☒ | 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 | ☐ |
Page No. | ||||||
3 | ||||||
Item 1. | 3 | |||||
MagnaChip Semiconductor Corporation and Subsidiaries Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019 | 3 | |||||
4 | ||||||
5 | ||||||
6 | ||||||
7 | ||||||
MagnaChip Semiconductor Corporation and Subsidiaries Notes to Consolidated Financial Statements | 8 | |||||
Item 2. | ||||||
Item 3. | ||||||
Item 4. | ||||||
Item 1. | ||||||
Item 1A. | ||||||
Item 6. | ||||||
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 $ 542,111 $ 151,657 57,772 47,447 33,631 41,404 4,551 10,200 8,265 9,003 9,650 9,820 8,338 10,013 — 99,821 664,318 379,365 77,489 73,068 2,032 1,876 2,877 2,769 2,138 5,757 8,598 9,059 — 123,434 $ 757,452 $ 595,328 $ 40,497 $ 40,376 7,639 6,410 41,630 44,799 14,038 1,569 1,390 1,625 306,567 — 7,652 2,014 — 37,040 419,413 133,833 — 304,743 51,953 51,181 7,782 9,671 — 110,881 479,148 610,309 447 439 159,840 152,404 220,253 (58,131 ) (107,649 ) (107,033 ) 5,413 (2,660 ) 278,304 (14,981 ) $ 757,452 $ 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 | Nine Months Ended | |||||||||||||||
September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | |||||||||||||
(In thousands of U.S. dollars, except share data) | ||||||||||||||||
Revenues: | ||||||||||||||||
Net sales – standard products business | $ | 116,262 | $ | 139,273 | $ | 335,953 | $ | 371,543 | ||||||||
Net sales – transitional Fab 3 foundry services | 8,551 | 9,894 | 28,161 | 25,776 | ||||||||||||
Total revenues | 124,813 | 149,167 | 364,114 | 397,319 | ||||||||||||
Cost of sales: | ||||||||||||||||
Cost of sales – standard products business | 87,494 | 104,018 | 245,917 | 285,643 | ||||||||||||
Cost of sales – transitional Fab 3 foundry services | 8,731 | 9,894 | 28,341 | 25,776 | ||||||||||||
Total cost of sales | 96,225 | 113,912 | 274,258 | 311,419 | ||||||||||||
Gross profit | 28,588 | 35,255 | 89,856 | 85,900 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative expenses | 12,888 | 10,686 | 37,398 | 33,817 | ||||||||||||
Research and development expenses | 12,477 | 10,233 | 34,094 | 34,049 | ||||||||||||
Other charges | — | — | 554 | — | ||||||||||||
Total operating expenses | 25,365 | 20,919 | 72,046 | 67,866 | ||||||||||||
Operating income | 3,223 | 14,336 | 17,810 | 18,034 | ||||||||||||
Interest expense | (5,485 | ) | (5,539 | ) | (16,522 | ) | (16,615 | ) | ||||||||
Foreign currency gain (loss), net | 8,864 | (21,985 | ) | (13,638 | ) | (44,166 | ) | |||||||||
Loss on early extinguishment of long-term borrowings, net | — | — | — | (42 | ) | |||||||||||
Other income, net | 714 | 678 | 2,343 | 1,816 | ||||||||||||
Income (loss) from continuing operations before income tax expense | 7,316 | (12,510 | ) | (10,007 | ) | (40,973 | ) | |||||||||
Income tax expense (benefit) | (1,145 | ) | 1,734 | 836 | 3,316 | |||||||||||
Income (loss) from continuing operations | 8,461 | (14,244 | ) | (10,843 | ) | (44,289 | ) | |||||||||
Income (loss) from discontinued operations, net of tax | 264,501 | 12,637 | 289,227 | (963 | ) | |||||||||||
Net income (loss) | $ | 272,962 | $ | (1,607 | ) | $ | 278,384 | $ | (45,252 | ) | ||||||
Basic earnings (loss) per common share— | ||||||||||||||||
Continuing operations | $ | 0.24 | $ | (0.41 | ) | $ | (0.31 | ) | $ | (1.29 | ) | |||||
Discontinued operations | 7.50 | 0.36 | 8.24 | (0.03 | ) | |||||||||||
Total | $ | 7.74 | $ | (0.05 | ) | $ | 7.93 | $ | (1.32 | ) | ||||||
Diluted earnings (loss) per common share— | ||||||||||||||||
Continuing operations | $ | 0.21 | $ | (0.41 | ) | $ | (0.31 | ) | $ | (1.29 | ) | |||||
Discontinued operations | 5.68 | 0.36 | 8.24 | (0.03 | ) | |||||||||||
Total | $ | 5.89 | $ | (0.05 | ) | $ | 7.93 | $ | (1.32 | ) | ||||||
Weighted average number of shares— | ||||||||||||||||
Basic | 35,280,864 | 34,357,745 | 35,089,479 | 34,266,513 | ||||||||||||
Diluted | 46,581,788 | 34,357,745 | 35,089,479 | 34,266,513 |
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 | Nine Months Ended | |||||||||||||||
September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | |||||||||||||
(In thousands of U.S. dollars) | ||||||||||||||||
Net income (loss) | $ | 272,962 | $ | (1,607 | ) | $ | 278,384 | $ | (45,252 | ) | ||||||
Other comprehensive income (loss) | ||||||||||||||||
Foreign currency translation adjustments | (6,517 | ) | 15,931 | 9,191 | 30,915 | |||||||||||
Derivative adjustments | ||||||||||||||||
Fair valuation of derivatives | 1,390 | (2,803 | ) | (1,410 | ) | (5,703 | ) | |||||||||
Reclassification adjustment for loss on derivatives included in net income (loss) | 41 | 1,600 | 292 | 3,553 | ||||||||||||
Total other comprehensive income (loss) | (5,086 | ) | 14,728 | 8,073 | 28,765 | |||||||||||
Total comprehensive income (loss) | $ | 267,876 | $ | 13,121 | $ | 286,457 | $ | (16,487 | ) | |||||||
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 | Retained Earnings | Treasury | Accumulated Other Comprehensive | ||||||||||||||||||||||||
(In thousands of U.S. dollars, except share data) | Shares | Amount | Capital | (Deficit) | Stock | Income (Loss) | Total | |||||||||||||||||||||
Three Months Ended September 30, 2020: | ||||||||||||||||||||||||||||
Balance at June 30, 2020 | 35,143,033 | $ | 443 | $ | 155,591 | $ | (52,709 | ) | $ | (107,649 | ) | $ | 10,499 | $ | 6,175 | |||||||||||||
Stock-based compensation | — | — | 2,226 | — | — | — | 2,226 | |||||||||||||||||||||
Exercise of stock options | 287,292 | 3 | 2,024 | — | — | — | 2,027 | |||||||||||||||||||||
Settlement of restricted stock units | 59,395 | 1 | (1 | ) | — | — | — | — | ||||||||||||||||||||
Other comprehensive loss, net | — | — | — | — | — | (5,086 | ) | (5,086 | ) | |||||||||||||||||||
Net income | — | — | — | 272,962 | — | — | 272,962 | |||||||||||||||||||||
Balance at September 30, 2020 | 35,489,720 | $ | 447 | $ | 159,840 | $ | 220,253 | $ | (107,649 | ) | $ | 5,413 | $ | 278,304 | ||||||||||||||
Three Months Ended September 30, 2019: | ||||||||||||||||||||||||||||
Balance at June 30, 2019 | 34,240,181 | $ | 433 | $ | 144,188 | $ | (79,950 | ) | $ | (106,514 | ) | $ | (6,073 | ) | $ | (47,916 | ) | |||||||||||
Stock-based compensation | — | — | 479 | — | — | — | 479 | |||||||||||||||||||||
Exercise of stock options | 129,409 | 1 | 888 | — | — | — | 889 | |||||||||||||||||||||
Settlement of restricted stock units | 1,099 | 0 | (0 | ) | — | — | — | — | ||||||||||||||||||||
Other comprehensive income, net | — | — | — | — | — | 14,728 | 14,728 | |||||||||||||||||||||
Net loss | — | — | — | (1,607 | ) | — | — | (1,607 | ) | |||||||||||||||||||
Balance at September 30, 2019 | 34,370,689 | $ | 434 | $ | 145,555 | $ | (81,557 | ) | $ | (106,514 | ) | $ | 8,655 | $ | (33,427 | ) | ||||||||||||
