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
|
|
|
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
Title of each class
|
Trading
Symbol(s)
|
Name of each exchange
on which registered
|
||
|
|
|
|
☒
|
Accelerated filer
|
☐
|
|||
Non-accelerated filer
|
☐
|
Smaller reporting company
|
|
|||
Emerging growth company
|
|
Page No.
|
||||
3
|
||||
Item 1.
|
3
|
|||
3
|
||||
4
|
||||
5
|
||||
6
|
||||
7
|
||||
8
|
||||
Item 2.
|
25
|
|||
Item 3.
|
42
|
|||
Item 4.
|
43
|
|||
44
|
||||
Item 1.
|
44
|
|||
Item 1A.
|
44
|
|||
Item 2.
|
44
|
|||
Item 3.
|
44
|
|||
Item 4.
|
44
|
|||
Item 5.
|
44
|
|||
Item 6.
|
45
|
|||
46
|
Item 1. |
Interim Consolidated Financial Statements (Unaudited)
|
March 31,
2023
|
December 31,
2022
|
|||||||
(In thousands of U.S. dollars, except share data)
|
||||||||
Assets
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Accounts receivable, net
|
|
|
||||||
Inventories, net
|
|
|
||||||
Other receivables
|
|
|
||||||
Prepaid expenses
|
|
|
||||||
Hedge collateral (Note 7)
|
|
|
||||||
Other current assets (Note 18)
|
|
|
||||||
Total current assets
|
|
|
||||||
Property, plant and equipment, net
|
|
|
||||||
Operating lease right-of-use assets
|
|
|
||||||
Intangible assets, net
|
|
|
||||||
Long-term prepaid expenses
|
|
|
||||||
Deferred income taxes
|
|
|
||||||
Other non-current assets
|
|
|
||||||
Total assets
|
$
|
|
$
|
|
||||
Liabilities and Stockholders’ Equity
|
||||||||
Current liabilities
|
||||||||
Accounts payable
|
$
|
|
$
|
|
||||
Other accounts payable
|
|
|
||||||
Accrued expenses (Note 6)
|
|
|
||||||
Accrued income taxes
|
|
|
||||||
Operating lease liabilities
|
|
|
||||||
Other current liabilities
|
|
|
||||||
Total current liabilities
|
|
|
||||||
Accrued severance benefits, net
|
|
|
||||||
Non-current operating lease liabilities
|
|
|
||||||
Other non-current liabilities
|
|
|
||||||
Total liabilities
|
|
|
||||||
Commitments and contingencies (Note 18)
|
||||||||
Stockholders’ equity
|
||||||||
Common stock, $
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Retained earnings
|
|
|
||||||
Treasury stock,
|
(
|
)
|
(
|
)
|
||||
Accumulated other comprehensive loss
|
(
|
)
|
(
|
)
|
||||
Total stockholders’ equity
|
|
|
||||||
Total liabilities and stockholders’ equity
|
$
|
|
$
|
|
Three Months Ended
|
||||||||
March 31,
2023
|
March 31,
2022
|
|||||||
(In thousands of U.S. dollars, except share data)
|
||||||||
Revenues:
|
||||||||
Net sales – standard products business
|
$
|
|
$
|
|
||||
Net sales – transitional Fab 3 foundry services
|
|
|
||||||
Total revenues
|
|
|
||||||
Cost of sales:
|
||||||||
Cost of sales – standard products business
|
|
|
||||||
Cost of sales – transitional Fab 3 foundry services
|
|
|
||||||
Total cost of sales
|
|
|
||||||
Gross profit
|
|
|
||||||
Operating expenses:
|
||||||||
Selling, general and administrative expenses
|
|
|
||||||
Research and development expenses
|
|
|
||||||
Early termination charges
|
|
|
||||||
Total operating expenses
|
|
|
||||||
Operating income (loss)
|
(
|
)
|
|
|||||
Interest income
|
||||||||
Interest expense
|
(
|
)
|
(
|
)
|
||||
Foreign currency loss, net
|
(
|
)
|
(
|
)
|
||||
Other income (expense), net
|
(
|
)
|
|
|||||
Income (loss) before income tax expense
|
(
|
)
|
|
|||||
Income tax expense (benefit)
|
(
|
)
|
|
|||||
Net income (loss)
|
$
|
(
|
)
|
$
|
|
|||
Basic earnings (loss) per common share—
|
$
|
(
|
)
|
$
|
|
|||
Diluted earnings (loss) per common share—
|
$
|
(
|
)
|
$
|
|
|||
Weighted average number of shares—
|
||||||||
Basic
|
|
|
||||||
Diluted
|
|
|
Three Months Ended
|
||||||||
March 31,
2023
|
March 31,
2022
|
|||||||
(In thousands of U.S. dollars)
|
||||||||
Net income (loss)
|
$
|
(
|
)
|
$
|
|
|||
Other comprehensive loss
|
||||||||
Foreign currency translation adjustments
|
(
|
)
|
(
|
)
|
||||
Derivative adjustments
|
||||||||
Fair valuation of derivatives
|
(
|
)
|
(
|
)
|
||||
Reclassification adjustment for loss on derivatives included in net income (loss)
|
|
|
||||||
