of stock options | 88,351 | 1 | 662 | — | — | — | 663 | |||||||||||||||||||||
Settlement of restricted stock units | 308,364 | 3 | (3 | ) | — | — | — | — | ||||||||||||||||||||
Acquisition of treasury stock | (53,994 | ) | — | — | — | (616 | ) | — | (616 | ) | ||||||||||||||||||
Other comprehensive income, net | — | — | — | — | — | 13,159 | 13,159 | |||||||||||||||||||||
Net income | — | — | — | 5,422 | — | — | 5,422 | |||||||||||||||||||||
Balance at June 30, 2020 | 35,143,033 | $ | 443 | $ | 155,591 | $ | (52,709 | ) | $ | (107,649 | ) | $ | 10,499 | $ | 6,175 | |||||||||||||
Six Months Ended June 30, 2019: | ||||||||||||||||||||||||||||
Balance at December 31, 2018 | 34,441,232 | $ | 431 | $ | 142,600 | $ | (36,305 | ) | $ | (103,926 | ) | $ | (20,110 | ) | $ | (17,310 | ) | |||||||||||
Stock-based compensation | — | — | 1,441 | — | — | — | 1,441 | |||||||||||||||||||||
Exercise of stock options | 24,558 | 0 | 149 | — | — | — | 149 | |||||||||||||||||||||
Settlement of restricted stock units | 168,493 | 2 | (2 | ) | — | — | — | — | ||||||||||||||||||||
Acquisition of treasury stock | (394,102 | ) | — | — | — | (2,588 | ) | — | (2,588 | ) | ||||||||||||||||||
Other comprehensive income, net | — | — | — | — | — | 14,037 | 14,037 | |||||||||||||||||||||
Net loss | — | — | — | (43,645 | ) | — | — | (43,645 | ) | |||||||||||||||||||
Balance at June 30, 2019 | 34,240,181 | $ | 433 | $ | 144,188 | $ | (79,950 | ) | $ | (106,514 | ) | $ | (6,073 | ) | $ | (47,916 | ) | |||||||||||
Three Months Ended | ||||||||
March 31, 2020 | March 31, 2019 | |||||||
(In thousands of US dollars) | ||||||||
Cash flows from operating activities | ||||||||
Net loss | $ | (23,749 | ) | $ | (34,125 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities | ||||||||
Depreciation and amortization | 7,935 | 8,303 | ||||||
Provision for severance benefits | 5,071 | 3,117 | ||||||
Amortization of debt issuance costs and original issue discount | 598 | 571 | ||||||
Loss on foreign currency, net | 38,480 | 11,720 | ||||||
Restructuring and other charges | 2,138 | 2,822 | ||||||
Provision for inventory reserves | 570 | 4,645 | ||||||
Stock-based compensation | 885 | 669 | ||||||
Loss on early extinguishment of long-term borrowings, net | — | 42 | ||||||
Other | 107 | 96 | ||||||
Changes in operating assets and liabilities | ||||||||
Accounts receivable, net | (10,430 | ) | (12,844 | ) | ||||
Unbilled accounts receivable, net | 6,937 | 9,726 | ||||||
Inventories | (4,863 | ) | (15,230 | ) | ||||
Other receivables | 1,982 | (4,205 | ) | |||||
Other current assets | 909 | 1,836 | ||||||
Accounts payable | 1,988 | 20,874 | ||||||
Other accounts payable | (1,817 | ) | 2,797 | |||||
Accrued expenses | (6,611 | ) | (5,365 | ) | ||||
Other current liabilities | 1,062 | (6,293 | ) | |||||
Othernon-current liabilities | 1,808 | 1,085 | ||||||
Payment of severance benefits | (2,080 | ) | (2,263 | ) | ||||
Other | 148 | 347 | ||||||
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Net cash provided by (used in) operating activities | 21,068 | (11,675 | ) | |||||
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Cash flows from investing activities | ||||||||
Proceeds from settlement of hedge collateral | 4,239 | 2,242 | ||||||
Payment of hedge collateral | (7,841 | ) | — | |||||
Purchase of property, plant and equipment | (3,351 | ) | (11,207 | ) | ||||
Payment for intellectual property registration | (229 | ) | (232 | ) | ||||
Collection of guarantee deposits | 47 | 298 | ||||||
Payment of guarantee deposits | — | (892 | ) | |||||
Other | 8 | (10 | ) | |||||
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Net cash used in investing activities | (7,127 | ) | (9,801 | ) | ||||
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Cash flows from financing activities | ||||||||
Repurchase of long-term borrowings | — | (1,175 | ) | |||||
Proceeds from exercise of stock options | — | 48 | ||||||
Acquisition of treasury stock | (1,021 | ) | (2,353 | ) | ||||
Repayment of financing related to water treatment facility arrangement | (135 | ) | (143 | ) | ||||
Repayment of principal portion of finance lease liabilities | (60 | ) | (59 | ) | ||||
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Net cash used in financing activities | (1,216 | ) | (3,682 | ) | ||||
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Effect of exchange rates on cash and cash equivalents | (7,089 | ) | (1,468 | ) | ||||
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| |||||
Net increase (decrease) in cash and cash equivalents | 5,636 | (26,626 | ) | |||||
|
|
|
| |||||
Cash and cash equivalents | ||||||||
Beginning of the period | 151,657 | 132,438 | ||||||
|
|
|
| |||||
End of the period | $ | 157,293 | $ | 105,812 | ||||
|
|
|
| |||||
Supplemental cash flow information | ||||||||
Cash paid for interest | $ | 9,522 | $ | 9,549 | ||||
|
|
|
| |||||
Cash paid for income taxes | $ | 1,534 | $ | 1,556 | ||||
|
|
|
| |||||
Non-cash investing activities | ||||||||
Property, plant and equipment additions in other accounts payable | $ | 687 | $ | 2,643 | ||||
|
|
|
| |||||
Non-cash financing activities | ||||||||
Acquisition of treasury stock to satisfy the tax withholding obligations in connection with equity-based compensation | $ | — | $ | (232 | ) | |||
|
|
|
|
Six Months Ended | ||||||||
June 30, 2020 | June 30, 2019 | |||||||
(In thousands of US dollars) | ||||||||
Cash flows from operating activities | ||||||||
Net income (loss) | $ | 5,422 | $ | (43,645 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities | ||||||||
Depreciation and amortization | 10,479 | 16,505 | ||||||
Provision for severance benefits | 10,179 | 6,406 | ||||||
Amortization of debt issuance costs and original issue discount | 1,205 | 1,134 | ||||||
Loss on foreign currency, net | 26,397 | 24,609 | ||||||
Restructuring and other charges | 141 | 732 | ||||||
Provision for inventory reserves | 2,033 | 8,940 | ||||||
Stock-based compensation | 2,528 | 1,441 | ||||||
Loss on early extinguishment of long-term borrowings, net | — | 42 | ||||||
Other | (111 | ) | (494 | ) | ||||
Changes in operating assets and liabilities | ||||||||
Accounts receivable, net | (438 | ) | (20,974 | ) | ||||
Unbilled accounts receivable, net | 10,933 | 6,201 | ||||||
Inventories | (14,060 | ) | (7,351 | ) | ||||
Other receivables | 67 | (2,969 | ) | |||||
Other current assets | 4,747 | 5,929 | ||||||
Accounts payable | 4,947 | 32,137 | ||||||
Other accounts payable | (5,898 | ) | (3,960 | ) | ||||
Accrued expenses | 161 | 2,880 | ||||||
Other current liabilities | 1,220 | (7,491 | ) | |||||
Other non-current liabilities | 1,238 | 1,716 | ||||||
Payment of severance benefits | (4,272 | ) | (4,579 | ) | ||||
Other | 147 | (54 | ) | |||||
Net cash provided by operating activities | 57,065 | 17,155 | ||||||
Cash flows from investing activities | ||||||||
Proceeds from settlement of hedge collateral | 5,855 | 4,627 | ||||||
Payment of hedge collateral | (7,841 | ) | (8,395 | ) | ||||
Purchase of property, plant and equipment | (8,842 | ) | (15,000 | ) | ||||
Payment for intellectual property registration | (473 | ) | (642 | ) | ||||
Collection of guarantee deposits | 47 | 388 | ||||||
Payment of guarantee deposits | (571 | ) | (1,330 | ) | ||||
Other | 21 | 193 | ||||||
Net cash used in investing activities | (11,804 | ) | (20,159 | ) | ||||
Cash flows from financing activities | ||||||||
Repurchase of long-term borrowings | — | (1,175 | ) | |||||
Proceeds from exercise of stock options | 663 | 149 | ||||||
Acquisition of treasury stock | (1,021 | ) | (2,588 | ) | ||||
Repayment of financing related to water treatment facility arrangement | (267 | ) | (281 | ) | ||||
Repayment of principal portion of finance lease liabilities | (119 | ) | (118 | ) | ||||
Net cash used in financing activities | (744 | ) | (4,013 | ) | ||||
Effect of exchange rates on cash and cash equivalents | (3,350 | ) | (1,668 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 41,167 | (8,685 | ) | |||||
Cash and cash equivalents | ||||||||
Beginning of the period | 151,657 | 132,438 | ||||||
End of the period | $ | 192,824 | $ | 123,753 | ||||
Supplemental cash flow information | ||||||||
Cash paid for interest | $ | 9,522 | $ | 9,549 | ||||
Cash paid for income taxes | $ | 1,889 | $ | 1,881 | ||||
Non-cash investing activities | ||||||||
Property, plant and equipment additions in other accounts payable | $ | 602 | $ | 687 | ||||
Three Months Ended | ||||||||
March 31, 2020 | March 31, 2019 | |||||||
(In thousands of US dollars) | ||||||||
Revenues: | ||||||||
Net sales – Foundry Services Group | $ | 86,279 | $ | 57,116 | ||||
Net sales – transitional Fab 3 foundry services | (9,737 | ) | (7,003 | ) | ||||
|
|
|
| |||||
Total revenues | 76,542 | 50,113 | ||||||
Cost of sales: | ||||||||
Cost of sales – Foundry Services Group | 65,583 | 53,438 | ||||||
Cost of sales – transitional Fab 3 foundry services | (9,737 | ) | (7,003 | ) | ||||
|
|
|
| |||||
Total cost of sales | 55,846 | 46,435 | ||||||
|
|
|
| |||||
Gross profit | 20,696 | 3,678 | ||||||
Operating expenses: | ||||||||
Selling, general and administrative expenses | 5,644 | 6,034 | ||||||
Research and development expenses | 7,403 | 7,974 | ||||||
Restructuring and other charges | 2,115 | 2,894 | ||||||
|
|
|
| |||||
Total operating expenses | 15,162 | 16,902 | ||||||
|
|
|
| |||||
Operating income (loss) from discontinued operations | 5,534 | (13,224 | ) | |||||
Foreign currency gain, net | 2,097 | 613 | ||||||
Other income | 107 | 86 | ||||||
|
|
|
| |||||
Income (loss) from discontinued operations before income tax expense | 7,738 | (12,525 | ) | |||||