Common Stock | Additional Paid-In | Retained Earnings | Treasury | Accumulated Other Comprehensive | Total | |||||||||||||||||||||||
(In thousands of U.S. dollars, except share data) | Shares | Amount | Capital | (Deficit) | Stock | Income (Loss) | ||||||||||||||||||||||
Nine Months Ended September 30, 2020: | ||||||||||||||||||||||||||||
Balance at December 31, 2019 | 34,800,312 | $ | 439 | $ | 152,404 | $ | (58,131 | ) | $ | (107,033 | ) | $ | (2,660 | ) | $ | (14,981 | ) | |||||||||||
Stock-based compensation | — | — | 4,754 | — | — | — | 4,754 | |||||||||||||||||||||
Exercise of stock options | 375,643 | 4 | 2,686 | — | — | — | 2,690 | |||||||||||||||||||||
Settlement of restricted stock units | 367,759 | 4 | (4 | ) | — | — | — | — | ||||||||||||||||||||
Acquisition of treasury stock | (53,994 | ) | — | — | — | (616 | ) | — | (616 | ) | ||||||||||||||||||
Other comprehensive income, net | — | — | — | — | — | 8,073 | 8,073 | |||||||||||||||||||||
Net income | — | — | — | 278,384 | — | — | 278,384 | |||||||||||||||||||||
Balance at September 30, 2020 | 35,489,720 | $ | 447 | $ | 159,840 | $ | 220,253 | $ | (107,649 | ) | $ | 5,413 | $ | 278,304 | ||||||||||||||
Nine Months Ended September 30, 2019: | ||||||||||||||||||||||||||||
Balance at December 31, 2018 | 34,441,232 | $ | 431 | $ | 142,600 | $ | (36,305 | ) | $ | (103,926 | ) | $ | (20,110 | ) | $ | (17,310 | ) | |||||||||||
Stock-based compensation | — | — | 1,920 | — | — | — | 1,920 | |||||||||||||||||||||
Exercise of stock options | 153,967 | 1 | 1,037 | — | — | — | 1,038 | |||||||||||||||||||||
Settlement of restricted stock units | 169,592 | 2 | (2 | ) | — | — | — | — | ||||||||||||||||||||
Acquisition of treasury stock | (394,102 | ) | — | — | — | (2,588 | ) | — | (2,588 | ) | ||||||||||||||||||
Other comprehensive income, net | — | — | — | — | — | 28,765 | 28,765 | |||||||||||||||||||||
Net loss | — | — | — | (45,252 | ) | — | — | (45,252 | ) | |||||||||||||||||||
Balance at September 30, 2019 | 34,370,689 | $ | 434 | $ | 145,555 | $ | (81,557 | ) | $ | (106,514 | ) | $ | 8,655 | $ | (33,427 | ) | ||||||||||||
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 | ) | |||||
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Cash and cash equivalents | ||||||||
Beginning of the period | 151,657 | 132,438 | ||||||
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End of the period | $ | 157,293 | $ | 105,812 | ||||
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Supplemental cash flow information | ||||||||
Cash paid for interest | $ | 9,522 | $ | 9,549 | ||||
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Cash paid for income taxes | $ | 1,534 | $ | 1,556 | ||||
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Non-cash investing activities | ||||||||
Property, plant and equipment additions in other accounts payable | $ | 687 | $ | 2,643 | ||||
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Non-cash financing activities | ||||||||
Acquisition of treasury stock to satisfy the tax withholding obligations in connection with equity-based compensation | $ | — | $ | (232 | ) | |||
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Nine Months Ended | ||||||||
September 30, 2020 | September 30, 2019 | |||||||
(In thousands of U.S. dollars) | ||||||||
Cash flows from operating activities | ||||||||
Net income (loss) | $ | 278,384 | $ | (45,252 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities | ||||||||
Depreciation and amortization | 13,333 | 24,661 | ||||||
Provision for severance benefits | 14,150 | 10,491 | ||||||
Amortization of debt issuance costs and original issue discount | 1,824 | 1,712 | ||||||
Loss on foreign currency, net | 6,609 | 50,512 | ||||||
Restructuring and other charges | 490 | 470 | ||||||
Provision for inventory reserves | 4,079 | 9,255 | ||||||
Stock-based compensation | 4,754 | 1,920 | ||||||
Loss on early extinguishment of long-term borrowings, net | — | 42 | ||||||
Gain on sale of discontinued operations | (287,117 | ) | — | |||||
Others, net | 85 | 61 | ||||||
Changes in operating assets and liabilities | ||||||||
Accounts receivable, net | (16,583 | ) | (32,812 | ) | ||||
Unbilled accounts receivable, net | 14,260 | 14,208 | ||||||
Inventories | 1,390 | (15,576 | ) | |||||
Other receivables | 6,111 | (4,814 | ) | |||||
Other current assets | 9,143 | 6,356 | ||||||
Accounts payable | (5,156 | ) | 27,585 | |||||
Other accounts payable | (8,034 | ) | (10,074 | ) | ||||
Accrued expenses | 1,991 | 3,831 | ||||||
Accrued income taxes | 12,546 | (583 | ) | |||||
Other current liabilities | 2,243 | (5,766 | ) | |||||
Other non-current liabilities | 2,868 | 808 | ||||||
Payment of severance benefits | (5,888 | ) | (6,195 | ) | ||||
Others, net | 59 | (821 | ) | |||||
Net cash provided by operating activities | 51,541 | 30,019 | ||||||
Cash flows from investing activities | ||||||||
Proceeds from settlement of hedge collateral | 8,029 | 12,625 | ||||||
Payment of hedge collateral | (7,841 | ) | (17,024 | ) | ||||
Purchase of property, plant and equipment | (16,353 | ) | (16,693 | ) | ||||
Payment for intellectual property registration | (664 | ) | (907 | ) | ||||
Collection of guarantee deposits | 891 | 539 | ||||||
Payment of guarantee deposits | (611 | ) | (1,330 | ) | ||||
Proceeds from sale of discontinued operations | 350,553 | — | ||||||
Others, net | 26 | 225 | ||||||
Net cash provided by (used in) investing activities | 334,030 | (22,565 | ) | |||||
Cash flows from financing activities | ||||||||
Repurchase of long-term borrowings | — | (1,175 | ) | |||||
Proceeds from exercise of stock options | 2,690 | 1,038 | ||||||
Acquisition of treasury stock | (1,021 | ) | (2,588 | ) | ||||
Repayment of financing related to water treatment facility arrangement | (402 | ) | (415 | ) | ||||
Repayment of principal portion of finance lease liabilities | (165 | ) | (174 | ) | ||||
Net cash provided by (used in) financing activities | 1,102 | (3,314 | ) | |||||
Effect of exchange rates on cash and cash equivalents | 3,781 | (5,237 | ) | |||||
Net increase (decrease) in cash and cash equivalents | 390,454 | (1,097 | ) | |||||
Cash and cash equivalents | ||||||||
Beginning of the period | 151,657 | 132,438 | ||||||
End of the period | $ | 542,111 | $ | 131,341 | ||||
Supplemental cash flow information | ||||||||
Cash paid for interest | $ | 19,044 | $ | 19,071 | ||||
Cash paid for income taxes | $ | 2,573 | $ | 1,904 | ||||
Non-cash investing activities | ||||||||
Property, plant and equipment additions in other accounts payable | $ | 3,865 | $ | 496 | ||||
ended September 30, 2020.