Total other comprehensive loss
|
(
|
)
|
(
|
)
|
||||
Total comprehensive income (loss)
|
$
|
(
|
)
|
$
|
|
Common Stock
|
Additional
Paid-In
Capital
|
Retained
Earnings
|
Treasury Stock
|
Accumulated
Other
Comprehensive
Loss
|
Total
|
|||||||||||||||||||||||
(In thousands of U.S. dollars, except share data)
|
Shares
|
Amount
|
||||||||||||||||||||||||||
Three Months Ended March 31, 2023:
|
||||||||||||||||||||||||||||
Balance at December 31, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
|||||||||||||
Stock-based compensation
|
—
|
|
|
|
|
|
|
|||||||||||||||||||||
Exercise of stock options
|
||||||||||||||||||||||||||||
Settlement of restricted stock units
|
|
|
(
|
) |
|
|
|
|
||||||||||||||||||||
Acquisition of treasury stock
|
(
|
)
|
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||||
Other comprehensive loss, net
|
—
|
|
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
Net loss
|
—
|
|
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||||||||
Balance at March 31, 2023
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
|||||||||||||
Three Months Ended March 31, 2022:
|
||||||||||||||||||||||||||||
Balance at December 31, 2021
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
|||||||||||||
Stock-based compensation
|
—
|
|
|
|
|
|
|
|||||||||||||||||||||
Exercise of stock options
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Settlement of restricted stock units
|
|
|
(
|
)
|
|
|
|
|
||||||||||||||||||||
Acquisition of treasury stock
|
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Accelerated stock repurchase
|
( |
) | ( |
) | ||||||||||||||||||||||||
Other comprehensive loss, net
|
—
|
|
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
Net income
|
—
|
|
|
|
|
|
|
|||||||||||||||||||||
Balance at March 31, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
Three Months Ended
|
||||||||
March 31,
2023
|
March 31,
2022
|
|||||||
(In thousands of U.S. dollars)
|
||||||||
Cash flows from operating activities
|
||||||||
Net income (loss)
|
$
|
(
|
)
|
$
|
|
|||
Adjustments to reconcile net income (loss) to net cash provided by operating activities
|
||||||||
Depreciation and amortization
|
|
|
||||||
Provision for severance benefits
|
|
|
||||||
Loss on foreign currency, net
|
|
|
||||||
Provision for inventory reserves
|
|
|
||||||
Stock-based compensation
|
|
|
||||||
Other, net
|
|
|
||||||
Changes in operating assets and liabilities
|
||||||||
Accounts receivable, net
|
|
(
|
)
|
|||||
Inventories
|
|
|
||||||
Other receivables
|
|
|
||||||
Other current assets
|
|
(
|
)
|
|||||
Accounts payable
|
|
|
||||||
Other accounts payable
|
(
|
)
|
(
|
)
|
||||
Accrued expenses
|
|
|
||||||
Accrued income taxes
|
(
|
)
|
(
|
)
|
||||
Other current liabilities
|
(
|
)
|
(
|
)
|
||||
Other non-current liabilities
|
(
|
)
|
(
|
)
|
||||
Payment of severance benefits
|
(
|
)
|
(
|
)
|
||||
Other, net
|
(
|
)
|
(
|
)
|
||||
Net cash provided by operating activities
|
|
|
||||||
Cash flows from investing activities
|
||||||||
Proceeds from settlement of hedge collateral
|
|
|
||||||
Payment of hedge collateral
|
(
|
)
|
(
|
)
|
||||
Purchase of property, plant and equipment
|
(
|
)
|
(
|
)
|
||||
Payment for intellectual property registration
|
(
|
)
|
(
|
)
|
||||
Payment of guarantee deposits
|
(
|
)
|
(
|
)
|
||||
Other, net
|
|
|
||||||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
||||
Cash flows from financing activities
|
||||||||
Proceeds from exercise of stock options
|
|
|
||||||
Acquisition of treasury stock
|
(
|
)
|
(
|
)
|
||||
Repayment of financing related to water treatment facility arrangement
|
(
|
)
|
(
|
)
|
||||
Repayment of principal portion of finance lease liabilities
|
(
|
)
|
(
|
)
|
||||
Net cash provided by (used in) financing activities
|
(
|
)
|
|
|||||
Effect of exchange rates on cash and cash equivalents
|
(
|
)
|
(
|
)
|
||||
Net increase (decrease) in cash and cash equivalents
|
(
|
)
|
|
|||||
Cash and cash equivalents at beginning of period
|
|
|
||||||