Income tax expense | 409 | 45 | ||||||
|
|
|
| |||||
Income (loss) from discontinued operations, net of tax | $ | 7,329 | $ | (12,570 | ) | |||
|
|
|
|
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | |||||||||||||
(In thousands of US dollars, except share data) | ||||||||||||||||
Revenues: | ||||||||||||||||
Net sales – Foundry Services Group | $ | 95,779 | $ | 73,139 | $ | 182,058 | $ | 130,255 | ||||||||
Net sales – transitional Fab 3 foundry services | (9,873 | ) | (8,879 | ) | (19,610 | ) | (15,882 | ) | ||||||||
Total revenues | 85,906 | 64,260 | 162,448 | 114,373 | ||||||||||||
Cost of sales: | ||||||||||||||||
Cost of sales – Foundry Services Group | 64,869 | 60,921 | 130,452 | 114,359 | ||||||||||||
Cost of sales – transitional Fab 3 foundry services | (9,873 | ) | (8,879 | ) | (19,610 | ) | (15,882 | ) | ||||||||
Total cost of sales | 54,996 | 52,042 | 110,842 | 98,477 | ||||||||||||
Gross profit | 30,910 | 12,218 | 51,606 | 15,896 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative expenses | 4,992 | 5,880 | 10,636 | 11,914 | ||||||||||||
Research and development expenses | 6,915 | 7,217 | 14,318 | 15,191 | ||||||||||||
Restructuring and other charges | 589 | 1,130 | 2,704 | 4,024 | ||||||||||||
Total operating expenses | 12,496 | 14,227 | 27,658 | 31,129 | ||||||||||||
Operating income (loss) from discontinued operations | 18,414 | (2,009 | ) | 23,948 | (15,233 | ) | ||||||||||
Foreign currency gain (loss), net | (23 | ) | 1,140 | 2,074 | 1,753 | |||||||||||
Others, net | (59 | ) | (135 | ) | 48 | (49 | ) | |||||||||
Income (loss) from discontinued operations before income tax expense | 18,332 | (1,004 | ) | 26,070 | (13,529 | ) | ||||||||||
Income tax expense | 935 | 26 | 1,344 | 71 | ||||||||||||
Income (loss) from discontinued operations, net of tax | 17,397 | (1,030 | ) | 24,726 | (13,600 | ) | ||||||||||
March 31, 2020 | December 31, 2019 | |||||||
(In thousands of US dollars) | ||||||||
Assets | ||||||||
Current assets | ||||||||
Accounts receivable, net | $ | 40,735 | $ | 48,194 | ||||
Unbilled accounts receivable, net | 9,374 | 16,463 | ||||||
Inventories, net | 34,968 | 31,863 | ||||||
Other current assets | 2,891 | 3,301 | ||||||
Other assets of the disposal group classified as held for sale | 1,461 | — | ||||||
|
|
|
| |||||
Total current assets held for sale | $ | 89,429 | $ | 99,821 | ||||
|
|
|
| |||||
Property, plant and equipment, net | 99,604 | 109,506 | ||||||
Intangible assets, net | 1,202 | 1,245 | ||||||
Othernon-current assets | 11,384 | 12,683 | ||||||
|
|
|
| |||||
Total assets held for sale | $ | 201,619 | $ | 223,255 | ||||
|
|
|
| |||||
Liabilities | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 20,462 | $ | 20,503 | ||||
Other current liabilities | 14,773 | 16,537 | ||||||
|
|
|
| |||||
Total current liabilities held for sale | $ | 35,235 | $ | 37,040 | ||||
|
|
|
| |||||
Accrued severance benefits, net | 93,121 | 95,547 | ||||||
Othernon-current liabilities | 13,657 | 15,334 | ||||||
|
|
|
| |||||
Total liabilities held for sale | $ | 142,013 | $ | 147,921 | ||||
|
|
|
|
June 30, 2020 | December 31, 2019 | |||||||
(In thousands of US dollars) | ||||||||
Assets | ||||||||
Current assets | ||||||||
Accounts receivable, net | $ | 42,789 | $ | 48,194 | ||||
Unbilled accounts receivable | 5,936 | 16,463 | ||||||
Inventories, net | 36,602 | 31,863 | ||||||
Other current assets | 2,933 | 3,301 | ||||||
Other assets of the disposal group classified as held for sale | 683 | — | ||||||
Total current assets held for sale | $ | 88,943 | $ | 99,821 | ||||
Property, plant and equipment, net | 103,887 | 109,506 | ||||||
Intangible assets, net | 1,350 | 1,245 | ||||||
Other non-current assets | 10,906 | 12,683 | ||||||
Total assets held for sale | $ | 205,086 | $ | 223,255 | ||||
Liabilities | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 21,530 | $ | 20,503 | ||||
Other current liabilities | 14,266 | 16,537 | ||||||
Total current liabilities held for sale | $ | 35,796 | $ | 37,040 | ||||
Accrued severance benefits, net | 97,485 | 95,547 | ||||||
Other non-current liabilities | 13,288 | 15,334 | ||||||
Total liabilities held for sale | $ | 146,569 | $ | 147,921 | ||||
Three Months Ended | ||||||||
March 31, 2020 | March 31, 2019 | |||||||
(In thousands of US dollars) | ||||||||
Significant non-cash operating activities: | ||||||||
Depreciation and amortization | $ | 5,365 | $ | 5,752 | ||||
Provision for severance benefits | 3,052 | 1,803 | ||||||
Stock-based compensation | 123 | 106 | ||||||
Investing activities: | ||||||||
Capital expenditures | $ | (1,479 | ) | $ | (4,469 | ) |
Six Months Ended | ||||||||
June 30, 2020 | June 30, 2019 | |||||||
(In thousands of US dollars) | ||||||||
Significant non-cash operating activities: | ||||||||
Depreciation and amortization | $ | 5,365 | $ | 11,403 | ||||
Provision for severance benefits | 6,405 | 3,763 | ||||||
Stock-based compensation | 263 | 210 | ||||||
Investing activities: | ||||||||
Capital expenditures | $ | (4,415 | ) | $ | (8,262 | ) |
March 31, 2020 | December 31, 2019 | |||||||
Finished goods | $ | 8,448 | $ | 10,087 | ||||
Semi-finished goods andwork-in-process | 25,342 | 28,815 | ||||||
Raw materials | 7,916 | 8,449 | ||||||
Materialsin-transit | 231 | — | �� | |||||
Less: inventory reserve | (4,807 | ) | (5,947 | ) | ||||
|
|
|
| |||||
Inventories, net | $ | 37,130 | $ | 41,404 | ||||
|
|
|
|
June 30, 2020 | December 31, 2019 | |||||||
Finished goods | $ | 11,252 | $ | 10,087 | ||||
Semi-finished goods and work-in-process | 32,196 | 28,815 | ||||||
Raw materials | 6,627 | 8,449 | ||||||
Materials in-transit | 743 | — | ||||||
Less: inventory reserve | (5,307 | ) | (5,947 | ) | ||||
Inventories, net | $ | 45,511 | $ | 41,404 | ||||
Three Months Ended | ||||||||
March 31, 2020 | March 31, 2019 | |||||||
Beginning balance | $ | (5,947 | ) | $ | (4,845 | ) | ||
Change in reserve | ||||||||
Inventory reserve charged to costs of sales | (1,275 | ) | (5,073 | ) | ||||
Sale of previously reserved inventory | 906 | 476 | ||||||
|
|
|
| |||||
(369 | ) | (4,597 | ) | |||||
Write off | 499 | 592 | ||||||
Translation adjustments | 316 | 160 | ||||||
Reclassified to assets held for sale | 694 | — | ||||||
|
|
|
| |||||
Ending balance | $ | (4,807 | ) | $ | (8,690 | ) | ||
|
|
|
|
Three Months Ended | Six Months Ended | Three Months Ended | Six Months Ended | |||||||||||||
June 30, 2020 | June 30, 2019 | |||||||||||||||
Beginning balance | $ | (4,807 | ) | $ | (5,947 | ) | $ | (8,690 | ) | $ | (4,845 | ) | ||||
Change in reserve | ||||||||||||||||
Inventory reserve charged to costs of sales | (1,794 | ) | (3,069 | ) | (4,374 | ) | (9,447 | ) | ||||||||
Sale of previously reserved inventory | 747 | 1,653 | 490 | 966 | ||||||||||||
(1,047 | ) | (1,416 | ) | (3,884 | ) | (8,481 | ) | |||||||||
Write off | 642 | 1,141 | 624 | 1,216 | ||||||||||||
Translation adjustments | (95 | ) | 221 | 168 | 328 | |||||||||||
Reclassified to assets held for sale | — | 694 | — | — | ||||||||||||
Ending balance | $ | (5,307 | ) | $ | (5,307 | ) | $ | (11,782 | ) | $ | (11,782 | ) | ||||
March 31, 2020 | December 31, 2019 | |||||||
Buildings and related structures | $ | 21,309 | $ | 22,502 | ||||
Machinery and equipment | 85,213 | 89,453 | ||||||
Finance leaseright-of-use assets | 306 | 323 | ||||||
Others | 20,863 | 22,242 | ||||||
|
|
|
| |||||
127,691 | 134,520 | |||||||
Less: accumulated depreciation | (73,987 | ) | (75,704 | ) | ||||
Land | 13,497 | 14,252 | ||||||
|
|
|
| |||||
Property, plant and equipment, net | $ | 67,201 | $ | 73,068 | ||||
|
|
|
|
June 30, 2020 | December 31, 2019 | |||||||
Buildings and related structures | $ | 21,938 | $ | 22,502 | ||||
Machinery and equipment | 87,505 | 89,453 | ||||||
Finance lease right-of-use | 312 | 323 | ||||||
Others | 23,360 | 22,242 | ||||||
133,115 | 134,520 | |||||||
Less: accumulated depreciation | (77,747 | ) | (75,704 | ) | ||||
Land | 13,742 | 14,252 | ||||||
Property, plant and equipment, net | $ | 69,110 | $ | 73,068 | ||||
March 31, 2020 | ||||||||||||
Gross amount | Accumulated amortization | Net amount | ||||||||||
Technology | $ | 6,226 | $ | (6,226 | ) | $ | — | |||||
Customer relationships | 9,641 | (9,641 | ) | — | ||||||||
Intellectual property assets | 8,314 | (5,731 | ) | 2,583 | ||||||||
|
|
|
|
|
| |||||||
Intangible assets, net | $ | 24,181 | $ | (21,598 | ) | $ | 2,583 | |||||
|
|
|
|
|
|
June 30, 2020 | ||||||||||||
Gross amount | Accumulated amortization | Net amount | ||||||||||
Technology | $ | 6,340 | $ | (6,340 | ) | $ | — | |||||
Customer relationships | 9,816 | (9,816 | ) | — | ||||||||
Intellectual property assets | 8,555 | (5,965 | ) | 2,590 | ||||||||
Intangible assets, net | $ | 24,711 | $ | (22,121 | ) | $ | 2,590 | |||||
December 31, 2019 | ||||||||||||
Gross amount | Accumulated amortization | Net amount | ||||||||||
Technology | $ | 6,575 | $ | (6,575 | ) | $ | — | |||||
Customer relationships | 10,180 | (10,180 | ) | — | ||||||||
Intellectual property assets | 8,637 | (5,868 | ) | 2,769 | ||||||||
Intangible assets, net | $ | 25,392 | $ | (22,623 | ) | $ | 2,769 | |||||
Leases | Classification | March 31, 2020 | December 31, 2019 | |||||||
Assets | ||||||||||
Operating lease | Operating lease right-of-use assets | $ | 1,413 | $ | 1,876 | |||||
Finance lease | Property, plant and equipment, net | 229 | 258 | |||||||
|
|
|
| |||||||
Total lease assets | $ | 1,642 | $ | 2,134 | ||||||
|
|
|
| |||||||
Liabilities | ||||||||||
Current | ||||||||||
Operating | Operating lease liabilities | $ | 1,301 | $ | 1,625 | |||||
Finance | Other current liabilities | 58 | 60 | |||||||