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 | Nine Months Ended | |||||||||||||||
September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | |||||||||||||
(In thousands of U.S. dollars, except share data) | ||||||||||||||||
Revenues: | ||||||||||||||||
Net sales – Foundry Services Group | $ | 72,674 | $ | 90,404 | $ | 254,732 | $ | 220,659 | ||||||||
Net sales – transitional Fab 3 foundry services | (6,277 | ) | (9,894 | ) | (25,887 | ) | (25,776 | ) | ||||||||
Total revenues | 66,397 | 80,510 | 228,845 | 194,883 | ||||||||||||
Cost of sales: | ||||||||||||||||
Cost of sales – Foundry Services Group | 52,420 | 64,793 | 182,872 | 179,152 | ||||||||||||
Cost of sales – transitional Fab 3 foundry services | (6,277 | ) | (9,894 | ) | (25,887 | ) | (25,776 | ) | ||||||||
Total cost of sales | 46,143 | 54,899 | 156,985 | 153,376 | ||||||||||||
Gross profit | 20,254 | 25,611 | 71,860 | 41,507 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative expenses | 4,068 | 6,126 | 14,704 | 18,040 | ||||||||||||
Research and development expenses | 5,166 | 7,135 | 19,484 | 22,326 | ||||||||||||
Restructuring and other charges | 7,870 | 763 | 10,574 | 4,787 | ||||||||||||
Total operating expenses | 17,104 | 14,024 | 44,762 | 45,153 | ||||||||||||
Operating income (loss) from discontinued operations | 3,150 | 11,587 | 27,098 | (3,646 | ) | |||||||||||
Foreign currency gain (loss), net | (797 | ) | 780 | 1,277 | 2,533 | |||||||||||
Others, net | 18 | (10 | ) | 66 | (59 | ) | ||||||||||
Income (loss) from discontinued operations before income tax expense | 2,371 | 12,357 | 28,441 | (1,172 | ) | |||||||||||
Income tax expense (benefit) | 14,173 | (280 | ) | 15,517 | (209 | ) | ||||||||||
Gain on sale of discontinued operations | 287,117 | — | 287,117 | — | ||||||||||||
Transaction costs | (10,814 | ) | — | (10,814 | ) | — | ||||||||||
Income (loss) from discontinued operations, net of tax | 264,501 | 12,637 | 289,227 | (963 | ) | |||||||||||
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 | ||||
|
|
|
|
As of March 31, 2020, all assets and liabilities held for sale are classified as current on the consolidated balance sheets based on the anticipated date of disposal of the Foundry Services Group business and Fab 4.
sheet:
December 31, 2019 | ||||
(In thousands of U.S. dollars) | ||||
Assets | ||||
Current assets | ||||
Accounts receivable, net | $ | 48,194 | ||
Unbilled accounts receivable | 16,463 | |||
Inventories, net | 31,863 | |||
Other current assets | 3,301 | |||
Total current assets held for sal e | $ | 99,821 | ||
Property, plant and equipment, net | 109,506 | |||
Intangible assets, net | 1,245 | |||
Other non-current assets | 12,683 | |||
Total assets held for sale | $ | 223,255 | ||
Liabilities | ||||
Current liabilities | ||||
Accounts payable | $ | 20,503 | ||
Other current liabilities | 16,537 | |||
Total current liabilities held for sale | $ | 37,040 | ||
Accrued severance benefits, net | 95,547 | |||
Other non-current liabilities | 15,334 | |||
Total liabilities held for sale | $ | 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 | ) |
Nine Months Ended | ||||||||
September 30, 2020 | September 30, 2019 | |||||||
(In thousands of U.S. dollars) | ||||||||
Significant non-cash operating activities: | ||||||||
Depreciation and amortization | $ | 5,365 | $ | 16,958 | ||||
Provision for severance benefits | 8,209 | 5,997 | ||||||
Stock-based compensation | 388 | 259 | ||||||
Investing activities: | ||||||||
Capital expenditures | $ | (5,838 | ) | $ | (9,174 | ) |
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 | ||||
|
|
|
|
September 30, 2020 | December 31, 2019 | |||||||
Finished goods | $ | 5,030 | $ | 10,087 | ||||
Semi-finished goods and work-in-process | 28,919 | 28,815 | ||||||
Raw materials | 5,743 | 8,449 | ||||||
Materials in-transit | 444 | — | ||||||
Less: inventory reserve | (6,505 | ) | (5,947 | ) | ||||
Inventories, net | $ | 33,631 | $ | 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 | Nine Months Ended | Three Months Ended | Nine Months Ended | |||||||||||||
September 30, 2020 | September 30, 2019 | |||||||||||||||
Beginning balance | $ | (5,307 | ) | $ | (5,947 | ) | $ | (11,782 | ) | $ | (4,845 | ) | ||||
Change in reserve | ||||||||||||||||
Inventory reserve charged to costs of sales | (3,472 | ) | (6,541 | ) | (1,298 | ) | (10,745 | ) | ||||||||
Sale of previously reserved inventory | 1,578 | 3,231 | 914 | 1,880 | ||||||||||||
(1,894 | ) | (3,310 | ) | (384 | ) | (8,865 | ) | |||||||||
Write off | 835 | 1,976 | 377 | 1,593 | ||||||||||||
Translation adjustments | (139 | ) | 82 | 461 | 789 | |||||||||||
Reclassified to assets held for sale | 0 | 694 | — | — | ||||||||||||
Ending balance | $ | (6,505 | ) | $ | (6,505 | ) | $ | (11,328 | ) | $ | (11,328 | ) | ||||
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 | ||||
|
|
|
|
September 30, 2020 | December 31, 2019 | |||||||
Buildings and related structures | $ | 22,580 | $ | 22,502 | ||||
Machinery and equipment | 90,136 | 89,453 | ||||||
Finance lease right-of-use | 319 | 323 | ||||||
Others | 31,802 | 22,242 | ||||||
144,837 | 134,520 | |||||||
Less: accumulated depreciation | (81,409 | ) | (75,704 | ) | ||||
Land | 14,061 | 14,252 | ||||||
Property, plant and equipment, net | $ | 77,489 | $ | 73,068 | ||||
Concurrent with the execution of the BTA, the Company executed a factory (kun) mortgage agreement under which the real property owned by the Company in respect of the Fab 3 fabrication facility located in Gumi, Korea and other material assets located in, attached to or forming part of such facility were pledged as collateral for purposes of securing the payment of its termination fee of $34,470 thousand under the BTA. The Company has a right to replace the factory (kun) mortgage at any time with a deposit of $34,470 thousand cash into escrow.