Cash and cash equivalents at end of period
|
$
|
|
$
|
|
||||
Supplemental cash flow information
|
||||||||
Cash paid for income taxes
|
$
|
|
$
|
|
||||
Non-cash investing activities
|
||||||||
Property, plant and equipment additions in other accounts payable
|
$
|
|
$
|
|
||||
Non-cash financing activities
|
||||||||
Acquisition of treasury stock to satisfy the tax withholding obligations in connection with equity-based compensation
|
$
|
|
$
|
|
||||
Unsettled common stock repurchases
|
$
|
|
$
|
|
March 31,
2023
|
December 31,
2022
|
|||||||
Finished goods
|
$
|
|
$
|
|
||||
Semi-finished goods and work-in-process
|
|
|
||||||
Raw materials
|
|
|
||||||
Materials in-transit
|
|
|
||||||
Less: inventory reserve
|
(
|
)
|
(
|
)
|
||||
Inventories, net
|
$
|
|
$
|
|
Three Months Ended
|
||||||||
March 31,
2023
|
March 31,
2022
|
|||||||
Beginning balance
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Change in reserve
|
||||||||
Inventory reserve charged to costs of sales
|
(
|
)
|
(
|
)
|
||||
Sale of previously reserved inventory
|
|
|
||||||
(
|
)
|
(
|
)
|
|||||
Write off
|
|
|
||||||
Translation adjustments
|
|
|
||||||
Ending balance
|
$
|
(
|
)
|
$
|
(
|
)
|
March 31,
2023
|
December 31,
2022
|
|||||||
Buildings and related structures
|
$
|
|
$
|
|
||||
Machinery and equipment
|
|
|
||||||
Finance lease right-of-use assets
|
|
|
||||||
Others
|
|
|
||||||
|
|
|||||||
Less: accumulated depreciation
|
(
|
)
|
(
|
)
|
||||
Land
|
|
|
||||||
Construction in progress
|
|
|
||||||
Property, plant and equipment, net
|
$
|
|
$
|
|
March 31, 2023
|
||||||||||||
Gross
amount
|
Accumulated
amortization
|
Net
amount
|
||||||||||
Intellectual property assets
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||
Intangible assets
|
$
|
|
$
|
(
|
)
|
$
|
|
December 31, 2022
|
||||||||||||
Gross
amount
|
Accumulated
amortization
|
Net
amount
|
||||||||||
Intellectual property assets
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||
Intangible assets
|
$
|
|
$
|
(
|
)
|
$
|
|
Leases
|
Classification
|
March 31,
2023
|
December 31,
2022
|
||||||
Assets
|
|||||||||
Operating lease
|
Operating lease right-of-use assets
|
$
|
|
$
|
|
||||
Finance lease
|
Property, plant and equipment, net
|
|
|
||||||
Total lease assets
|
$
|
|
$
|
|
|||||
Liabilities
|
|||||||||
Current
|
|||||||||
Operating
|
Operating lease liabilities
|
$
|
|
$
|
|
||||
Finance
|
|
|
|
||||||
Non-current
|
|||||||||
Operating
|
Non-current operating lease liabilities
|
|
|
||||||
Finance
|
|
|
|
||||||
Total lease liabilities
|
$
|
|
$
|
|
March 31,
2023
|
December 31,
2022
|
|||||||
Weighted average remaining lease term
|
||||||||
Operating leases
|
|
|
||||||
Finance leases
|
|
|
||||||
Weighted average discount rate
|
||||||||
Operating leases
|
|
%
|
|
%
|
||||
Finance leases
|
|
%
|
|
%
|
Three Months Ended
|
||||||||
March 31,
2023
|
March 31,
2022
|
|||||||
Operating lease cost
|
$
|
|
$
|
|
||||
Finance lease cost
|
||||||||
Amortization of right-of-use assets
|
|
|
||||||
Interest on lease liabilities
|
|
|
||||||
Total lease cost
|
$
|
|
$
|
|
Three Months Ended
|
||||||||
March 31,
2023
|
March 31,
2022
|
|||||||
Cash paid for amounts included in the measurement of lease liabilities
|
||||||||
Operating cash flows from operating leases
|
$
|
|
$
|
|
||||
Operating cash flows from finance leases
|
|
|
||||||
Financing cash flows from finance leases
|
|
|
Operating
Leases
|
Finance
Leases
|
|||||||
Remainder of 2023
|
$
|
|
$
|
|
||||
2024
|
|
|
||||||
2025
|
|
|
||||||
2026
|
|
|
||||||
2027
|
|
|
||||||
Total future lease payments
|
|
|
||||||
Less: Imputed interest
|
(
|
)
|
(
|
)
|
||||
Present value of future payments
|
$
|
|
$
|
|
March 31,
2023
|
December 31,
2022
|
|||||||
Payroll, benefits and related taxes, excluding severance benefits
|
$
|
|
$
|
|
||||
Withholding tax attributable to intercompany interest income
|
|
|
||||||
Outside service fees
|
|
|
||||||
Others
|
|
|
||||||
Accrued expenses
|
$
|
|
$
|
|
Date of transaction
|
Total notional amount