Non-current | ||||||||||
Operating | Othernon-current liabilities | 112 | 251 | |||||||
Finance | Othernon-current liabilities | 182 | 208 | |||||||
|
|
|
| |||||||
Total lease liabilities | $ | 1,653 | $ | 2,144 | ||||||
|
|
|
|
Leases | Classification | June 30, 2020 | December 31, 2019 | |||||||
Assets | ||||||||||
Operating lease | Operating lease right-of-use assets | $ | 1,182 | $ | 1,876 | |||||
Finance lease | Property, plant and equipment, net | 218 | 258 | |||||||
Total lease assets | $ | 1,400 | $ | 2,134 | ||||||
Liabilities | ||||||||||
Current | ||||||||||
Operating | Operating lease liabilities | $ | 1,053 | $ | 1,625 | |||||
Finance | Other current liabilities | 60 | 60 | |||||||
Non-current | ||||||||||
Operating | Other non-current liabilities | 129 | 251 | |||||||
Finance | Other non-current liabilities | 170 | 208 | |||||||
Total lease liabilities | $ | 1,412 | $ | 2,144 | ||||||
March 31, 2020 | December 31, 2019 | |||||||
Weighted average remaining lease term | ||||||||
Operating leases | 1.0 years | 1.1 years | ||||||
Finance leases | 3.8 years | 4.0 years | ||||||
Weighted average discount rate | ||||||||
Operating leases | 7.35 | % | 7.19 | % | ||||
Finance leases | 7.75 | % | 7.75 | % |
June 30, 2020 | December 31, 2019 | |||||||
Weighted average remaining lease term | ||||||||
Operating leases | 1.0 years | 1.1 years | ||||||
Finance leases | 3.5 years | 4.0 years | ||||||
Weighted average discount rate | ||||||||
Operating leases | 7.01 | % | 7.19 | % | ||||
Finance leases | 7.75 | % | 7.75 | % |
Three Months Ended | ||||||||
March 31, 2020 | March 31, 2019 | |||||||
Operating lease cost | $ | 468 | $ | 525 | ||||
Finance lease cost | ||||||||
Amortization ofright-of-use assets | 16 | 17 | ||||||
Interest on lease liabilities | 5 | 6 | ||||||
|
|
|
| |||||
Total lease cost | $ | 489 | $ | 548 | ||||
|
|
|
|
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | |||||||||||||
Operating lease cost | $ | 461 | $ | 501 | $ | 929 | $ | 1,026 | ||||||||
Finance lease cost | ||||||||||||||||
Amortization of right-of-use | 15 | 16 | 31 | 33 | ||||||||||||
Interest on lease liabilities | 4 | 6 | 9 | 12 | ||||||||||||
Total lease cost | $ | 480 | $ | 523 | $ | 969 | $ | 1,071 | ||||||||
Three Months Ended | ||||||||
March 31, 2020 | March 31, 2019 | |||||||
Cash paid for amounts included in the measurement of lease liabilities | ||||||||
Operating cash flows from operating leases | $ | 468 | $ | 525 | ||||
Operating cash flows from finance leases | 5 | 6 | ||||||
Financing cash flows from finance leases | 14 | 14 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | |||||||||||||
Cash paid for amounts included in the measurement of lease liabilities | ||||||||||||||||
Operating cash flows from operating leases | $ | 461 | $ | 501 | $ | 929 | $ | 1,026 | ||||||||
Operating cash flows from finance leases | 4 | 6 | 9 | 12 | ||||||||||||
Financing cash flows from finance leases | 14 | 14 | 28 | 28 |
Operating Leases | Finance Leases | |||||||
2020 | $ | 1,192 | $ | 55 | ||||
2021 | 254 | 74 | ||||||
2022 | 21 | 74 | ||||||
2023 | 1 | 74 | ||||||
Thereafter | — | — | ||||||
|
|
|
| |||||
Total future lease payments | 1,468 | 277 | ||||||
Less: Imputed interest | (55 | ) | (37 | ) | ||||
|
|
|
| |||||
Present value of future payments | $ | 1,413 | $ | 240 | ||||
|
|
|
|
Operating Leases | Finance Leases | |||||||
2020 | $ | 820 | $ | 37 | ||||
2021 | 335 | 75 | ||||||
2022 | 58 | 75 | ||||||
2023 | 14 | 75 | ||||||
Thereafter | — | — | ||||||
Total future lease payments | 1,227 | 262 | ||||||
Less: Imputed interest | (45 | ) | (32 | ) | ||||
Present value of future payments | $ | 1,182 | $ | 230 | ||||
March 31, 2020 | December 31, 2019 | |||||||
Payroll, benefits and related taxes, excluding severance benefits | $ | 8,992 | $ | 8,493 | ||||
Withholding tax attributable to intercompany interest income | 23,771 | 23,371 | ||||||
Interest on senior notes | 3,444 | 8,205 | ||||||
Outside service fees | 1,224 | 1,996 | ||||||
Others | 4,058 | 2,734 | ||||||
|
|
|
| |||||
Accrued expenses | $ | 41,489 | $ | 44,799 | ||||
|
|
|
|
June 30, 2020 | December 31, 2019 | |||||||
Payroll, benefits and related taxes, excluding severance benefits | $ | 10,165 | $ | 8,493 | ||||
Withholding tax attributable to intercompany interest income | 24,457 | 23,371 | ||||||
Interest on senior notes | 8,205 | 8,205 | ||||||
Outside service fees | 922 | 1,996 | ||||||
Others | 1,986 | 2,734 | ||||||
Accrued expenses | $ | 45,735 | $ | 44,799 | ||||
Date of transaction | Type of derivative | Total notional amount | Month of settlement | |||||||
August 13, 2019 | Zero cost collar | $ | 30,000 | April 2020 to June 2020 | ||||||
September 27, 2019 | Zero cost collar | $ | 21,000 | April 2020 to June 2020 | ||||||
December 4, 2019 | Zero cost collar | $ | 30,000 | July 2020 to December 2020 | ||||||
January 31, 2020 | Zero cost collar | $ | 30,000 | July 2020 to December 2020 | ||||||
February 3, 2020 | Zero cost collar | $ | 18,000 | July 2020 to December 2020 | ||||||
February 21, 2020 | Zero cost collar | $ | 30,000 | July 2020 to December 2020 |
Date of transaction | Type of derivative | Total notional amount | Month of settlement | |||||||||
December 4, 2019 | Zero cost collar | $ | 30,000 | July 2020 to December 2020 | ||||||||
January 31, 2020 | Zero cost collar | $ | 30,000 | July 2020 to December 2020 | ||||||||
February 3, 2020 | Zero cost collar | $ | 18,000 | July 2020 to December 2020 | ||||||||
February 21, 2020 | Zero cost collar | $ | 30,000 | July 2020 to December 2020 |
Date of transaction | Type of derivative | Total notional amount | Month of settlement | |||||||
August 13, 2019 | Zero cost collar | $ | 60,000 | January 2020 to June 2020 | ||||||
September 27, 2019 | Zero cost collar | $ | 42,000 | January 2020 to June 2020 | ||||||
December 4, 2019 | Zero cost collar | $ | 30,000 | July 2020 to December 2020 |
Date of transaction | Type of derivative | Total notional amount | Month of settlement | |||||||||
August 13, 2019 | Zero cost collar | $ | 60,000 | January 2020 to June 2020 | ||||||||
September 27, 2019 | Zero cost collar | $ | 42,000 | January 2020 to June 2020 | ||||||||
December 4, 2019 | Zero cost collar | $ | 30,000 | July 2020 to December 2020 |
Derivatives designated as hedging instruments: | March 31, 2020 | December 31, 2019 | ||||||||||
Asset Derivatives: | ||||||||||||
Zero cost collars | Other current assets | $ | — | $ | 1,456 | |||||||
Liability Derivatives: | ||||||||||||
Zero cost collars | Other current liabilities | $ | 3,500 | $ | — |
Derivatives designated as hedging instruments: | June 30, 2020 | December 31, 2019 | ||||||||||
Asset Derivatives: | ||||||||||||
Zero cost collars | Other current assets | $ | — | $ | 1,456 | |||||||
Liability Derivatives: | ||||||||||||
Zero cost collars | Other current liabilities | $ | 1,188 | $ | — |
As of March 31, 2020 | Gross amounts of recognized liabilities | Gross amounts offset in the balance sheets | Net amounts of liabilities presented in the balance sheets | Gross amounts not offset in the balance sheets | Net amount | |||||||||||||||||||
Financial instruments | Cash collateral pledged | |||||||||||||||||||||||
Liability Derivatives: | ||||||||||||||||||||||||
Zero cost collars | $ | 3,500 | $ | — | $ | 3,500 | $ | — | $ | (2,720 | ) | $ | 780 |
As of June 30, 2020 | Gross amounts of recognized liabilities | Gross amounts offset in the balance sheets | Net amounts of liabilities presented in the balance sheets | Gross amounts not offset in the balance sheets | Net amount | |||||||||||||||||||
Financial instruments | Cash collateral pledged | |||||||||||||||||||||||
Liability Derivatives: | ||||||||||||||||||||||||
Zero cost collars | $ | 1,188 | $ | — | $ | 1,188 | $ | — | $ | (1,190 | ) | $ | (2 | ) |
As of December 31, 2019 | Gross amounts of recognized assets | Gross amounts offset in the balance sheets | Net amounts of assets presented in the balance sheets | Gross amounts not offset in the balance sheets | Net amount | |||||||||||||||||||
Financial instruments | Cash collateral pledged | |||||||||||||||||||||||
Asset Derivatives: | ||||||||||||||||||||||||
Zero cost collars | $ | 1,456 | $ | — | $ | 1,456 | $ | — | $ | 1,070 | $ | 2,526 |
Derivatives in ASC 815 Cash Flow Hedging Relationships | Amount of Gain (Loss) Recognized in AOCI on Derivatives (Effective Portion) | Location/Amount of Loss Reclassified from AOCI Into Statement of Operations (Effective Portion) | Location/Amount of Gain (Loss) Recognized in Statement of Operations on Derivatives (Ineffective Portion) | |||||||||||||||||||||||||||||
Three Months Ended March 31, | Three Months Ended March 31, | Three Months Ended March 31, | ||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||
Zero cost collars | $ | (5,004 | ) | $ | 34 | Net sales | $ | (58 | ) | $ | — | Other income, net | $ | 117 | $ | — | ||||||||||||||||
Forwards | $ | — | $ | (533 | ) | Net sales | $ | — | $ | (89 | ) | Other income, net | $ | — | $ | (56 | ) | |||||||||||||||
Forwards—excluded time value | Net sales | $ | — | $ | (98 | ) | ||||||||||||||||||||||||||
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$ | (5,004 | ) | $ | (499 | ) | $ | (58 | ) | $ | (187 | ) | $ | 117 | $ | (56 | ) | ||||||||||||||||
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Derivatives in ASC 815 Cash Flow Hedging Relationships | Amount of Gain (Loss) Recognized in AOCI on Derivatives (Effective Portion) | Location/Amount of Loss Reclassified from AOCI Into Statement of Operations (Effective Portion) | Location/Amount of Gain (Loss) Recognized in Statement of Operations on Derivatives (Ineffective Portion) | |||||||||||||||||||||||||||||