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 | |||||
|
|
|
|
|
|
September 30, 2020 | ||||||||||||
Gross amount | Accumulated amortization | Net amount | ||||||||||
Technology | $ | 6,487 | $ | (6,487 | ) | $ | — | |||||
Customer relationships | 10,044 | (10,044 | ) | — | ||||||||
Intellectual property assets | 8,760 | (5,883 | ) | 2,877 | ||||||||
Intangible assets, net | $ | 25,291 | $ | (22,414 | ) | $ | 2,877 | |||||
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 | September 30, 2020 | December 31, 2019 | |||||||||
Assets | ||||||||||||
Operating lease | Operating lease right-of-use assets | $ | 2,032 | $ | 1,876 | |||||||
Finance lease | Property, plant and equipment, net | 207 | 258 | |||||||||
Total lease assets | $ | 2,239 | $ | 2,134 | ||||||||
Liabilities | ||||||||||||
Current | ||||||||||||
Operating | Operating lease liabilities | $ | 1,390 | $ | 1,625 | |||||||
Finance | Other current liabilities | 62 | 60 | |||||||||
Non-current | ||||||||||||
Operating | Other non-current liabilities | 642 | 251 | |||||||||
Finance | Other non-current liabilities | 158 | 208 | |||||||||
Total lease liabilities | $ | 2,252 | $ | 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 | % |
September 30, 2020 | December 31, 2019 | |||||||
Weighted average remaining lease term | ||||||||
Operating leases | 1.4 years | 1.1 years | ||||||
Finance leases | 3.3 years | 4.0 years | ||||||
Weighted average discount rate | ||||||||
Operating leases | 6.82 | % | 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 | Nine Months Ended | |||||||||||||||
September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | |||||||||||||
Operating lease cost | $ | 480 | $ | 483 | $ | 1,409 | $ | 1,509 | ||||||||
Finance lease cost | ||||||||||||||||
Amortization of right-of-use | 16 | 15 | 47 | 48 | ||||||||||||
Interest on lease liabilities | 4 | 5 | 13 | 17 | ||||||||||||
Total lease cost | $ | 500 | $ | 503 | $ | 1,469 | $ | 1,574 | ||||||||
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 | Nine Months Ended | |||||||||||||||
September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | |||||||||||||
Cash paid for amounts included in the measurement of lease liabilities | ||||||||||||||||
Operating cash flows from operating leases | $ | 480 | $ | 483 | $ | 1,409 | $ | 1,509 | ||||||||
Operating cash flows from finance leases | 4 | 5 | 13 | 17 | ||||||||||||
Financing cash flows from finance leases | 15 | 13 | 43 | 41 |
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 | $ | 358 | $ | 19 | ||||
2021 | 1,459 | 77 | ||||||
2022 | 308 | 77 | ||||||
2023 | 16 | 77 | ||||||
Thereafter | — | — | ||||||
Total future lease payments | 2,141 | 250 | ||||||
Less: Imputed interest | (109 | ) | (30 | ) | ||||
Present value of future payments | $ | 2,032 | $ | 220 | ||||
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 | ||||
|
|
|
|
September 30, 2020 | December 31, 2019 | |||||||
Payroll, benefits and related taxes, excluding severance benefits | $ | 9,743 | $ | 8,493 | ||||
Withholding tax attributable to intercompany interest income | 25,206 | 23,371 | ||||||
Interest on senior notes | 3,444 | 8,205 | ||||||
Outside service fees | 685 | 1,996 | ||||||
Others | 2,552 | 2,734 | ||||||
Accrued expenses | $ | 41,630 | $ | 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 | $ | 15,000 | October 2020 to | ||||||
January 31, 2020 | Zero cost collar | $ | 15,000 | October 2020 to December 2020 | ||||||
February 3, 2020 | Zero cost collar | $ | 9,000 | October 2020 to December 2020 | ||||||
February 21, 2020 | Zero cost collar | $ | 15,000 | October 2020 to December 2020 | ||||||
July 13, 2020 | Zero cost collar | $ | 30,000 | January 2021 to June 2021 |
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 | ||||||||
September 27, 2019 | Zero cost collar | $ | 42,000 | January 2020 to June 2020 | ||||||||
December 4, 2019 | Zero cost collar | $ | 30,000 | July 2020 to |
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: | September 30, 2020 | December 31, 2019 | ||||||||||
Asset Derivatives: | ||||||||||||
Zero cost collars | Other current assets | $ | 262 | $ | 1,456 | |||||||
Liability Derivatives: | ||||||||||||
Zero cost collars | Other current liabilities | $ | 33 | $ | — |
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 September 30, 2020 | Gross amounts of recognized assets/liabilities | Gross amounts offset in the balance sheets | Net amounts of assets/liabilities 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 | $ | 262 | $ | 0 | $ | 262 | $ | 0 | $ | 0 | $ | 262 | ||||||||||||
Liability Derivatives: | ||||||||||||||||||||||||
Zero cost collars | $ | 33 | $ | 0 | $ | 33 | $ | 0 | $ | 0 | $ | 33 |
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 | Location/Amount of Loss Reclassified from AOCI Into Statement of Operations | Location/Amount of Gain (Loss) Recognized in Statement of Operations on Derivatives | |||||||||||||||||||||||||||||
Three Months Ended September 30, | Three Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||
Zero cost collars | $ | 1,390 | $ | (2,803 | )�� | Net sales | $ | (41 | ) | $ | (1,600 | ) | Other income, net | $ | 50 | $ | (33 | ) |
Derivatives in ASC 815 Cash Flow Hedging Relationships | Amount of Loss Recognized in AOCI on Derivatives | Location/Amount of Loss Reclassified from AOCI Into Statement of Operations | Location/Amount of Gain (Loss) Recognized in Statement of Operations on Derivatives | |||||||||||||||||||||||||||||
Nine Months Ended September 30, | Nine Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||
Zero cost collars | $ | (1,410 | ) | $ | (3,905 | ) | Net sales | $ | (292 | ) | $ | (1,803 | ) | Other income, net | $ | 222 | $ | (44 | ) | |||||||||||||
Forwards | $ | — | $ | (1,798 | ) | Net sales | $ | — | $ | (1,750 | ) | Other income, net | $ | — | $ | (125 | ) | |||||||||||||||
$ | (1,410 | ) | $ | (5,703 | ) | $ | (292 | ) | $ | (3,553 | ) | $ | 222 | $ | (169 | ) | ||||||||||||||||
Thesezero cost collar contracts may be terminated by the counterparty in a number of circumstances, including if the Company’s borrowing rating falls below
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 September 30, 2020 | Fair Value Measurement September 30, 2020 | Quoted Prices in Active Markets for Identical Asset / Liability (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||
Assets: | ||||||||||||||||||||
Derivative assets (other current assets) | $ | 262 | $ | 262 | — | $ | 262 | — | ||||||||||||
Liabilities: | ||||||||||||||||||||
Derivative liabilities (other current liabilities) | $ | 33 | $ | 33 | — | $ | 33 | — |
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 |
September 30, 2020 | December 31, 2019 | |||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||
(In thousands of U.S. dollars) | ||||||||||||||||
Borrowings: | ||||||||||||||||
5.0% Exchangeable Senior Notes due March 2021 (Level 2) | $ | 83,088 | $ | 126,643 | $ | 81,959 | $ | 116,078 | ||||||||
6.625% Senior Notes due July 2021 (Level 2) | $ | 223,479 | $ | 224,250 | $ | 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 | ) | ||||
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Total borrowings, net | 305,340 | 304,743 | ||||||
Less: current portion of long-term borrowings, net | (82,328 | ) | — | |||||
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Long-term borrowings, net | $ | 223,012 | $ | 304,743 | ||||
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September 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 | (1,423 | ) | (3,247 | ) | ||||
Total borrowings, net | 306,567 | 304,743 | ||||||
Less: current portion of long-term borrowings, net | 306,567 | — | ||||||
Long-term borrowings, net | $ | 0 | $ | 304,743 | ||||
benefit
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 | ) | ||||
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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 | Nine Months Ended | Three Months Ended | Nine Months Ended | |||||||||||||
September 30, 2020 | September 30, 2019 | |||||||||||||||
Beginning balance | $ | 51,785 | $ | 53,344 | $ | 53,202 | $ | 55,691 | ||||||||
Provisions | 2,167 | 5,941 | 1,851 | 4,494 | ||||||||||||
Severance payments | (1,295 | ) | (4,749 | ) | (1,017 | ) | (4,312 | ) | ||||||||
Translation adjustments | 1,204 | (675 | ) | (2,180 | ) | (4,017 | ) | |||||||||
53,861 | 53,861 | 51,856 | 51,856 | |||||||||||||
Less: Cumulative contributions to severance insurance deposit accounts | (1,616 | ) | (1,616 | ) | (1,357 | ) | (1,357 | ) | ||||||||
The National Pension Fund | (73 | ) | (73 | ) | (80 | ) | (80 | ) | ||||||||
Group severance insurance plan | (219 | ) | (219 | ) | (227 | ) | (227 | ) | ||||||||
Accrued severance benefits, net | $ | 51,953 | $ | 51,953 | $ | 50,192 | $ | 50,192 | ||||||||
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 | $ | 387 | ||
2021 | 386 | |||
2022 | 743 | |||
2023 | 605 | |||
2024 | 1,074 | |||
2025 | 2,157 | |||
2026 – 2030 | 19,644 |
A
In July 2020, the U.S. Treasury Department issued final tax regulations related to the foreign-derived intangible income and global intangible
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 | Nine Months Ended | |||||||||||||||
September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | |||||||||||||
Revenues | ||||||||||||||||
Standard products business | ||||||||||||||||
Display Solutions | $ | 69,583 | $ | 90,550 | $ | 216,352 | $ | 233,041 | ||||||||
Power Solutions | 46,679 | 48,723 | 119,601 | 138,502 | ||||||||||||
Total standard products business | 116,262 | 139,273 | 335,953 | 371,543 | ||||||||||||
Transitional Fab 3 foundry services | 8,551 | 9,894 | 28,161 | 25,776 | ||||||||||||
Total revenues | $ | 124,813 | $ | 149,167 | $ | 364,114 | $ | 397,319 | ||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | |||||||||||||
Gross Profit | ||||||||||||||||
Standard products business | $ | 28,768 | $ | 35,255 | $ | 90,036 | $ | 85,900 | ||||||||
Transitional Fab 3 foundry services | (180 | ) | — | (180 | ) | — | ||||||||||
Total gross profit | $ | 28,588 | $ | 35,255 | $ | 89,856 | $ | 85,900 | ||||||||
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 | Nine Months Ended | |||||||||||||||
September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | |||||||||||||
Korea | $ | 28,370 | $ | 36,114 | $ | 81,144 | $ | 107,319 | ||||||||
Asia Pacific (other than Korea) | 84,188 | 100,872 | 245,940 | 258,276 | ||||||||||||
United States | 1,789 | 482 | 3,959 | 1,600 | ||||||||||||
Europe | 1,451 | 1,501 | 3,278 | 3,515 | ||||||||||||
Others | 464 | 304 | 1,632 | 833 | ||||||||||||
Total | $ | 116,262 | $ | 139,273 | $ | 335,953 | $ | 371,543 | ||||||||
95%
16. Accumulated Other Comprehensive Income (Loss)
accounts receivable, net, respectively.