|
Month of settlement
|
|||
|
$
|
|
to |
||
|
$
|
|
to |
||
|
$
|
|
to |
||
|
$
|
|
to |
Date of transaction
|
Total notional amount
|
Month of settlement
|
|||
|
$
|
|
to |
||
|
$
|
|
to |
||
$ |
to |
Derivatives designated as hedging instruments:
|
March 31,
2023
|
December 31,
2022
|
|||||||
Asset Derivatives: | |||||||||
Zero cost collars
|
$ |
$ |
|||||||
Liability Derivatives:
|
|||||||||
Zero cost collars
|
|
$
|
|
$
|
|
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
|
||||||||||||||||||||
As of March 31, 2023
|
Financial
instruments
|
Cash collateral
pledged
|
||||||||||||||||||||||
Asset Derivatives:
|
||||||||||||||||||||||||
Zero cost collars
|
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
Liability Derivatives:
|
||||||||||||||||||||||||
Zero cost collars
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
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
|
||||||||||||||||||||
As of December 31, 2022
|
Financial
instruments
|
Cash collateral
pledged
|
||||||||||||||||||||||
Liability Derivatives:
|
||||||||||||||||||||||||
Zero cost collars
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
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 Loss
Recognized in
Statement of Operations on Derivatives
|
|||||||||||||||||||||||
Three Months Ended
March 31,
|
Three Months Ended
March 31,
|
Three Months Ended
March 31,
|
||||||||||||||||||||||||
2023
|
2022
|
2023
|
2022
|
2023
|
2022
|
|||||||||||||||||||||
Zero cost collars
|
$
|
(
|
)
|
$
|
(
|
)
|
|
$
|
(
|
)
|
$
|
(
|
)
|
Other income, net
|
$
|
(
|
)
|
$
|
(
|
)
|
||||||
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ |
( |
) |
Counterparty
|
March 31,
2023
|
December 31,
2022
|
||||||
SC
|
$
|
|
$
|
|
||||
Total
|
$ |
$ |
Carrying Value
March 31, 2023
|
Fair Value
Measurement
March 31, 2023
|
Quoted Prices in
Active Markets
for Identical
Liability (Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||||||
Assets: |
||||||||||||||||||||
Derivative assets (other current assets)
|
$ |
$ |
|
$ |
||||||||||||||||
Liabilities:
|
||||||||||||||||||||
Derivative liabilities (other current liabilities)
|
$
|
|
$
|
|
|
$
|
|
|
|
Carrying Value
December 31, 2022
|
Fair Value
Measurement
December 31, 2022
|
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)
|
$
|
|
$
|
|
|
$
|
|
|
Three Months Ended |
||||||||
March 31,
2023
|
March 31,
2022
|
|||||||
Beginning balance
|
$ | $ | ||||||
Provisions
|
||||||||
Severance payments
|
( |
) | ( |
) | ||||
Translation adjustments
|
( |
) | ( |
) | ||||
Less: Cumulative contributions to severance insurance deposit accounts
|
( |
) | ( |
) | ||||
The National Pension Fund
|
( |
) | ( |
) | ||||
Group severance insurance plan
|
( |
) | ( |
) | ||||
Accrued severance benefits, net
|
$ | $ |
Severance benefit
|
||||
Remainder of 2023
|
$
|
|
||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
2028
|
|
|||
2029 – 2033
|
|
Three Months Ended
|
||||||||
March 31,
2023
|
March 31,
2022
|
|||||||
Revenues
|
||||||||
Standard products business
|
||||||||
Display Solutions
|
$
|
|
$
|
|
||||
Power Solutions
|
|
|
||||||
Total standard products business
|
$ |
|
$ |
|
||||
Transitional Fab 3 foundry services
|
|
|
||||||
Total revenues
|
$
|
|
$
|
|
Three Months Ended
|
||||||||
March 31,
2023
|
March 31,
2022
|
|||||||
Gross Profit
|
||||||||
Standard products business
|
$
|
|
$
|
|
||||
Transitional Fab 3 foundry services
|
(
|
)
|
|
|||||
Total gross profit
|
$
|
|
$
|
|
Three Months Ended
|
||||||||
March 31,
2023
|
March 31,
2022
|
|||||||
Korea
|
$
|
|
$
|
|
||||
Asia Pacific (other than Korea)
|
|
|
||||||
United States
|
|
|
||||||
Europe
|
|
|
||||||
Total
|
$
|
|
$
|
|
March 31,
2023
|
December 31,
2022
|
|||||||
Foreign currency translation adjustments
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Derivative adjustments
|
(
|
)
|
(
|
)
|
||||
Total
|
$
|
(
|
)
|
$
|
(
|
)
|
Three Months Ended March 31, 2023
|
Foreign
currency
translation
adjustments
|
Derivative
adjustments
|
Total
|
|||||||||