Three Months Ended June 30, | Three Months Ended June 30, | Three Months Ended June 30, | ||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||
Zero cost collars | $ | 2,204 | $ | (1,136 | ) | Net sales | $ | (193 | ) | $ | (203 | ) | Other income, net | $ | 55 | $ | (11 | ) | ||||||||||||||
Forwards | $ | — | $ | (1,363 | ) | Net sales | $ | — | $ | (1,661 | ) | Other income, net | $ | — | $ | (69 | ) | |||||||||||||||
$ | 2,204 | $ | (2,499 | ) | $ | (193 | ) | $ | (1,864 | ) | $ | 55 | $ | (80 | ) | |||||||||||||||||
Derivatives in ASC 815 Cash Flow Hedging Relationships | Amount of Loss Recognized in AOCI on Derivatives (Effective Portion) | Location/Amount of Loss Reclassified from AOCI Into Statement of Operations (Effective Portion) | Location/Amount of Gain (Loss) Recognized in Statement of Operations on Derivatives (Ineffective Portion) | |||||||||||||||||||||||||||||
Six Months Ended June 30, | Six Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||
Zero cost collars | $ | (2,800 | ) | $ | (1,102 | ) | Net sales | $ | (251 | ) | $ | (203 | ) | Other income, net | $ | 172 | $ | (11 | ) | |||||||||||||
Forwards | $ | — | $ | (1,798 | ) | Net sales | $ | — | $ | (1,750 | ) | Other income, net | $ | — | $ | (125 | ) | |||||||||||||||
$ | (2,800 | ) | $ | (2,900 | ) | $ | (251 | ) | $ | (1,953 | ) | $ | 172 | $ | (136 | ) | ||||||||||||||||
Carrying Value March 31, 2020 | Fair Value Measurement March 31, 2020 | Quoted Prices in Active Markets for Identical liability (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||
Liabilities: | ||||||||||||||||||||
Derivative liabilities (other current liabilities) | $ | 3,500 | $ | 3,500 | — | $ | 3,500 | — |
Carrying Value June 30, 2020 | Fair Value Measurement June 30, 2020 | Quoted Prices in Active Markets for Identical liability (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||
Liabilities: | ||||||||||||||||||||
Derivative liabilities (other current liabilities) | $ | 1,188 | $ | 1,188 | — | $ | 1,188 | — |
Carrying Value December 31, 2019 | Fair Value Measurement December 31, 2019 | Quoted Prices in Active Markets for Identical Asset (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||
Assets: | ||||||||||||||||||||
Derivative assets (other current assets) | $ | 1,456 | $ | 1,456 | — | $ | 1,456 | — |
March 31, 2020 | December 31, 2019 | |||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||
(In thousands of US dollars) | ||||||||||||||||
Borrowings: | ||||||||||||||||
5.0% Exchangeable Senior Notes due March 2021 (Level 2) | $ | 82,328 | $ | 94,479 | $ | 81,959 | $ | 116,078 | ||||||||
6.625% Senior Notes due July 2021 (Level 2) | $ | 223,012 | $ | 210,795 | $ | 222,784 | $ | 224,250 |
June 30, 2020 | December 31, 2019 | |||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||
(In thousands of US dollars) | ||||||||||||||||
Borrowings: | ||||||||||||||||
5.0% Exchangeable Senior Notes due March 2021 (Level 2) | $ | 82,706 | $ | 103,838 | $ | 81,959 | $ | 116,078 | ||||||||
6.625% Senior Notes due July 2021 (Level 2) | $ | 223,242 | $ | 218,644 | $ | 222,784 | $ | 224,250 |
March 31, 2020 | December 31, 2019 | |||||||
5.0% Exchangeable Senior Notes due March 2021 | $ | 83,740 | $ | 83,740 | ||||
6.625% Senior Notes due July 2021 | 224,250 | 224,250 | ||||||
Less: unamortized discount and debt issuance costs | (2,650 | ) | (3,247 | ) | ||||
|
|
|
| |||||
Total borrowings, net | 305,340 | 304,743 | ||||||
Less: current portion of long-term borrowings, net | (82,328 | ) | — | |||||
|
|
|
| |||||
Long-term borrowings, net | $ | 223,012 | $ | 304,743 | ||||
|
|
|
|
June 30, 2020 | December 31, 2019 | |||||||
5.0% Exchangeable Senior Notes due March 2021 | $ | 83,740 | $ | 83,740 | ||||
6.625% Senior Notes due July 2021 | 224,250 | 224,250 | ||||||
Less: unamortized discount and debt issuance costs | (2,042 | ) | (3,247 | ) | ||||
Total borrowings, net | 305,948 | 304,743 | ||||||
Less: current portion of long-term borrowings, net | (82,706 | ) | — | |||||
Long-term borrowings, net | $ | 223,242 | $ | 304,743 | ||||
Three Months Ended | ||||||||
March 31, 2020 | March 31, 2019 | |||||||
Beginning balance | $ | 53,344 | $ | 55,691 | ||||
Provisions | 2,019 | 1,314 | ||||||
Severance payments | (1,952 | ) | (1,496 | ) | ||||
Translation adjustments | (2,801 | ) | (956 | ) | ||||
|
|
|
| |||||
50,610 | 54,553 | |||||||
Less: Cumulative contributions to severance insurance deposit accounts | (1,557 | ) | (869 | ) | ||||
The National Pension Fund | (75 | ) | (87 | ) | ||||
Group severance insurance plan | (213 | ) | (243 | ) | ||||
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|
| |||||
Accrued severance benefits, net | $ | 48,765 | $ | 53,354 | ||||
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|
Three Months Ended | Six Months Ended | Three Months Ended | Six Months Ended | |||||||||||||
June 30, 2020 | June 30, 2019 | |||||||||||||||
Beginning balance | $ | 50,610 | $ | 53,344 | $ | 54,553 | $ | 55,691 | ||||||||
Provisions | 1,755 | 3,774 | 1,329 | 2,643 | ||||||||||||
Severance payments | (1,502 | ) | (3,454 | ) | (1,799 | ) | (3,295 | ) | ||||||||
Translation adjustments | 922 | (1,879 | ) | (881 | ) | (1,837 | ) | |||||||||
51,785 | 51,785 | 53,202 | 53,202 | |||||||||||||
Less: Cumulative contributions to severance insurance deposit accounts | (1,570 | ) | (1,570 | ) | (1,099 | ) | (1,099 | ) | ||||||||
The National Pension Fund | (73 | ) | (73 | ) | (84 | ) | (84 | ) | ||||||||
Group severance insurance plan | (215 | ) | (215 | ) | (236 | ) | (236 | ) | ||||||||
Accrued severance benefits, net | $ | 49,927 | $ | 49,927 | $ | 51,783 | $ | 51,783 | ||||||||
Severance benefit | ||||
Remainder of 2020 | $ | 369 | ||
2021 | 626 | |||
2022 | 823 | |||
2023 | 580 | |||
2024 | 788 | |||
2025 | 2,201 | |||
2026 – 2030 | 19,439 |
Severance benefit | ||||
Remainder of 2020 | $ | 379 | ||
2021 | 401 | |||
2022 | 741 | |||
2023 | 596 | |||
2024 | 1,178 | |||
2025 | 2,104 | |||
2026 – 2030 | 19,482 |
A
Three Months Ended | ||||||||
March 31, 2020 | March 31, 2019 | |||||||
Revenues | ||||||||
Standard products business | ||||||||
Display Solutions | $ | 77,593 | $ | 58,230 | ||||
Power Solutions | 33,143 | 42,034 | ||||||
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| |||||
Total standard products business | $ | 110,736 | $ | 100,264 | ||||
Transitional Fab 3 foundry services | 9,737 | 7,003 | ||||||
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Total revenues | $ | 120,473 | $ | 107,267 | ||||
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Three Months Ended | ||||||||
March 31, 2020 | March 31, 2019 | |||||||
Gross Profit | ||||||||
Standard products business | $ | 29,130 | $ | 19,023 | ||||
Transitional Fab 3 foundry services | — | — | ||||||
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| |||||
Total gross profit | $ | 29,130 | $ | 19,023 | ||||
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Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | |||||||||||||
Revenues | ||||||||||||||||
Standard products business | ||||||||||||||||
Display Solutions | $ | 69,176 | $ | 84,261 | $ | 146,769 | $ | 142,491 | ||||||||
Power Solutions | 39,779 | 47,745 | 72,922 | 89,779 | ||||||||||||
Total standard products business | 108,955 | 132,006 | 219,691 | 232,270 | ||||||||||||
Transitional Fab 3 foundry services | 9,873 | 8,879 | 19,610 | 15,882 | ||||||||||||
Total revenues | $ | 118,828 | $ | 140,885 | $ | 239,301 | $ | 248,152 | ||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | |||||||||||||
Gross Profit | ||||||||||||||||
Standard products business | $ | 32,138 | $ | 31,622 | $ | 61,268 | $ | 50,645 | ||||||||
Transitional Fab 3 foundry services | — | — | — | — | ||||||||||||
Total gross profit | $ | 32,138 | $ | 31,622 | $ | 61,268 | $ | 50,645 | ||||||||
Three Months Ended | ||||||||
March 31, 2020 | March 31, 2019 | |||||||
Korea | $ | 30,817 | $ | 34,646 | ||||
Asia Pacific (other than Korea) | 77,542 | 63,747 | ||||||
United States | 709 | 462 | ||||||
Europe | 971 | 1,133 | ||||||
Others | 697 | 276 | ||||||
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| |||||
Total | $ | 110,736 | $ | 100,264 | ||||
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|
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | |||||||||||||
Korea | $ | 21,957 | $ | 36,559 | $ | 52,774 | $ | 71,205 | ||||||||
Asia Pacific (other than Korea) | 84,210 | 93,657 | 161,752 | 157,404 | ||||||||||||
U.S.A. | 1,461 | 656 | 2,170 | 1,118 | ||||||||||||
Europe | 856 | 881 | 1,827 | 2,014 | ||||||||||||
Others | 471 | 253 | 1,168 | 529 | ||||||||||||
Total | $ | 108,955 | $ | 132,006 | $ | 219,691 | $ | 232,270 | ||||||||
respectively, and 89% for
95%
March 31, 2020 | December 31, 2019 | |||||||
Foreign currency translation adjustments | $ | 18,046 | $ | (4,205 | ) | |||
Derivative adjustments | (3,401 | ) | 1,545 | |||||
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Total | $ | 14,645 | $ | (2,660 | ) | |||
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|
June 30, 2020 | December 31, 2019 | |||||||
Foreign currency translation adjustments | $ | 11,503 | $ | (4,205 | ) | |||
Derivative adjustments | (1,004 | ) | 1,545 | |||||
Total | $ | 10,499 | $ | (2,660 | ) | |||
Three Months Ended March 31, 2020 | Foreign currency translation adjustments | Derivative adjustments | Total | |||||||||
Beginning balance | $ | (4,205 | ) | $ | 1,545 | $ | (2,660 | ) | ||||
|
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| |||||||