16. | Accumulated Other Comprehensive Income (Loss) |
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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September 30, 2020 | December 31, 2019 | |||||||
Foreign currency translation adjustments | $ | 4,986 | $ | (4,205 | ) | |||
Derivative adjustments | 427 | 1,545 | ||||||
Total | $ | 5,413 | $ | (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 September 30, 2020 | Foreign currency translation adjustments | Derivative adjustments | Total | |||||||||
Beginning balance | $ | 11,503 | $ | (1,004 | ) | $ | 10,499 | |||||
Other comprehensive income (loss) before reclassifications | (6,517 | ) | 1,390 | (5,127 | ) | |||||||
Amounts reclassified from accumulated other comprehensive loss | — | 41 | 41 | |||||||||
Net current-period other comprehensive income (loss) | (6,517 | ) | 1,431 | (5,086 | ) | |||||||
Ending balance | $ | 4,986 | $ | 427 | $ | 5,413 | ||||||
Three Months Ended September 30, 2019 | Foreign currency translation adjustments | Derivative adjustments | Total | |||||||||
Beginning balance | $ | (5,077 | ) | $ | (996 | ) | $ | (6,073 | ) | |||
Other comprehensive income (loss) before reclassifications | 15,931 | (2,803 | ) | 13,128 | ||||||||
Amounts reclassified from accumulated other comprehensive loss | — | 1,600 | 1,600 | |||||||||
Net current-period other comprehensive income (loss) | 15,931 | (1,203 | ) | 14,728 | ||||||||
Ending balance | $ | 10,854 | $ | (2,199 | ) | $ | 8,655 | |||||
Nine Months Ended September 30, 2020 | Foreign currency translation adjustments | Derivative adjustments | Total | |||||||||
Beginning balance | $ | (4,205 | ) | $ | 1,545 | $ | (2,660 | ) | ||||
Other comprehensive income (loss) before reclassifications | 9,191 | (1,410 | ) | 7,781 | ||||||||
Amounts reclassified from accumulated other comprehensive loss | — | 292 | 292 | |||||||||
Net current-period other comprehensive income (loss) | 9,191 | (1,118 | ) | 8,073 | ||||||||
Ending balance | $ | 4,986 | $ | 427 | $ | 5,413 | ||||||
Nine Months Ended September 30, 2019 | Foreign currency translation adjustments | Derivative adjustments | Total | |||||||||
Beginning balance | $ | (20,061 | ) | $ | (49 | ) | $ | (20,110 | ) | |||
Other comprehensive income (loss) before reclassifications | 30,915 | (5,703 | ) | 25,212 | ||||||||
Amounts reclassified from accumulated other comprehensive loss | — | 3,553 | 3,553 | |||||||||
Net current-period other comprehensive income (loss) | 30,915 | (2,150 | ) | 28,765 | ||||||||
Ending balance | $ | 10,854 | $ | (2,199 | ) | $ | 8,655 | |||||
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 | ) | ||
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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 | ) | ||
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Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | |||||||||||||
(In thousands of U.S. dollars, except share data) | ||||||||||||||||
Basic earnings (loss) per share | ||||||||||||||||
Income (loss) from continuing operations | $ | 8,461 | $ | (14,244 | ) | $ | (10,843 | ) | $ | (44,289 | ) | |||||
Income (loss) from discontinued operations, net of tax | 264,501 | 12,637 | 289,227 | (963 | ) | |||||||||||
Net income (loss) | $ | 272,962 | (1,607 | ) | $ | 278,384 | $ | (45,252 | ) | |||||||
Basic weighted average common stock outstanding | 35,280,864 | 34,357,745 | 35,089,479 | 34,266,513 | ||||||||||||
Basic earnings (loss) per common share | ||||||||||||||||
Continuing operations | $ | 0.24 | $ | (0.41 | ) | $ | (0.31 | ) | $ | (1.29 | ) | |||||
Discontinued operations | 7.50 | 0.36 | 8.24 | (0.03 | ) | |||||||||||
Total | $ | 7.74 | $ | (0.05 | ) | $ | 7.93 | $ | (1.32 | ) | ||||||
Diluted earnings (loss) per share | ||||||||||||||||
Income (loss) from continuing operations | $ | 8,461 | $ | (14,244 | ) | $ | (10,843 | ) | $ | (44,289 | ) | |||||
Add back: Interest expense on Exchangeable Notes | 1,429 | — | — | — | ||||||||||||
Income (loss) from continuing operations allocated to common stockholders | $ | 9,890 | $ | (14,244 | ) | $ | (10,843 | ) | $ | (44,289 | ) | |||||
Income (loss) from discontinued operations, net of tax | 264,501 | 12,637 | 289,227 | (963 | ) | |||||||||||
Net income (loss) allocated to common stockholders | $ | 274,391 | $ | (1,607 | ) | $ | 278,384 | $ | (45,252 | ) | ||||||
Basic weighted average common stock outstanding | 35,280,864 | 34,357,745 | 35,089,479 | 34,266,513 | ||||||||||||
Net effect of dilutive equity awards | 1,156,769 | — | — | — | ||||||||||||
Net effect of assumed conversion of 5.0% Exchangeable Notes to common stock | 10,144,155 | — | — | — | ||||||||||||
Diluted weighted average common stock outstanding | 46,581,788 | 34,357,745 | 35,089,479 | 34,266,513 | ||||||||||||
Diluted earnings (loss) per common share | ||||||||||||||||
Continuing operations | $ | 0.21 | $ | (0.41 | ) | $ | (0.31 | ) | $ | (1.29 | ) | |||||
Discontinued operations | 5.68 | 0.36 | 8.24 | (0.03 | ) | |||||||||||
Total | $ | 5.89 | $ | (0.05 | ) | $ | 7.93 | $ | (1.32 | ) | ||||||
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 | Nine Months Ended | |||||||||||||||
September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | |||||||||||||
Options | 697,667 | 2,479,423 | 1,788,202 | 2,479,423 | ||||||||||||
Restricted Stock Units | — | 592,967 | 1,248,113 | 592,967 |
nine months ended September 30, 2019.
While the Company experienced some minor disruption in its Power Solutions business from assembly and test subcontractors located in China in the first quarter of 2020 as a result of
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
4 to Key Foundry Co., Ltd. (the “Buyer”), for a purchase price equal to approximately $350.6 million in cash. automotive electronics.2,9501,200 registered patents and pending applications and extensive engineering and manufacturing process expertise.BTABusiness Transfer Agreement for the sale of our Foundry Services Group business and Fab 4. The planned divestiturepreviously announced sale of the Foundry Services Group business and Fab 4 will allow usis expected to strategically shift our operational focus to our standard products business. As a result, the results of the Foundry Services Group business were classified as discontinued operations in our consolidated statements of operations from the first quarter of 2020 and excluded from both continuing operations and segment results for all periods presented. Accordingly, 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 ofOn September 1, 2020, we completed the sale of theour 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 uninterruptible power suppliers,supplies (UPSs), 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.