Beginning balance
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||
Other comprehensive loss before reclassifications
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Amounts reclassified from accumulated other comprehensive loss
|
|
|
|
|||||||||
Net current-period other comprehensive loss
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Ending balance
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
Three Months Ended March 31, 2022
|
Foreign
currency
translation
adjustments
|
Derivative
adjustments
|
Total
|
|||||||||
Beginning balance
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||
Other comprehensive loss before reclassifications
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Amounts reclassified from accumulated other comprehensive loss
|
|
|
|
|||||||||
Net current-period other comprehensive loss
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Ending balance
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
Three Months Ended
|
||||||||
March 31,
2023
|
March 31,
2022
|
|||||||
(In thousands of U.S. dollars, except share data)
|
||||||||
Basic Earnings (Loss) per Share
|
||||||||
Net income (loss)
|
$
|
(
|
)
|
$
|
|
|||
Basic weighted average common stock outstanding
|
|
|
||||||
Basic earnings (loss) per share
|
$
|
(
|
)
|
$
|
|
|||
Diluted Earnings (Loss) per Share
|
||||||||
Net income (loss)
|
$
|
(
|
)
|
$
|
|
|||
Basic weighted average common stock outstanding
|
|
|
||||||
Net effect of dilutive equity awards
|
|
|
||||||
Diluted weighted average common stock outstanding
|
|
|
||||||
Diluted earnings (loss) per share
|
$
|
(
|
)
|
$
|
|
Three Months Ended
|
||||||||
March 31,
2023
|
March 31,
2022
|
|||||||
Options
|
|
|
||||||
Restricted Stock Units
|
|
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
• |
we believe that Adjusted EBITDA, by eliminating the impact of a number of items that we do not consider to be indicative of our core ongoing operating performance, provides a more comparable measure of our operating performance from
period-to-period and may be a better indicator of future performance;
|
• |
we believe that Adjusted EBITDA is commonly requested and used by securities analysts, investors and other interested parties in the evaluation of a company as an enterprise level performance measure that eliminates the effects of
financing, income taxes and the accounting effects of capital spending, as well as other one time or recurring items described above; and
|
• |
we believe that Adjusted EBITDA is useful for investors, among other reasons, to assess a company’s period-to-period core operating performance and to understand and assess the manner in which management analyzes operating performance.
|
• |
for planning purposes, including the preparation of our annual operating budget;
|
• |
to evaluate the effectiveness of our enterprise level business strategies;
|
• |
in communications with our Board of Directors concerning our consolidated financial performance; and
|
• |
in certain of our compensation plans as a performance measure for determining incentive compensation payments.
|
Three Months
Ended
March 31,
2023
|
Three Months
Ended
March 31,
2022
|
|||||||
(Dollars in millions)
|
||||||||
Net Income (loss)
|
$
|
(21.5
|
)
|
$
|
9.5
|
|||
Interest income
|
(2.8
|
)
|
(0.7
|
)
|
||||
Interest expense
|
0.3
|
0.1
|
||||||
Income tax expense (benefit)
|
(1.2
|
)
|
3.5
|
|||||
Depreciation and amortization
|
4.4
|
3.9
|
||||||
EBITDA
|
(20.9
|
)
|
16.3
|
|||||
Adjustments:
|
||||||||
Equity-based compensation expense(a)
|
1.1
|
1.6
|
||||||
Foreign currency loss, net(b)
|
3.4
|
0.7
|
||||||
Derivative valuation loss, net(c)
|
0.1
|
0.1
|
||||||
Early termination charges(d)
|
8.4
|
—
|
||||||
Adjusted EBITDA
|
$
|
(7.9
|
)
|
$
|
18.8
|
(a) |
This adjustment eliminates the impact of non-cash equity-based compensation expenses. Although we expect to incur non-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 these non-cash expenses as supplemental
information.