Other comprehensive income (loss) before reclassifications | 22,251 | (5,004 | ) | 17,247 | ||||||||
Amounts reclassified from accumulated other comprehensive loss | — | 58 | 58 | |||||||||
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| |||||||
Net current-period other comprehensive income (loss) | 22,251 | (4,946 | ) | 17,305 | ||||||||
|
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| |||||||
Ending balance | $ | 18,046 | $ | (3,401 | ) | $ | 14,645 | |||||
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Three Months Ended March 31, 2019 | Foreign currency translation adjustments | Derivative adjustments | Total | |||||||||
Beginning balance | $ | (20,061 | ) | $ | (49 | ) | $ | (20,110 | ) | |||
|
|
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|
|
| |||||||
Other comprehensive income (loss) before reclassifications | 7,304 | (499 | ) | 6,805 | ||||||||
Amounts reclassified from accumulated other comprehensive loss | — | 187 | 187 | |||||||||
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| |||||||
Net current-period other comprehensive income (loss) | 7,304 | (312 | ) | 6,992 | ||||||||
|
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| |||||||
Ending balance | $ | (12,757 | ) | $ | (361 | ) | $ | (13,118 | ) | |||
|
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|
Three Months Ended June 30, 2020 | Foreign currency translation adjustments | Derivative adjustments | Total | |||||||||
Beginning balance | $ | 18,046 | $ | (3,401 | ) | $ | 14,645 | |||||
Other comprehensive income (loss) before reclassifications | (6,543 | ) | 2,204 | (4,339 | ) | |||||||
Amounts reclassified from accumulated other comprehensive loss | — | 193 | 193 | |||||||||
Net current-period other comprehensive income (loss) | (6,543 | ) | 2,397 | (4,146 | ) | |||||||
Ending balance | $ | 11,503 | $ | (1,004 | ) | $ | 10,499 | |||||
Three Months Ended June 30, 2019 | Foreign currency translation adjustments | Derivative adjustments | Total | |||||||||
Beginning balance | $ | (12,757 | ) | $ | (361 | ) | $ | (13,118 | ) | |||
Other comprehensive income (loss) before reclassifications | 7,680 | (2,499 | ) | 5,181 | ||||||||
Amounts reclassified from accumulated other comprehensive loss | — | 1,864 | 1,864 | |||||||||
Net current-period other comprehensive income (loss) | 7,680 | (635 | ) | 7,045 | ||||||||
Three Months Ended June 30, 2020 | Foreign currency translation adjustments | Derivative adjustments | Total | |||||||||
Ending balance | $ | (5,077 | ) | $ | (996 | ) | $ | (6,073 | ) | |||
Six Months Ended June 30, 2020 | Foreign currency translation adjustments | Derivative adjustments | Total | |||||||||
Beginning balance | $ | (4,205 | ) | $ | 1,545 | $ | (2,660 | ) | ||||
Other comprehensive income (loss) before reclassifications | 15,708 | (2,800 | ) | 12,908 | ||||||||
Amounts reclassified from accumulated other comprehensive loss | — | 251 | 251 | |||||||||
Net current-period other comprehensive income (loss) | 15,708 | (2,549 | ) | 13,159 | ||||||||
Ending balance | $ | 11,503 | $ | (1,004 | ) | $ | 10,499 | |||||
Six Months Ended June 30, 2019 | Foreign currency translation adjustments | Derivative adjustments | Total | |||||||||
Beginning balance | $ | (20,061 | ) | $ | (49 | ) | $ | (20,110 | ) | |||
Other comprehensive income (loss) before reclassifications | 14,984 | (2,900 | ) | 12,084 | ||||||||
Amounts reclassified from accumulated other comprehensive loss | — | 1,953 | 1,953 | |||||||||
Net current-period other comprehensive income (loss) | 14,984 | (947 | ) | 14,037 | ||||||||
Ending balance | $ | (5,077 | ) | $ | (996 | ) | $ | (6,073 | ) | |||
Three Months Ended | ||||||||
March 31, 2020 | March 31, 2019 | |||||||
(In thousands of US dollars, except share data) | ||||||||
Basic and diluted loss per share | ||||||||
Loss from continuing operations | $ | (31,078 | ) | $ | (21,555 | ) | ||
Income (loss) from discontinued operations, net of tax | 7,329 | (12,570 | ) | |||||
|
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| |||||
Net loss | $ | (23,749 | ) | $ | (34,125 | ) | ||
|
|
|
| |||||
Weighted average number of shares – basic and diluted | 34,893,157 | 34,194,878 | ||||||
Basic and diluted earnings (loss) per common share | ||||||||
Continuing operations | $ | (0.89 | ) | $ | (0.63 | ) | ||
Discontinued operations | 0.21 | (0.37 | ) | |||||
|
|
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| |||||
Total | $ | (0.68 | ) | $ | (1.00 | ) | ||
|
|
|
|
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | |||||||||||||
(In thousands of US dollars, except share data) | ||||||||||||||||
Basic earnings (loss) per share | ||||||||||||||||
Income (loss) from continuing operations | $ | 11,774 | $ | (8,490 | ) | $ | (19,304 | ) | $ | (30,045 | ) | |||||
Income (loss) from discontinued operations, net of tax | 17,397 | (1,030 | ) | 24,726 | (13,600 | ) | ||||||||||
Net income (loss) | $ | 29,171 | $ | (9,520 | ) | $ | 5,422 | $ | (43,645 | ) | ||||||
Basic weighted average common stock outstanding | 35,092,312 | 34,245,127 | 34,992,734 | 34,220,141 | ||||||||||||
Basic earnings (loss) per common share | ||||||||||||||||
Continuing operations | $ | 0.34 | $ | (0.25 | ) | $ | (0.55 | ) | $ | (0.88 | ) | |||||
Discontinued operations | 0.50 | (0.03 | ) | 0.71 | (0.40 | ) | ||||||||||
Total | $ | 0.84 | $ | (0.28 | ) | $ | 0.16 | $ | (1.28 | ) | ||||||
Diluted earnings (loss) per share | ||||||||||||||||
Income (loss) from continuing operations | $ | 11,774 | $ | (8,490 | ) | $ | (19,304 | ) | $ | (30,045 | ) | |||||
Add back: Interest expense on Exchangeable Notes | 1,425 | — | — | — | ||||||||||||
Income (loss) from continuing operations allocated to common stockholders | $ | 13,199 | $ | (8,490 | ) | $ | (19,304 | ) | $ | (30,045 | ) | |||||
Income (loss) from discontinued operations, net of tax | 17,397 | (1,030 | ) | 24,726 | (13,600 | ) | ||||||||||
Net income (loss) allocated to common stockholders | $ | 30,596 | $ | (9,520 | ) | $ | 5,422 | $ | (43,645 | ) | ||||||
Basic weighted average common stock outstanding | 35,092,312 | 34,245,127 | 34,992,734 | 34,220,141 | ||||||||||||
Net effect of dilutive equity awards | 1,237,770 | — | — | — | ||||||||||||
Net effect of assumed conversion of 5.0% Exchangeable Notes to common stock | 10,144,155 | — | — | — | ||||||||||||
Diluted weighted average common stock outstanding | 46,474,237 | 34,245,127 | 34,992,734 | 34,220,141 | ||||||||||||
Continuing operations | $ | 0.28 | $ | (0.25 | ) | $ | (0.55 | ) | $ | (0.88 | ) | |||||
Discontinued operations | 0.37 | (0.03 | ) | 0.71 | (0.40 | ) | ||||||||||
Total | $ | 0.65 | $ | (0.28 | ) | $ | 0.16 | $ | (1.28 | ) | ||||||
Three Months Ended | ||||||||
March 31, 2020 | March 31, 2019 | |||||||
Options | 2,163,845 | 2,632,300 | ||||||
Restricted Stock Units | 729,939 | 508,943 |
For the three months ended March 31, 2020 and 2019, 10,144,155
Three Months Ended | Six Months Ended | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Options | 699,167 | 2,611,832 | 2,075,494 | 2,611,832 | ||||||||||||
Restricted Stock Units | — | 501,490 | 1,238,639 | 501,490 |
six months ended June 30, 2019.
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
automotive electronics.fromcommencing in the first quarter of 2020, we have one reportable segment: our standard products business, together with transitional foundry services associated with our fabrication facility located in Gumi, Korea, known as Fab 3, that it expectswe expect to perform for the Buyer for a period of up to three years (the “Transitional Fab 3 Foundry Services”). The Transitional Fab 3 Foundry Services revenue is accounted for at cost prior to the closing of the sale of the Foundry Services Group business and Fab 4.panel display solutions to major panel display suppliers of large and smallmobile rigid and flexible panel displays for home appliances, mobile communications, monitors, notebooks and mobile, automotive applications and home appliances.applications. Our Display Solutions products include source, gate drivers, timing controllers, andpolysiliconspolysilicon (LTPS), as well as high-volume display technologies such as thin film transistors (TFT). Since 2007, we have designed and manufactured OLED display driver IC products. Our current portfolio of OLED solutions address a wide range of resolutions ranging from HD to Wide Quad High Definition (WQHD) for applications including smartphones, TVs, and other mobile devices. We believe we have a unique intellectual property portfolio and mixed-signal design and manufacturing expertise in the OLED industry.consumercomputing, industrial and industrialautomotive applications. These products include metal oxide semiconductor field effect transistors (MOSFETs), insulated-gate bipolar transistors (IGBTs),and linear regulators, interface ICs and power management ICs (PMICs) for a range of devices, including televisions, smartphones, mobile phones, desktop PCs, notebooks, tablet PCs, other consumer electronics, andtablets, servers, telecommunication power, home appliances, industrial applications such as unit power suppliers, LED lighting, personal mobility, motor controldrives, battery management systems (BMS) and home appliances. to rapidly develop and introduce new products and services in response to market demands. Our design center and substantial manufacturing operations in Korea place us at the core of the global electronics device supply chain. We believe this enables us to quickly and efficiently respond to our customers’ needs, and allows us to better serve and capture additional demand from existing and new customers.
Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | |||||||||||||||||||||||
Continuing Operations | Discontinued Operations | Total | Continuing Operations | Discontinued Operations | Total | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Net Income (Loss) | $ | (31.1 | ) | $ | 7.3 | $ | (23.7 | ) | $ | (21.6 | ) | $ | (12.6 | ) | $ | (34.1 | ) | |||||||
Interest expense, net | 4.9 | — | 4.9 | 5.1 | — | 5.1 | ||||||||||||||||||
Income tax expense | 1.3 | 0.4 | 1.7 | 0.8 | 0.0 | 0.8 | ||||||||||||||||||
Depreciation and amortization | 2.6 | 5.4 | 7.9 | 2.6 | 5.8 | 8.3 | ||||||||||||||||||
EBITDA | (22.3 | ) | 13.1 | (9.2 | ) | (13.1 | ) | (6.8 | ) | (19.9 | ) | |||||||||||||
Adjustments | ||||||||||||||||||||||||
Restructuring and other charges(a) | — | 2.1 | 2.1 | — | 2.9 | 2.9 | ||||||||||||||||||
Equity-based compensation expense(b) | 0.8 | 0.1 | 0.9 | 0.6 | 0.1 | 0.7 | ||||||||||||||||||
Foreign currency loss (gain), net(c) | 31.0 | (2.1 | ) | 28.9 | 10.6 | (0.6 | ) | 10.0 | ||||||||||||||||
Derivative valuation loss (gain), net(d) | (0.1 | ) | — | (0.1 | ) | 0.1 | — | 0.1 | ||||||||||||||||
Loss on early extinguishment of long-term borrowings, net(e) | — | — | — | 0.0 | — | 0.0 | ||||||||||||||||||
Others(f) | 0.6 | — | 0.6 | 0.6 | — | 0.6 | ||||||||||||||||||
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Adjusted EBITDA | $ | 9.9 | $ | 13.2 | $ | 23.1 | $ | (1.3 | ) | $ | (4.4 | ) | $ | (5.7 | ) | |||||||||
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Three Months Ended June 30, 2020 | Six Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | |||||||||||||
(In millions) | ||||||||||||||||
Income (loss) from continuing operations | $ | 11.8 | $ | (19.3 | ) | $ | (8.5 | ) | $ | (30.0 | ) | |||||
Interest expense, net | 4.7 | 9.7 | 4.9 | 9.9 | ||||||||||||
Income tax expenses | 0.7 | 2.0 | 0.8 | 1.6 | ||||||||||||
Depreciation and amortization | 2.5 | 5.1 | 2.6 | 5.1 | ||||||||||||
EBITDA | $ | 19.7 | $ | (2.5 | ) | $ | (0.3 | ) | $ | (13.4 | ) | |||||
Adjustments: | ||||||||||||||||
Equity-based compensation expense(a) | 1.5 | 2.3 | 0.7 | 1.2 | ||||||||||||
Foreign currency loss (gain), net(b) | (8.5 | ) | 22.5 | 11.6 | 22.2 | |||||||||||
Derivative valuation loss (gain), net(c) | (0.1 | ) | (0.2 | ) | 0.1 | 0.1 | ||||||||||
Loss on early extinguishment of long-term borrowings, net(d) | — | — | — | 0.0 | ||||||||||||
Others(e) | — | 0.6 | — | 0.6 | ||||||||||||
Adjusted EBITDA | $ | 12.7 | $ | 22.6 | $ | 12.0 | $ | 10.7 | ||||||||
(a) |
|
This adjustment eliminates the impact of |
This adjustment mainly eliminates the impact of non-cash foreign currency translation associated with intercompany debt obligations with respect to the continuing operations and foreign currency denominated receivables and payables, as well as the cash impact of foreign currency transaction gains or losses on collection of such receivables and payment of such payables. Although we expect to incur foreign currency translation gains or losses in the future, we believe that analysts and investors will find it helpful to review our operating performance without the effects of these primarilynon-cash gains or losses, which we cannot control. Additionally, we believe the isolation of this adjustment provides investors with enhanced comparability to prior and future periods of our operating performance results. |
This adjustment eliminates the impact of gain or loss recognized in income on derivatives, which represents derivatives value changes excluded from the risk being hedged. We enter into derivative transactions to mitigate foreign exchange risks. As our derivative transactions are limited to a certain portion of our expected cash flows denominated in US dollars, and we do not enter into derivative transactions for trading or speculative purposes, we do not believe that these charges or gains are indicative of our core operating performance. |
This adjustment eliminates $0.04 million in expenses related to the repurchase of a portion of the 2021 Notes and the Exchangeable Notes in the first quarter of 2019. |
For the non-recurring professional service fees and expenses incurred in connection with certain treasury and finance initiatives. For the |
Three Months Ended June 30, 2020 | Six Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | |||||||||||||
(In millions) | ||||||||||||||||
Operating income | $ | 8.6 | $ | 14.6 | $ | 8.8 | $ | 3.7 | ||||||||
Adjustments: | ||||||||||||||||
Equity-based compensation expense(a) | 1.5 | 2.3 | 0.7 | 1.2 | ||||||||||||
Others(b) | — | 0.6 | — | 0.6 | ||||||||||||
Adjusted Operating Income | $ | 10.1 | $ | 17.4 | $ | 9.4 | $ | 5.5 | ||||||||
(a) | This adjustment eliminates the impact of non-cash equity-based compensation expenses. Although we expect to incurnon-cash equity-based compensation expenses in the future, these expenses do not generally require cash settlement, and, therefore, are not used by us to assess the profitability of our operations. We believe that analysts and investors will find it helpful to review our operating performance without the effects of thesenon-cash expenses as supplemental information. |
(b) | For the six months ended June 30, 2020, this adjustment eliminates non-recurring professional service fees and expenses incurred in connection with certain treasury and finance initiatives. For the six months ended June 30, 2019, this adjustment eliminates a $0.5 million legal settlement charge related to dispute with a prior customer and a legal expense related to the indemnification of a former employee, which is borne by us under a negotiated separation agreement. We do not believe that these charges are indicative of our core operating performance and have been excluded for comparative purposes. |
Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | |||||||||||||||||||||||
Continuing Operations | Discontinued Operations | Total | Continuing Operations | Discontinued Operations | Total | |||||||||||||||||||
(In millions, except per share data) | ||||||||||||||||||||||||
Net Income (Loss) | $ | (31.1 | ) | $ | 7.3 | $ | (23.7 | ) | $ | (21.6 | ) | $ | (12.6 | ) | $ | (34.1 | ) | |||||||
Adjustments | ||||||||||||||||||||||||
Restructuring and other charges(a) | — | 2.1 | 2.1 | — | 2.9 | 2.9 | ||||||||||||||||||
Equity-based compensation expense(b) | 0.8 | 0.1 | 0.9 | 0.6 | 0.1 | 0.7 | ||||||||||||||||||
Foreign currency loss (gain), net(c) | 31.0 | (2.1 | ) | 28.9 | 10.6 | (0.6 | ) | 10.0 | ||||||||||||||||
Derivative valuation loss (gain), net(d) | (0.1 | ) | — | (0.1 | ) | 0.1 | — | 0.1 | ||||||||||||||||
Loss on early extinguishment of long-term borrowings, net(e) | — | — | — | 0.0 | — | 0.0 | ||||||||||||||||||
Others(f) | 0.6 | — | 0.6 | 0.6 | — | 0.6 | ||||||||||||||||||
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Adjusted Net Income (Loss) | $ | 1.1 | $ | 7.5 | $ | 8.6 | $ | (9.7 | ) | $ | (10.2 | ) | $ | (19.9 | ) | |||||||||
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Reported earnings (loss) per share – basic | $ | (0.89 | ) | $ | 0.21 | $ | (0.68 | ) | $ | (0.63 | ) | $ | (0.37 | ) | $ | (1.00 | ) | |||||||
Reported earnings (loss) per share – diluted | $ | (0.89 | ) | $ | 0.21 | $ | (0.68 | ) | $ | (0.63 | ) | $ | (0.37 | ) | $ | (1.00 | ) | |||||||
Weighted average number of shares – basic | 34,893,157 | 34,893,157 | 34,893,157 | 34,194,878 | 34,194,878 | 34,194,878 | ||||||||||||||||||
Weighted average number of shares – diluted | 34,893,157 | 34,893,157 | 34,893,157 | 34,194,878 | 34,194,878 | 34,194,878 | ||||||||||||||||||
Adjusted Net Income (Loss) per share – basic | $ | 0.03 | $ | 0.21 | $ | 0.25 | $ | (0.28 | ) | $ | (0.30 | ) | $ | (0.58 | ) | |||||||||
Adjusted Net Income (Loss) per share – diluted | $ | 0.03 | $ | 0.21 | $ | 0.24 | $ | (0.28 | ) | $ | (0.30 | ) | $ | (0.58 | ) | |||||||||
Weighted average number of shares – basic | 34,893,157 | 34,893,157 | 34,893,157 | 34,194,878 | 34,194,878 | 34,194,878 | ||||||||||||||||||
Weighted average number of shares – diluted | 35,883,200 | 35,883,200 | 35,883,200 | 34,194,878 | 34,194,878 | 34,194,878 |
Three Months Ended June 30, 2020 | Six Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | |||||||||||||
(In millions) | ||||||||||||||||
Income (loss) from continuing operations | $ | 11.8 | $ | (19.3 | ) | $ | (8.5 | ) | $ | (30.0 | ) | |||||
Adjustments: | ||||||||||||||||
Equity-based compensation expense(a) | 1.5 | 2.3 | 0.7 | 1.2 | ||||||||||||
Foreign currency loss (gain), net(b) | (8.5 | ) | 22.5 | 11.6 | 22.2 | |||||||||||
Derivative valuation loss (gain), net(c) | (0.1 | ) | (0.2 | ) | 0.1 | 0.1 | ||||||||||
Loss on early extinguishment of long-term borrowings, net(d) | — | — | — | 0.0 | ||||||||||||
Others(e) | — | 0.6 | — | 0.6 | ||||||||||||
Adjusted Net Income (Loss) | $ | 4.8 | $ | 5.8 | $ | 3.8 | $ | (5.9 | ) | |||||||
Reported earnings (loss) per share – basic | $ | 0.34 | $ | (0.55 | ) | $ | (0.25 | ) | $ | (0.88 | ) | |||||
Reported earnings (loss) per share – diluted | $ | 0.28 | $ | (0.55 | ) | $ | (0.25 | ) | $ | (0.88 | ) | |||||
Weighted average number of shares – basic | 35,092,312 | 34,992,734 | 34,245,127 | 34,220,141 | ||||||||||||
Weighted average number of shares – diluted | 46,474,237 | 34,992,734 | 34,245,127 | 34,220,141 | ||||||||||||
Adjusted earnings (loss) per share – basic | $ | 0.14 | $ | 0.17 | $ | 0.11 | $ | (0.17 | ) | |||||||
Adjusted earnings (loss) per share – diluted | $ | 0.13 | $ | 0.16 | $ | 0.11 | $ | (0.17 | ) | |||||||
Weighted average number of shares – basic | 35,092,312 | 34,992,734 | 34,245,127 | 34,220,141 | ||||||||||||
Weighted average number of shares – diluted | 36,330,083 | 36,248,039 | 34,965,562 | 34,220,141 |
(a) |
|
This adjustment eliminates the impact of |
This adjustment mainly eliminates the impact of non-cash foreign currency translation associated with intercompany debt obligations with respect to the continuing operations and foreign currency denominated receivables and payables, as well as the cash impact of foreign currency transaction gains or losses on collection of such receivables and payment of such payables. Although we expect to incur foreign currency translation gains or losses in the future, we believe that analysts and investors will find it helpful to review our operating performance without the effects of these primarilynon-cash gains or losses, which we cannot control. Additionally, we believe the isolation of this adjustment provides investors with enhanced comparability to prior and future periods of our operating performance results. |
This adjustment eliminates the impact of gain or loss recognized in income on derivatives, which represents derivatives value changes excluded from the risk being hedged. We enter into derivative transactions to mitigate foreign exchange risks. As our derivative transactions are limited to a certain portion of our expected cash flows denominated in US dollars, and we do not enter into derivative transactions for trading or speculative purposes, we do not believe that these charges or gains are indicative of our core operating performance. |
This adjustment eliminates $0.04 million in expenses related to the repurchase of a portion of the 2021 Notes and the Exchangeable Notes in the first quarter of 2019. |
For the non-recurring professional service fees and expenses incurred in connection with certain treasury and finance initiatives. For the |
March 31,June 30, 2020, the outstanding intercompany loan balance including accrued interest between our Korean subsidiary and our Dutch subsidiary was $684.0$690.7 million. As a result of such foreign currency fluctuations, it could be more difficult to detect underlying trends in our business and results of operations. In addition, to the extent that fluctuations in currency exchange rates cause our results of operations to differ from our expectations or the expectations of our investors, the trading price of our stock could be adversely affected.
Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | |||||||||||||||||||
Amount | % of Total revenues | Amount | % of Total revenues | Change Amount | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Revenues | ||||||||||||||||||||
Net sales – standard products business | $ | 110.7 | 91.9 | % | $ | 100.3 | 93.5 | % | $ | 10.5 | ||||||||||
Net sales – transitional Fab 3 foundry services | 9.7 | 8.1 | 7.0 | 6.5 | 2.7 | |||||||||||||||
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Total revenues | 120.5 | 100.0 | 107.3 | 100.0 | 13.2 | |||||||||||||||
Cost of sales | ||||||||||||||||||||
Cost of sales – standard products business | 81.6 | 67.7 | 81.2 | 75.7 | 0.4 | |||||||||||||||
Cost of sales – transitional Fab 3 foundry services | 9.7 | 8.1 | 7.0 | 6.5 | 2.7 | |||||||||||||||
Total cost of sales | 91.3 | 75.8 | 88.2 | 82.3 | 3.1 | |||||||||||||||
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Gross profit | 29.1 | 24.2 | 19.0 | 17.7 | 10.1 | |||||||||||||||
Selling, general and administrative expenses | 12.1 | 10.0 | 12.0 | 11.2 | 0.1 | |||||||||||||||
Research and development expenses | 10.5 | 8.7 | 12.0 | 11.2 | (1.5 | ) | ||||||||||||||
Other charges | 0.6 | 0.5 | — | — | 0.6 | |||||||||||||||
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Operating income (loss) | 6.0 | 5.0 | (5.1 | ) | (4.7 | ) | 11.0 | |||||||||||||
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Interest expense | (5.6 | ) | (4.7 | ) | (5.6 | ) | (5.3 | ) | 0.0 | |||||||||||
Foreign currency loss, net | (31.0 | ) | (25.7 | ) | (10.6 | ) | (9.9 | ) | (20.4 | ) | ||||||||||
Loss on early extinguishment of long-term borrowings, net | — | — | (0.0 | ) | (0.0 | ) | 0.0 | |||||||||||||
Others, net | 0.8 | 0.7 | 0.6 | 0.5 | 0.3 | |||||||||||||||
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(35.7 | ) | (29.7 | ) | (15.7 | ) | (14.6 | ) | (20.0 | ) | |||||||||||
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Loss from continuing operations before income tax expense | (29.8 | ) | (24.7 | ) | (20.8 | ) | (19.4 | ) | (9.0 | ) | ||||||||||
Income tax expense | 1.3 | 1.1 | 0.8 | 0.7 | 0.5 | |||||||||||||||
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Loss from continuing operations | (31.1 | ) | (25.8 | ) | (21.6 | ) | (20.1 | ) | (9.5 | ) | ||||||||||
Income (loss) from discontinued operations, net of tax | 7.3 | 6.1 | (12.6 | ) | (11.7 | ) | 19.9 | |||||||||||||
Net loss | $ | (23.7 | ) | (19.7 | ) | $ | (34.1 | ) | (31.8 | ) | $ | 10.4 | ||||||||
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Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | |||||||||||||||||||
Amount | % of Total revenues | Amount | % of Total revenues | Change Amount | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Revenues | ||||||||||||||||||||
Net sales – standard products business | $ | 109.0 | 91.7 | % | $ | 132.0 | 93.7 | % | $ | (23.1 | ) | |||||||||
Net sales – transitional Fab 3 foundry services | 9.9 | 8.3 | 8.9 | 6.3 | 1.0 | |||||||||||||||
Total revenues | 118.8 | 100.0 | 140.9 | 100.0 | (22.1 | ) | ||||||||||||||
Cost of sales | ||||||||||||||||||||
Cost of sales – standard products business | 76.8 | 64.6 | 100.4 | 71.3 | (23.6 | ) | ||||||||||||||
Cost of sales – transitional Fab 3 foundry services | 9.9 | 8.3 | 8.9 | 6.3 | 1.0 | |||||||||||||||
Total cost of sales | 86.7 | 73.0 | 109.3 | 77.6 | (22.6 | ) | ||||||||||||||
Gross profit | 32.1 | 27.0 | 31.6 | 22.4 | 0.5 | |||||||||||||||
Selling, general and administrative expenses | 12.4 | 10.4 | 11.1 | 7.9 | 1.3 | |||||||||||||||
Research and development expenses | 11.1 | 9.3 | 11.8 | 8.4 | (0.7 | ) | ||||||||||||||
Operating income | 8.6 | 7.3 | 8.8 | 6.2 | (0.1 | ) | ||||||||||||||
Interest expense | (5.4 | ) | (4.6 | ) | (5.4 | ) | (3.9 | ) | 0.0 | |||||||||||
Foreign currency gain (loss), net | 8.5 | 7.1 | (11.6 | ) | (8.2 | ) | 20.0 | |||||||||||||
Others, net | 0.8 | 0.7 | 0.6 | 0.4 | 0.2 | |||||||||||||||
3.8 | 3.2 | (16.5 | ) | (11.7 | ) | 20.3 | ||||||||||||||
Income (loss) from continuing operations before income tax expense | 12.5 | 10.5 | (7.7 | ) | (5.5 | ) | 20.2 | |||||||||||||
Income tax expense | 0.7 | 0.6 | 0.8 | 0.6 | (0.1 | ) | ||||||||||||||
Income (loss) from continuing operations | 11.8 | 9.9 | (8.5 | ) | (6.0 | ) | 20.3 | |||||||||||||
Income (loss) from discontinued operations, net of tax | 17.4 | 14.6 | (1.0 | ) | (0.7 | ) | 18.4 | |||||||||||||
Net income (loss) | $ | 29.2 | 24.5 | $ | (9.5 | ) | (6.8 | ) | $ | 38.7 | ||||||||||
Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | |||||||||||||||||||
Amount | % of Total Revenues | Amount | % of Total Revenues | Change Amount | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Revenues | ||||||||||||||||||||
Net sales – standard products business | ||||||||||||||||||||
Display Solutions | $ | 77.6 | 64.4 | % | $ | 58.2 | 54.3 | % | $ | 19.4 | ||||||||||
Power Solutions | 33.1 | 27.5 | 42.0 | 39.2 | (8.9 | ) | ||||||||||||||
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Total standard products business | 110.7 | 91.9 | 100.3 | 93.5 | 10.5 | |||||||||||||||
Net sales – transitional Fab 3 foundry services | 9.7 | 8.1 | 7.0 | 6.5 | 2.7 | |||||||||||||||
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Total revenues | $ | 120.5 | 100.0 | % | $ | 107.3 | 100.0 | % | $ | 13.2 | ||||||||||
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Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | |||||||||||||||||||
Amount | % of Net sales | Amount | % of Net sales | Change Amount | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Gross Profit | ||||||||||||||||||||
Gross profit – standard products business | $ | 29.1 | 26.3 | % | $ | 19.0 | 19.0 | % | $ | 10.1 | ||||||||||
Gross profit – transitional Fab 3 foundry services | — | — | — | — | — | |||||||||||||||
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Total gross profit | $ | 29.1 | 24.2 | % | $ | 19.0 | 17.7 | % | $ | 10.1 | ||||||||||
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Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | |||||||||||||||||||
Amount | % of Total Revenues | Amount | % of Total Revenues | Change Amount | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Revenues | ||||||||||||||||||||
Net sales – standard products business | ||||||||||||||||||||
Display Solutions | $ | 69.2 | 58.2 | % | $ | 84.3 | 59.8 | % | $ | (15.1 | ) | |||||||||
Power Solutions | 39.8 | 33.5 | 47.7 | 33.9 | (8.0 | ) | ||||||||||||||
Total standard products business | 109.0 | 91.7 | 132.0 | 93.7 | (23.1 | ) | ||||||||||||||
Net sales – transitional Fab 3 foundry services | 9.9 | 8.3 | 8.9 | 6.3 | 1.0 | |||||||||||||||
Total revenues | $ | 118.8 | 100.0 | % | $ | 140.9 | 100.0 | % | $ | (22.1 | ) | |||||||||
Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | |||||||||||||||||||
Amount | % of Net sales | Amount | % of Net sales | Change Amount | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Gross Profit | ||||||||||||||||||||
Gross profit – standard products business | $ | 32.1 | 29.5 | % | $ | 31.6 | 24.0 | % | $ | 0.5 | ||||||||||
Gross profit – transitional Fab 3 foundry services | — | — | — | — | — | |||||||||||||||
Total gross profit | $ | 32.1 | 27.0 | % | $ | 31.6 | 22.4 | % | $ | 0.5 | ||||||||||
The significant global macro-economic market disruption due to
Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | |||||||||||||||||||
Amount | % of Net Sales – standard products business | Amount | % of Net Sales – standard products business | Change Amount | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Korea | $ | 30.8 | 27.8 | % | $ | 34.6 | 34.6 | % | $ | (3.8 | ) | |||||||||
Asia Pacific (other than Korea) | 77.5 | 70.0 | 63.7 | 63.6 | 13.8 | |||||||||||||||
United States | 0.7 | 0.6 | 0.5 | 0.5 | 0.2 | |||||||||||||||
Europe | 1.0 | 0.9 | 1.1 | 1.1 | (0.2 | ) | ||||||||||||||
Others | 0.7 | 0.6 | 0.3 | 0.3 | 0.4 | |||||||||||||||
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$ | 110.7 | 100.0 | % | $ | 100.3 | 100.0 | % | $ | 10.5 | |||||||||||
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Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | |||||||||||||||||||
Amount | % of Net Sales – standard products business | Amount | % of Net Sales – standard products business | Change Amount | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Korea | $ | 22.0 | 20.2 | % | $ | 36.6 | 27.7 | % | $ | (14.6 | ) | |||||||||
Asia Pacific (other than Korea) | 84.2 | 77.3 | 93.7 | 70.9 | (9.4 | ) | ||||||||||||||
United States | 1.5 | 1.3 | 0.7 | 0.5 | 0.8 | |||||||||||||||
Europe | 0.9 | 0.8 | 0.9 | 0.7 | (0.0 | ) | ||||||||||||||
Others | 0.5 | 0.4 | 0.3 | 0.2 | 0.2 | |||||||||||||||
$ | 109.0 | 100.0 | % | $ | 132.0 | 100.0 | % | $ | (23.1 | ) | ||||||||||
manufacturers due in part to the geographic diversification of our OLED product portfolio amid a COVID-19-related disruption.
during the second quarter of 2020.