Business Transfer Agreement
Repurchase
Net Income (Loss) Interest expense, net Income tax expense Depreciation and amortization EBITDA Adjustments Restructuring and other charges(a) Equity-based compensation expense(b) Foreign currency loss (gain), net(c) Derivative valuation loss (gain), net(d) Loss on early extinguishment of long-term borrowings, net(e) Others(f) Adjusted EBITDA Non-US (Loss) (Loss) (including on a per share basis) in our report. Adjusted EBITDA, as we define it, is anon-USrestructuring and other charges, (ii) equity-based compensation expense, (iii)(ii) foreign currency loss (gain), net, (iv)(iii) derivative valuation loss (gain), net, (v)(iv) loss on early extinguishment of long-term borrowings, net, (v) inventory reserve related to Huawei impact of downstream trade restrictions, (vi) expenses related to Fab 3 power outage and (vi)(vii) others. EBITDA for the periods indicated is defined as net income (loss) before interest expense, net, income tax expense, and depreciation and amortization.USU.S. GAAP and should not be construed as an alternative to income from continuing operations, cash flows from operating activities or net income, as determined in accordance with USU.S. GAAP. A reconciliation of net income (loss) to Adjusted EBITDA from continuing operations discontinued operations and total operations is as follows: Three Months Ended
March 31, 2020 Three Months Ended
March 31, 2019 Continuing
Operations Discontinued
Operations Total Continuing
Operations Discontinued
Operations Total (In millions) $ (31.1 ) $ 7.3 $ (23.7 ) $ (21.6 ) $ (12.6 ) $ (34.1 ) 4.9 — 4.9 5.1 — 5.1 1.3 0.4 1.7 0.8 0.0 0.8 2.6 5.4 7.9 2.6 5.8 8.3 (22.3 ) 13.1 (9.2 ) (13.1 ) (6.8 ) (19.9 ) — 2.1 2.1 — 2.9 2.9 0.8 0.1 0.9 0.6 0.1 0.7 31.0 (2.1 ) 28.9 10.6 (0.6 ) 10.0 (0.1 ) — (0.1 ) 0.1 — 0.1 — — — 0.0 — 0.0 0.6 — 0.6 0.6 — 0.6 $ 9.9 $ 13.2 $ 23.1 $ (1.3 ) $ (4.4 ) $ (5.7 )
Ended
September 30,
2020
Ended
September 30,
2020
Ended
September 30,
2019
Ended
September 30,
2019 $ 8.5 $ (10.8 ) $ (14.2 ) $ (44.3 ) 4.9 14.5 4.9 14.8 (1.1 ) 0.8 1.7 3.3 2.9 8.0 2.6 7.7 $ 15.0 $ 12.5 $ (5.0 ) $ (18.5 ) 2.1 4.4 0.4 1.7 (8.9 ) 13.6 22.0 44.2 (0.1 ) (0.2 ) 0.0 0.2 — — — 0.0 2.3 2.3 — — 1.2 1.2 — — — 0.6 — 0.6 $ 11.7 $ 34.3 $ 17.4 $ 28.1
(a) |
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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 |
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. |
(e) | This adjustment eliminates a $2.3 million excess and obsolete inventory charge that we recorded in relation to the U.S. Government’s export restrictions on Huawei, which is a downstream customer of some of our direct customers. As this charge meaningfully impacted our operational results and is not expected to represent an ongoing operating expense subject to our ability to foresee and control, we believe our operating performance results are more meaningfully compared if this charge is excluded. |
(f) | This adjustment eliminates $1.2 million in expenses related to the write-off of the damaged work in process wafers and charges for facility recovery. These charges are inconsistent in amount and frequency, and we do not believe that these charges are indicative of our core operation performance and have been excluded for comparative purposes. |
(g) | For the non-recurring professional service fees and expenses incurred in connection with certain treasury and finance |
we use Adjusted Net Income (Loss) (including on a per share basis) in communications with our Board of Directors concerning our consolidated financial performance without the impact ofnon-cash expenses and the other items as we discussed below since we believe that it is a more consistent measure of our core operating results from period to period; and
we believe that reporting Adjusted Net Income (Loss) (including on a per share basis) is useful to readersinvestors to provide a supplemental way to understand our underlying operating performance and allows investors to monitor and understand changes in evaluating our core operating results because it eliminates the effects ofnon-cash expenses as well as the other items we discuss below, such as foreign currency gains and losses, which are out of our control and can vary significantlyability to generate income from period to period.
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 September 30, 2020 | Nine Months Ended September 30, 2020 | Three Months Ended September 30, 2019 | Nine Months Ended September 30, 2019 | |||||||||||||
(In millions) | ||||||||||||||||
Operating income | $ | 3.2 | $ | 17.8 | $ | 14.3 | $ | 18.0 | ||||||||
Adjustments: | ||||||||||||||||
Equity-based compensation expense(a) | 2.1 | 4.4 | 0.4 | 1.7 | ||||||||||||
Inventory reserve related to Huawei impact of downstream trade restrictions (b) | 2.3 | 2.3 | �� | — | — | |||||||||||
Expenses related to Fab 3 power outage(c) | 1.2 | 1.2 | — | — | ||||||||||||
Others(d) | — | 0.6 | — | 0.6 | ||||||||||||
Adjusted Operating Income | $ | 8.8 | $ | 26.2 | $ | 14.8 | $ | 20.3 | ||||||||
(a) |
|
This adjustment eliminates the impact of |
(b) | This adjustment eliminates a $2.3 million excess and obsolete inventory charge that we recorded in relation to the U.S. Government’s export restrictions on Huawei, which is a downstream customer of some of our direct customers. As this charge meaningfully impacted our operational results and is not expected to represent an ongoing operating expense subject to our ability to foresee and control, we believe our operating performance results are more meaningfully compared if this charge is excluded. |
(c) | This adjustment eliminates $1.2 million in expenses related to the write-off of the damaged work in process wafers and charges for facility recovery. These charges are inconsistent in amount and frequency, and we do not believe that these charges are indicative of our core operation performance and have been excluded for comparative purposes. |
(d) | For the nine months ended September 30, 2020, this adjustment primarily eliminates non-recurring professional service fees and expenses incurred in connection with certain treasury and finance initiatives incurred during the three months ended March 31, 2020. For the nine months ended September 30, 2019, this adjustment primarily 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 during the three months ended March 31, 2019. We do not believe that these charges are indicative of our core operating performance and have been excluded for comparative purposes. |
Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2020 | Three Months Ended September 30, 2019 | Nine Months Ended September 30, 2019 | |||||||||||||
(In millions) | ||||||||||||||||
Income (loss) from continuing operations | $ | 8.5 | $ | (10.8 | ) | $ | (14.2 | ) | $ | (44.3 | ) | |||||
Adjustments: | ||||||||||||||||
Equity-based compensation expense(a) | 2.1 | 4.4 | 0.4 | 1.7 | ||||||||||||
Foreign currency loss (gain), net(b) | (8.9 | ) | 13.6 | 22.0 | 44.2 | |||||||||||
Derivative valuation loss (gain), net(c) | (0.1 | ) | (0.2 | ) | 0.0 | 0.2 | ||||||||||
Loss on early extinguishment of long-term borrowings, net(d) | — | — | — | 0.0 | ||||||||||||
Inventory reserve related to Huawei impact of downstream trade restrictions (e) | 2.3 | 2.3 | — | — | ||||||||||||
Expenses related to Fab 3 power outage(f) | 1.2 | 1.2 | — | — | ||||||||||||
Others(g) | — | 0.6 | — | 0.6 | ||||||||||||
Adjusted Net Income | $ | 5.1 | $ | 11.0 | $ | 8.2 | $ | 2.3 | ||||||||
Reported earnings (loss) per share – basic | $ | 0.24 | $ | (0.31 | ) | $ | (0.41 | ) | $ | (1.29 | ) | |||||
Reported earnings (loss) per share – diluted | $ | 0.21 | $ | (0.31 | ) | $ | (0.41 | ) | $ | (1.29 | ) | |||||
Weighted average number of shares – basic | 35,280,864 | 35,089,479 | 34,357,745 | 34,266,513 | ||||||||||||
Weighted average number of shares – diluted | 46,581,788 | 35,089,479 | 34,357,745 | 34,266,513 | ||||||||||||
Adjusted earnings per share – basic | $ | 0.15 | $ | 0.31 | $ | 0.24 | $ | 0.07 | ||||||||
Adjusted earnings per share – diluted | $ | 0.14 | $ | 0.30 | $ | 0.21 | $ | 0.07 | ||||||||
Weighted average number of shares – basic | 35,280,864 | 35,089,479 | 34,357,745 | 34,266,513 | ||||||||||||
Weighted average number of shares – diluted | 46,581,788 | 36,151,622 | 45,516,245 | 34,955,722 |
(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) | 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 |
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. |
(e) | This adjustment eliminates a $2.3 million excess and obsolete inventory charge that we recorded in relation to the U.S. Government’s export restrictions on Huawei, which is a downstream customer of some of our direct customers. As this charge meaningfully impacted our operational results and is not expected to represent an ongoing operating expense subject to our ability to foresee and control, we believe our operating performance results are more meaningfully compared if this charge is excluded. |
(f) | This adjustment eliminates $1.2 million in expenses related to the write-off of the damaged work in process wafers and charges for facility recovery. These charges are inconsistent in amount and frequency, and we do not believe that these charges are indicative of our core operation performance and have been excluded for comparative purposes. |
(g) | For the non-recurring professional service fees and expenses incurred in connection with certain treasury and finance |
Following the consummation of the sale, and for up to three years, we are expected to provide the Transitional Fab 3 Foundry Services at an agreed upon cost plus mark-up.