|
(b) |
This adjustment mainly eliminates the impact of non-cash foreign currency translation associated with intercompany debt obligations 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 primarily non-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.
|
(c) |
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 U.S. dollars, and we do not enter into derivative transactions for trading or speculative purposes, we do not
believe that these charges or gains are indicative of our core operating performance.
|
(d) |
For the three months ended March 31, 2023, this adjustment eliminates the termination related charges of $8.4 million in connection with the Program that we offered to certain employees during the first quarter of 2023. As this
adjustment meaningfully impacted our operating results and are not expected to represent an ongoing operating expense or income to us, we believe our operating performance results are more usefully compared if this adjustment is excluded.
|
• |
Adjusted EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
|
• |
Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
|
• |
Adjusted EBITDA does not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;
|
• |
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often need to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements;
|
• |
Adjusted EBITDA does not consider the potentially dilutive impact of issuing equity-based compensation to our management team and employees;
|
• |
Adjusted EBITDA does not reflect the costs of holding certain assets and liabilities in foreign currencies; and
|
• |
other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
|
Three Months
Ended
March 31,
2023
|
Three Months
Ended
March 31,
2022
|
|||||||
(Dollars in millions)
|
||||||||
Operating income (loss)
|
$
|
(21.8
|
)
|
$
|
12.9
|
|||
Adjustments:
|
||||||||
Equity-based compensation expense(a)
|
1.1
|
1.6
|
||||||
Early termination charges(b)
|
8.4
|
—
|
||||||
Adjusted Operating Income (Loss)
|
$
|
(12.2
|
)
|
$
|
14.5
|
(a) |
This adjustment eliminates the impact of non-cash equity-based compensation expenses. Although we expect to incur non-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 these non-cash expenses as supplemental
information.
|
(b) |
For the three months ended March 31, 2023, this adjustment eliminates the termination related charges of $8.4 million in connection with the Program that we offered to certain employees during the first quarter of 2023. As this
adjustment meaningfully impacted our operating results and are not expected to represent an ongoing operating expense or income to us, we believe our operating performance results are more usefully compared if this adjustment is excluded.
|
• |
we use Adjusted Net Income (including on a per share basis) in communications with our Board of Directors concerning our consolidated financial performance without the impact of non-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 (including on a per share basis) is useful to readers in evaluating our core operating results because it eliminates the effects of non-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 significantly from period to period.
|
Three Months
Ended
March 31,
2023
|
Three Months
Ended
March 31,
2022
|
|||||||
(Dollars in millions, except per
share data)
|
||||||||
Net Income (Loss)
|
$
|
(21.5
|
)
|
$
|
9.5
|
|||
Adjustments:
|
||||||||
Equity-based compensation expense(a)
|
1.1
|
1.6
|
||||||
Foreign currency loss, net(b)
|
3.4
|
0.7
|
||||||
Derivative valuation loss, net(c)
|
0.1
|
0.1
|
||||||
Early termination charges(d)
|
8.4
|
—
|
||||||
Income tax effect on non-GAAP adjustments(e)
|
(1.9
|
)
|
1.0
|
|||||
Adjusted Net Income (Loss)
|
$
|
(10.4
|
)
|
$
|
12.9
|
Reported earnings (loss) per share—basic
|
$
|
(0.49
|
)
|
$
|
0.21
|
|||
Reported earnings (loss) per share—diluted
|
$
|
(0.49
|
)
|
$
|
0.20
|
|||
Weighted average number of shares—basic
|
43,390,832
|
45,603,208
|
||||||
Weighted average number of shares—diluted
|
43,390,832
|
46,693,294
|
||||||
Adjusted earnings (loss) per share—basic
|
$
|
(0.24
|
)
|
$
|
0.28
|
|||
Adjusted earnings (loss) per share—diluted
|
$
|
(0.24
|
)
|
$
|
0.28
|
|||
Weighted average number of shares—basic
|
43,390,832
|
45,603,208
|
||||||
Weighted average number of shares—diluted
|
43,390,832
|
46,693,294
|
(a) |
This adjustment eliminates the impact of non-cash equity-based compensation expenses. Although we expect to incur non-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 these non-cash expenses as supplemental
information.
|
(b) |
This adjustment mainly eliminates the impact of non-cash foreign currency translation associated with intercompany debt obligations 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 primarily non-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.
|
(c) |
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 U.S. dollars, and we do not enter into derivative transactions for trading or speculative purposes, we do not
believe that these charges or gains are indicative of our core operating performance.
|
(d) |
For the three months ended March 31, 2023, this adjustment eliminates the termination related charges of $8.4 million in connection with the Program that we offered to certain employees during the first quarter of 2023. As this
adjustment meaningfully impacted our operating results and are not expected to represent an ongoing operating expense or income to us, we believe our operating performance results are more usefully compared if this adjustment is excluded.