Other Charges. Other charges were $0.6 million for the three months ended March 31, 2020, which were consisted This decrease was offset in part by an increase in employee compensation, including issuance of professional service fees and expenses incurred in connection with certain treasury and finance initiatives.
equity-based compensation.
ForeignCurrencyLoss,Net. Net foreign currency loss for the three months ended March 31,June 30, 2020 was $31.0$8.5 million compared to net foreign currency loss of $10.6$11.6 million for the three months ended March 31,June 30, 2019. The net foreign currency gain for the three months ended June 30, 2020 was due to the appreciation in value of the Korean won relative to the U.S. dollar during the period. The net foreign currency loss for the three months ended March 31, 2020 and March 31,June 30, 2019 was due to the depreciation in value of the Korean won relative to the USU.S. dollar during the period.
Loss on Early Extinguishment of Long-Term Borrowings,
Others,Net.
Loss.
Continuing Operations
loss.
Tax
Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | |||||||||||||||||||
Amount | % of Total revenues | Amount | % of Total revenues | Change Amount | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Revenues | ||||||||||||||||||||
Net sales – standard products business | $ | 219.7 | 91.8 | % | $ | 232.3 | 93.6 | % | $ | (12.6 | ) | |||||||||
Net sales – transitional Fab 3 foundry services | 19.6 | 8.2 | 15.9 | 6.4 | 3.7 | |||||||||||||||
Total revenues | 239.3 | 100.0 | 248.2 | 100.0 | (8.9 | ) | ||||||||||||||
Cost of sales | ||||||||||||||||||||
Cost of sales – standard products business | 158.4 | 66.2 | 181.6 | 73.2 | (23.2 | ) | ||||||||||||||
Cost of sales – transitional Fab 3 foundry services | 19.6 | 8.2 | 15.9 | 6.4 | 3.7 | |||||||||||||||
Total cost of sales | 178.0 | 74.4 | 197.5 | 79.6 | (19.5 | ) | ||||||||||||||
Gross profit | 61.3 | 25.6 | 50.6 | 20.4 | 10.6 | |||||||||||||||
Selling, general and administrative expenses | 24.5 | 10.2 | 23.1 | 9.3 | 1.4 | |||||||||||||||
Research and development expenses | 21.6 | 9.0 | 23.8 | 9.6 | (2.2 | ) | ||||||||||||||
Other charges | 0.6 | 0.2 | — | — | 0.6 | |||||||||||||||
Operating income | 14.6 | 6.1 | 3.7 | 1.5 | 10.9 | |||||||||||||||
Interest expense | (11.0 | ) | (4.6 | ) | (11.1 | ) | (4.5 | ) | 0.0 | |||||||||||
Foreign currency loss, net | (22.5 | ) | (9.4 | ) | (22.2 | ) | (8.9 | ) | (0.3 | ) | ||||||||||
Loss on early extinguishment of long-term borrowings, net | — | — | (0.0 | ) | (0.0 | ) | 0.0 | |||||||||||||
Others, net | 1.6 | 0.7 | 1.1 | 0.5 | 0.5 | |||||||||||||||
(31.9 | ) | (13.3 | ) | (32.2 | ) | (13.0 | ) | 0.3 | ||||||||||||
Loss from continuing operations before income tax expense | (17.3 | ) | (7.2 | ) | (28.5 | ) | (11.5 | ) | 11.1 | |||||||||||
Income tax expense | 2.0 | 0.8 | 1.6 | 0.6 | 0.4 | |||||||||||||||
Loss from continuing operations | (19.3 | ) | (8.1 | ) | (30.0 | ) | (12.1 | ) | 10.7 | |||||||||||
Income (loss) from discontinued operations, net of tax | 24.7 | 10.3 | (13.6 | ) | (5.5 | ) | 38.3 | |||||||||||||
Net income (loss) | $ | 5.4 | 2.3 | $ | (43.6 | ) | (17.6 | ) | $ | 49.1 | ||||||||||
Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | |||||||||||||||||||
Amount | % of Total Revenues | Amount | % of Total Revenues | Change Amount | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Revenues | ||||||||||||||||||||
Net sales – standard products business | ||||||||||||||||||||
Display Solutions | $ | 146.8 | 61.3 | % | $ | 142.5 | 57.4 | % | $ | 4.3 | ||||||||||
Power Solutions | 72.9 | 30.5 | 89.8 | 36.2 | (16.9 | ) | ||||||||||||||
Total standard products business | 219.7 | 91.8 | 232.3 | 93.6 | (12.6 | ) | ||||||||||||||
Net sales – transitional Fab 3 foundry services | 19.6 | 8.2 | 15.9 | 6.4 | 3.7 | |||||||||||||||
Total revenues | $ | 239.3 | 100.0 | % | $ | 248.2 | 100.0 | % | $ | (8.9 | ) | |||||||||
Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | |||||||||||||||||||
Amount | % of Net sales | Amount | % of Net sales | Change Amount | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Gross Profit | ||||||||||||||||||||
Gross profit – standard products business | $ | 61.3 | 27.9 | % | $ | 50.6 | 21.8 | % | $ | 10.6 | ||||||||||
Gross profit – transitional Fab 3 foundry services | — | — | — | — | — | |||||||||||||||
Total gross profit | $ | 61.3 | 25.6 | % | $ | 50.6 | 20.4 | % | $ | 10.6 | ||||||||||
Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | |||||||||||||||||||
Amount | % of Net Sales – standard products business | Amount | % of Net Sales – standard products business | Change Amount | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Korea | $ | 52.8 | 24.0 | % | $ | 71.2 | 30.7 | % | $ | (18.4 | ) | |||||||||
Asia Pacific (other than Korea) | 161.8 | 73.6 | 157.4 | 67.8 | 4.3 | |||||||||||||||
United States | 2.2 | 1.0 | 1.1 | 0.5 | 1.1 | |||||||||||||||
Europe | 1.8 | 0.8 | 2.0 | 0.9 | (0.2 | ) | ||||||||||||||
Others | 1.2 | 0.5 | 0.5 | 0.2 | 0.6 | |||||||||||||||
$ | 219.7 | 100.0 | % | $ | 232.3 | 100.0 | % | $ | (12.6 | ) | ||||||||||
Income (Loss)
Cash Flows from Operating Activities
Cash inflow provided by operating activities totaled $21.1 million for the three months ended March 31, 2020, compared to $11.7 million of cash outflow used in operating activities for the three months ended March 31, 2019. The net operating cash inflow for the three months ended March 31, 2020 reflects our net loss of $23.7 million, as adjusted favorably by $55.8 million, which mainly consisted of depreciation and amortization, provision for severance benefits and net foreign currency loss, and net unfavorable impact of $11.0 million from changes of operating assets and liabilities.
cash and cash equivalents.
collateral and a $0.4 million net decrease in guarantee deposits.
Payments Due by Period | ||||||||||||||||||||||||||||
Total | Remainder of 2020 | 2021 | 2022 | 2023 | 2024 | Thereafter | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Exchangeable Notes(1) | $ | 87.9 | $ | 2.1 | $ | 85.8 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
Senior notes(2) | 246.5 | 7.4 | 239.1 | — | — | — | — | |||||||||||||||||||||
Operating leases(3) | 1.5 | 1.2 | 0.2 | 0.0 | 0.0 | — | — | |||||||||||||||||||||
Finance leases(3) | 0.3 | 0.1 | 0.1 | 0.1 | 0.1 | — | — | |||||||||||||||||||||
Water Treatment Services(3)(4) | 30.0 | 3.0 | 3.8 | 3.8 | 3.7 | 3.6 | 12.2 | |||||||||||||||||||||
Others(5) | 10.7 | 7.5 | 3.2 | 0.0 | 0.0 | 0.0 | — |
Payments Due by Period | ||||||||||||||||||||||||||||
Total | Remainder of 2020 | 2021 | 2022 | 2023 | 2024 | Thereafter | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Exchangeable Notes(1) | $ | 87.9 | $ | 2.1 | $ | 85.8 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
Senior notes(2) | 246.5 | 7.4 | 239.1 | — | — | — | — | |||||||||||||||||||||
Operating leases(3) | 1.2 | 0.8 | 0.3 | 0.1 | 0.0 | — | — | |||||||||||||||||||||
Finance leases(3) | 0.3 | 0.0 | 0.1 | 0.1 | 0.1 | — | — | |||||||||||||||||||||
Water Treatment Services(3)(4) | 29.6 | 2.0 | 3.9 | 3.8 | 3.8 | 3.7 | 12.4 | |||||||||||||||||||||
Others(5) | 9.5 | 6.1 | 3.4 | 0.0 | 0.0 | — | — |
(1) | Interest payments as well as $83.7 million aggregate principal amount of the Exchangeable Notes outstanding as of |
(2) | Interest payments as well as $224.3 million aggregate principal amount of the 2021 Notes outstanding as of |
(3) | Assumes constant currency exchange rate for Korean won to US dollars of |
(4) | Includes future payments for water treatment services for our fabrication facility in Gumi, Korea based on the contractual terms. |
(5) | Includes license agreements, funding obligations for the accrued severance benefits and other contractual obligations. |
The assets classified as held for sale are recorded at the lower of carrying amounts or estimated fair value less costs to sell and depreciation and amortization ceases on the that the held for sale criteria are met.
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 4. | Controls and Procedures |
PrincipalChief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.PrincipalChief Financial Officer, as of March 31,June 30, 2020, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in RulesPrincipalChief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31,June 30, 2020.March 31,June 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 6. | Exhibits. |
# | Filed herewith |
† | Furnished herewith |
* | Management contract, compensatory plan or arrangement |
MAGNACHIP SEMICONDUCTOR CORPORATION (Registrant) | ||||||
Dated: | By: | /s/ Young-Joon Kim | ||||
Young-Joon Kim | ||||||
Chief Executive Officer (Principal Executive Officer) | ||||||
Dated: | By: | /s/ | ||||
Chief
(Principal Financial Officer) |
49