non-USUSU.S. dollars converted from ournon-USUSU.S. dollar could materially impact our reported results of operations and distort period to period comparisons. In particular, because of the difference in the amount of our consolidated revenues and expenses that are in USU.S. dollars relative to Korean won, depreciation in the USU.S. dollar relative to the Korean won could result in a material increase in reported costs relative to revenues, and therefore could cause our profit margins and operating income (loss) to appear to decline materially, particularly relative to prior periods. The converse is true if the USU.S. dollar were to appreciate relative to the Korean won. Moreover, our foreign currency gain or loss would be affected by changes in the exchange rate between the Korean won and the USU.S. dollar, as a substantial portion ofUSU.S. dollars. As of March 31,September 30, 2020, the outstanding intercompany loan balance including accrued interest between our Korean subsidiary and our Dutch subsidiary was $684.0$446.0 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.
On September 1, 2020, we completed the sale for a purchase price equal to approximately $350.6 million in cash.
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 September 30, 2020 | Three Months Ended September 30, 2019 | |||||||||||||||||||
Amount | % of Total revenues | Amount | % of Total revenues | Change Amount | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Revenues | ||||||||||||||||||||
Net sales – standard products business | $ | 116.3 | 93.1 | % | $ | 139.3 | 93.4 | % | $ | (23.0 | ) | |||||||||
Net sales – transitional Fab 3 foundry services | 8.6 | 6.9 | 9.9 | 6.6 | (1.3 | ) | ||||||||||||||
Total revenues | 124.8 | 100.0 | 149.2 | 100.0 | (24.4 | ) | ||||||||||||||
Cost of sales | ||||||||||||||||||||
Cost of sales – standard products business | 87.5 | 70.1 | 104.0 | 69.7 | (16.5 | ) | ||||||||||||||
Cost of sales – transitional Fab 3 foundry services | 8.7 | 7.0 | 9.9 | 6.6 | (1.2 | ) | ||||||||||||||
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Total cost of sales | 96.2 | 77.1 | 113.9 | 76.4 | (17.7 | ) | ||||||||||||||
Gross profit | 28.6 | 22.9 | 35.3 | 23.6 | (6.7 | ) | ||||||||||||||
Selling, general and administrative expenses | 12.9 | 10.3 | 10.7 | 7.2 | 2.2 | |||||||||||||||
Research and development expenses | 12.5 | 10.0 | 10.2 | 6.9 | 2.2 | |||||||||||||||
Operating income | 3.2 | 2.6 | 14.3 | 9.6 | (11.1 | ) | ||||||||||||||
Interest expense | (5.5 | ) | (4.4 | ) | (5.5 | ) | (3.7 | ) | 0.1 | |||||||||||
Foreign currency gain (loss), net | 8.9 | 7.1 | (22.0 | ) | (14.7 | ) | 30.8 | |||||||||||||
Others, net | 0.7 | 0.6 | 0.7 | 0.5 | 0.0 | |||||||||||||||
4.1 | 3.3 | (26.8 | ) | (18.0 | ) | 30.9 | ||||||||||||||
Income (loss) from continuing operations before income tax expense | 7.3 | 5.9 | (12.5 | ) | (8.4 | ) | 19.8 | |||||||||||||
Income tax expense (benefit) | (1.1 | ) | (0.9 | ) | 1.7 | 1.2 | (2.9 | ) | ||||||||||||
Income (loss) from continuing operations | 8.5 | 6.8 | (14.2 | ) | (9.5 | ) | 22.7 | |||||||||||||
Income from discontinued operations, net of tax | 264.5 | 211.9 | 12.6 | 8.5 | 251.9 | |||||||||||||||
Net income (loss) | $ | 273.0 | 218.7 | $ | (1.6 | ) | (1.1 | ) | $ | 274.6 | ||||||||||
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 September 30, 2020 | Three Months Ended September 30, 2019 | |||||||||||||||||||
Amount | % of Total Revenues | Amount | % of Total Revenues | Change Amount | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Revenues | ||||||||||||||||||||
Net sales – standard products business | ||||||||||||||||||||
Display Solutions | $ | 69.6 | 55.7 | % | $ | 90.6 | 60.7 | % | $ | (21.0 | ) | |||||||||
Power Solutions | 46.7 | 37.4 | 48.7 | 32.7 | (2.0 | ) | ||||||||||||||
Total standard products business | 116.3 | 93.1 | 139.3 | 93.4 | (23.0 | ) | ||||||||||||||
Net sales – transitional Fab 3 foundry services | 8.6 | 6.9 | 9.9 | 6.6 | (1.3 | ) | ||||||||||||||
Total revenues | $ | 124.8 | 100.0 | % | $ | 149.2 | 100.0 | % | $ | (24.4 | ) | |||||||||
Three Months Ended September 30, 2020 | Three Months Ended September 30, 2019 | |||||||||||||||||||
Amount | % of Net sales | Amount | % of Net sales | Change Amount | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Gross Profit | ||||||||||||||||||||
Gross profit – standard products business | $ | 28.8 | 24.7 | % | $ | 35.3 | 25.3 | % | $ | (6.5 | ) | |||||||||
Gross profit – transitional Fab 3 foundry services | (0.2 | ) | (2.1 | ) | — | — | (0.2 | ) | ||||||||||||
Total gross profit | $ | 28.6 | 22.9 | % | $ | 35.3 | 23.6 | % | $ | (6.7 | ) | |||||||||
The decrease in net sales from our Power Solutions business line was primarily attributable to the Fab 3 power outage that affected our ability to meet customer demand for some of our Power Solution products during the three months ended September 30, 2020.
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 September 30, 2020 | Three Months Ended September 30, 2019 | |||||||||||||||||||
Amount | % of Net Sales – standard products business | Amount | % of Net Sales – standard products business | Change Amount | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Korea | $ | 28.4 | 24.4 | % | $ | 36.1 | 25.9 | % | $ | (7.7 | ) | |||||||||
Asia Pacific (other than Korea) | 84.2 | 72.4 | 100.9 | 72.4 | (16.7 | ) | ||||||||||||||
United States | 1.8 | 1.5 | 0.5 | 0.3 | 1.3 | |||||||||||||||
Europe | 1.5 | 1.2 | 1.5 | 1.1 | (0.1 | ) | ||||||||||||||
Others | 0.5 | 0.4 | 0.3 | 0.2 | 0.2 | |||||||||||||||
$ | 116.3 | 100.0 | % | $ | 139.3 | 100.0 | % | $ | (23.0 | ) | ||||||||||
manufacturers due in part to the geographic diversification of our OLED product portfolio amid a
our customers.