|
(e) |
For the three months ended March 31, 2023 and 2022, income tax effect on non-GAAP adjustments were calculated by calculating the tax expense of each jurisdiction with or without the non-GAAP adjustments. For the three months ended
March 31, 2023, income tax effect on non-GAAP adjustments related to our Korean subsidiary and the U.S parent entity were negative $1.2 million and negative $0.7 million, respectively. For the three months ended March 31, 2022, this
adjustment eliminates the income tax effect on non-GAAP adjustments of $1.0 million related to our Korean subsidiary using a calculation method that we compare the tax expense of our Korean subsidiary with and without the non-GAAP
adjustments.
|
• |
Adjusted Net Income does not reflect changes in, or cash requirements for, our working capital needs;
|
• |
Adjusted Net Income does not consider the potentially dilutive impact of issuing equity-based compensation to our management team and employees;
|
• |
Adjusted Net Income does not reflect the costs of holding certain assets and liabilities in foreign currencies; and
|
• |
other companies in our industry may calculate Adjusted Net Income differently than we do, limiting its usefulness as a comparative measure.
|
Three Months Ended
March 31, 2023
|
Three Months Ended
March 31, 2022
|
|||||||||||||||||||
Amount
|
% of
Total Revenues
|
Amount
|
% of
Total Revenues
|
Change
Amount
|
||||||||||||||||
(Dollars in millions)
|
||||||||||||||||||||
Revenues
|
||||||||||||||||||||
Net sales – standard products business
|
$
|
51.5
|
90.4
|
%
|
$
|
94.0
|
90.3
|
%
|
$
|
(42.5
|
)
|
|||||||||
Net sales – transitional Fab 3 foundry services
|
5.5
|
9.6
|
10.1
|
9.7
|
(4.6
|
)
|
||||||||||||||
Total revenues
|
57.0
|
100.0
|
104.1
|
100.0
|
(47.1
|
)
|
||||||||||||||
Cost of sales
|
||||||||||||||||||||
Cost of sales – standard products business
|
37.3
|
65.5
|
56.1
|
53.9
|
(18.8
|
)
|
||||||||||||||
Cost of sales – transitional Fab 3 foundry services
|
7.6
|
13.3
|
9.0
|
8.7
|
(1.4
|
)
|
||||||||||||||
Total cost of sales
|
44.9
|
78.8
|
65.1
|
62.5
|
(20.2
|
)
|
||||||||||||||
Gross profit
|
12.1
|
21.2
|
39.0
|
37.5
|
(26.9
|
)
|
||||||||||||||
Selling, general and administrative expenses
|
12.2
|
21.3
|
14.2
|
13.6
|
(2.0
|
)
|
||||||||||||||
Research and development expenses
|
13.3
|
23.3
|
12.0
|
11.5
|
1.3
|
|||||||||||||||
Early termination charges
|
8.4
|
14.8
|
—
|
—
|
8.4
|
|||||||||||||||
Operating income (loss)
|
(21.8
|
)
|
(38.3
|
)
|
12.9
|
12.4
|
(34.7
|
)
|
||||||||||||
Interest income
|
2.8
|
5.0
|
0.7
|
0.7
|
2.1
|
|||||||||||||||
Interest expense
|
(0.3
|
)
|
(0.4
|
)
|
(0.1
|
)
|
(0.1
|
)
|
(0.1
|
)
|
||||||||||
Foreign currency loss, net
|
(3.4
|
)
|
(6.0
|
)
|
(0.7
|
)
|
(0.7
|
)
|
(2.7
|
)
|
||||||||||
Others, net
|
(0.0
|
)
|
(0.1
|
)
|
0.2
|
0.2
|
(0.3
|
)
|
||||||||||||
(0.9
|
)
|
(1.5
|
)
|
0.1
|
0.1
|
(1.0
|
)
|
|||||||||||||
Income (loss) before income tax expense
|
(22.7
|
)
|
(39.8
|
)
|
13.0
|
12.5
|
(35.7
|
)
|
||||||||||||
Income tax expense (benefit)
|
(1.2
|
)
|
(2.2
|
)
|
3.5
|
3.3
|
(4.7
|
)
|
||||||||||||
Net income (loss)
|
$
|
(21.5
|
)
|
(37.7
|
)
|
$
|
9.5
|
9.2
|
$
|
(31.0
|
)
|
Three Months Ended
March 31, 2023
|
Three Months Ended
March 31, 2022
|
|||||||||||||||||||
Amount
|
% of
Total Revenues
|
Amount
|
% of
Total Revenues
|
Change
Amount
|
||||||||||||||||
(Dollars in millions)
|
||||||||||||||||||||
Revenues
|
||||||||||||||||||||