Other Charges. Other charges were $0.6 million for the three months ended March 31, 2020, which were consisted of professional service fees and expenses incurred in connection with certain treasury and finance initiatives.
employee compensation, including equity-based compensation.
ForeignCurrencyLoss,Net. Net foreign currency loss for the three months ended March 31,September 30, 2020 was $31.0$8.9 million compared to net foreign currency loss of $10.6$22.0 million for the three months ended March 31,September 30, 2019. The net foreign currency gain for the three months ended September 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,September 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.
in each period.
(Benefit)
Loss
Continuing Operations
Tax
Net income
Nine Months Ended September 30, 2020 | Nine Months Ended September 30, 2019 | |||||||||||||||||||
Amount | % of Total revenues | Amount | % of Total revenues | Change Amount | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Revenues | ||||||||||||||||||||
Net sales – standard products business | $ | 336.0 | 92.3 | % | $ | 371.5 | 93.5 | % | $ | (35.6 | ) | |||||||||
Net sales – transitional Fab 3 foundry services | 28.2 | 7.7 | 25.8 | 6.5 | 2.4 | |||||||||||||||
Total revenues | 364.1 | 100.0 | 397.3 | 100.0 | (33.2 | ) | ||||||||||||||
Cost of sales | ||||||||||||||||||||
Cost of sales – standard products business | 245.9 | 67.5 | 285.6 | 71.9 | (39.7 | ) | ||||||||||||||
Cost of sales – transitional Fab 3 foundry services | 28.3 | 7.8 | 25.8 | 6.5 | 2.6 | |||||||||||||||
Total cost of sales | 274.3 | 75.3 | 311.4 | 78.4 | (37.2 | ) | ||||||||||||||
Gross profit | 89.9 | 24.7 | 85.9 | 21.6 | 4.0 | |||||||||||||||
Selling, general and administrative expenses | 37.4 | 10.3 | 33.8 | 8.5 | 3.6 | |||||||||||||||
Research and development expenses | 34.1 | 9.4 | 34.0 | 8.6 | 0.0 | |||||||||||||||
Other charges | 0.6 | 0.2 | — | — | 0.6 | |||||||||||||||
Operating income | 17.8 | 4.9 | 18.0 | 4.5 | (0.2 | ) | ||||||||||||||
Interest expense | (16.5 | ) | (4.5 | ) | (16.6 | ) | (4.2 | ) | 0.1 | |||||||||||
Foreign currency loss, net | (13.6 | ) | (3.7 | ) | (44.2 | ) | (11.1 | ) | 30.5 | |||||||||||
Loss on early extinguishment of long-term borrowings, net | — | — | (0.0 | ) | (0.0 | ) | 0.0 | |||||||||||||
Others, net | 2.3 | 0.6 | 1.8 | 0.5 | 0.5 | |||||||||||||||
(27.8 | ) | (7.6 | ) | (59.0 | ) | (14.9 | ) | 31.2 | ||||||||||||
Loss from continuing operations before income tax expense | (10.0 | ) | (2.7 | ) | (41.0 | ) | (10.3 | ) | 31.0 | |||||||||||
Income tax expense | 0.8 | 0.2 | 3.3 | 0.8 | (2.5 | ) | ||||||||||||||
Loss from continuing operations | (10.8 | ) | (3.0 | ) | (44.3 | ) | (11.1 | ) | 33.4 | |||||||||||
Income (loss) from discontinued operations, net of tax | 289.2 | 79.4 | (1.0 | ) | (0.2 | ) | 290.2 | |||||||||||||
Net income (loss) | $ | 278.4 | 76.5 | $ | (45.3 | ) | (11.4 | ) | $ | 323.6 | ||||||||||
Nine Months Ended September 30, 2020 | Nine Months Ended September 30, 2019 | |||||||||||||||||||
Amount | % of Total Revenues | Amount | % of Total Revenues | Change Amount | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Revenues | ||||||||||||||||||||
Net sales – standard products business | ||||||||||||||||||||
Display Solutions | $ | 216.4 | 59.4 | % | $ | 233.0 | 58.7 | % | $ | (16.7 | ) | |||||||||
Power Solutions | 119.6 | 32.8 | 138.5 | 34.9 | (18.9 | ) | ||||||||||||||
Total standard products business | 336.0 | 92.3 | 371.5 | 93.5 | (35.6 | ) | ||||||||||||||
Net sales – transitional Fab 3 foundry services | 28.2 | 7.7 | 25.8 | 6.5 | 2.4 | |||||||||||||||
Total revenues | $ | 364.1 | 100.0 | % | $ | 397.3 | 100.0 | % | $ | (33.2 | ) | |||||||||
Nine Months Ended September 30, 2020 | Nine Months Ended September 30, 2019 | |||||||||||||||||||
Amount | % of Net sales | Amount | % of Net sales | Change Amount | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Gross Profit | ||||||||||||||||||||
Gross profit – standard products business | $ | 90.0 | 26.8 | % | $ | 85.9 | 23.1 | % | $ | 4.1 | ||||||||||
Gross profit – transitional Fab 3 foundry services | (0.2 | ) | (0.6 | ) | — | — | (0.2 | ) | ||||||||||||
Total gross profit | $ | 89.9 | 24.7 | % | $ | 85.9 | 21.6 | % | $ | 4.0 | ||||||||||
Nine Months Ended September 30, 2020 | Nine Months Ended September 30, 2019 | |||||||||||||||||||
Amount | % of Net Sales – standard products business | Amount | % of Net Sales – standard products business | Change Amount | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Korea | $ | 81.1 | 24.2 | % | $ | 107.3 | 28.9 | % | $ | (26.2 | ) | |||||||||
Asia Pacific (other than Korea) | 245.9 | 73.2 | 258.3 | 69.5 | (12.3 | ) | ||||||||||||||
United States | 4.0 | 1.2 | 1.6 | 0.4 | 2.4 | |||||||||||||||
Europe | 3.3 | 1.0 | 3.5 | .0.9 | (0.2 | ) | ||||||||||||||
Others | 1.6 | 0.5 | 0.8 | 0.2 | 0.8 | |||||||||||||||
$ | 336.0 | 100.0 | % | $ | 371.5 | 100.0 | % | $ | (35.6 | ) | ||||||||||
expense, a $10.8 million increase in transaction costs, a $5.8 million increase in restructuring and other charges.
Income (Loss)
unpaid interest thereon.
Cash Flows
Cash inflow provided by operating activities totaled $21.1 millioncash on hand and expected cash from operations to fund our operations as well as capital expenditures for the threenext twelve months ended March 31, 2020, compared to $11.7 million of cash outflow used in operating activities forand 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.
foreseeable future.
for the nine months ended September 30, 2020, compared to $30.0 million of cash inflow provided by operating activities for the nine months ended September 30, 2019. The net operating cash inflow for the nine months ended September 30, 2020 reflects our net loss of $8.7 million, excluding gain on sale of discontinued operations, as adjusted favorably by $45.3 million, which mainly consisted of net foreign currency loss, depreciation and amortization, provision for severance benefits, and net favorable impact of $15.0 million from changes of operating assets and liabilities.
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) | $ | 85.8 | $ | — | $ | 85.8 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
Senior Notes(2) | 227.4 | 227.4 | — | — | — | — | — | |||||||||||||||||||||
Operating leases(3) | 2.2 | 0.4 | 1.5 | 0.3 | 0.0 | — | — | |||||||||||||||||||||
Finance leases(3) | 0.2 | 0.0 | 0.1 | 0.1 | 0.1 | — | — | |||||||||||||||||||||
Water Treatment Services(3)(4) | 29.2 | 1.0 | 4.0 | 3.9 | 3.9 | 3.7 | 12.7 | |||||||||||||||||||||
Others(5) | 13.0 | 4.5 | 5.2 | 1.4 | 0.8 | 0.6 | 0.4 |
(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 |
(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,September 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,September 30, 2020.March 31,September 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 |
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