Net sales – standard products business
|
||||||||||||||||||||
Display Solutions
|
$
|
10.8
|
19.0
|
%
|
$
|
29.2
|
28.0
|
%
|
$
|
(18.3
|
)
|
|||||||||
Power Solutions
|
40.7
|
71.4
|
64.8
|
62.3
|
(24.2
|
)
|
||||||||||||||
Total standard products business
|
51.5
|
90.4
|
94.0
|
90.3
|
(42.5
|
)
|
||||||||||||||
Net sales – transitional Fab 3 foundry services
|
5.5
|
9.6
|
10.1
|
9.7
|
(4.6
|
)
|
||||||||||||||
Total revenues
|
$
|
57.0
|
100.0
|
%
|
$
|
104.1
|
100.0
|
%
|
$
|
(47.1
|
)
|
Three Months Ended
March 31, 2023
|
Three Months Ended
March 31, 2022
|
|||||||||||||||||||
Amount
|
% of
Net Sales
|
Amount
|
% of
Net Sales
|
Change
Amount
|
||||||||||||||||
(Dollars in millions)
|
||||||||||||||||||||
Gross Profit
|
||||||||||||||||||||
Gross profit – standard products business
|
$
|
14.2
|
27.6
|
%
|
$
|
37.9
|
40.3
|
%
|
$
|
(23.7
|
)
|
|||||||||
Gross profit – transitional Fab 3 foundry services
|
(2.1
|
)
|
(38.4
|
)
|
1.1
|
10.6
|
(3.2
|
)
|
||||||||||||
Total gross profit
|
$
|
12.1
|
21.2
|
%
|
$
|
39.0
|
37.5
|
%
|
$
|
(26.9
|
)
|
Three Months Ended
March 31, 2023
|
Three Months Ended
March 31, 2022
|
|||||||||||||||||||
Amount
|
% of
Net Sales –
standard
products
business
|
Amount
|
% of
Net Sales –
standard
products
business
|
Change
Amount
|
||||||||||||||||
(Dollars in millions)
|
||||||||||||||||||||
Korea
|
$
|
16.5
|
32.0
|
%
|
$
|
31.0
|
33.0
|
%
|
$
|
(14.5
|
)
|
|||||||||
Asia Pacific (other than Korea)
|
31.9
|
62.0
|
58.3
|
62.0
|
(26.4
|
)
|
||||||||||||||
United States
|
1.0
|
2.0
|
2.9
|
3.0
|
(1.8
|
)
|
||||||||||||||
Europe
|
2.1
|
4.0
|
1.9
|
2.0
|
0.2
|
|||||||||||||||
$
|
51.5
|
100.0
|
%
|
$
|
94.0
|
100.0
|
%
|
$
|
(42.5
|
)
|
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4. |
Controls and Procedures
|
Item 1. |
Legal Proceedings
|
Item 1A. |
Risk Factors
|
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds.
|
Period
|
Total Number
of Shares
Purchased(1)
|
Average
Price Paid
per Share
|
Total Number
of Shares
Purchased as Part
of Publicly
Announced Plans
or Programs(2)
|
Approximate dollar
value of Shares that
may yet be
Purchased under the
Plans or Programs
(in thousands)(2)
|
||||||||||||
January 2023
|
210,192
|
$
|
10.45
|
210,192
|
$
|
35,292
|
||||||||||
February 2023
|
222,314
|
$
|
10.16
|
222,314
|
$
|
33,033
|
||||||||||
March 2023(1)
|
807,487
|
$
|
9.22
|
805,966
|
$
|
25,601
|
||||||||||
Total
|
1,239,993
|
$
|
9.60
|
1,238,472
|
$
|
25,601
|
(1) |
Includes 1,521 shares withheld to satisfy tax withholding obligations in connection with the vesting of restricted stock units issued under our equity incentive plans.
|
(2) |
On August 31, 2022, the Company’s Board of Directors authorized an expansion of the Company’s previously announced stock repurchase program from $75 million to $87.5 million of the Company’s common stock. The Company has already
repurchased shares worth $37.5 million under the program through an accelerated stock repurchase agreement on December 21, 2021 with JPMorgan Chase Bank, National Association. The remaining $50.0 million of the expanded $87.5 million
program will be repurchased in the open market or through privately negotiated transactions. In connection with the repurchase program, the Company established a stock trading plan with Oppenheimer & Co. Inc. in accordance with Rule
10b5-1 under the Securities Exchange Act of 1934, as amended.
|
Item 3. |
Defaults Upon Senior Securities
|
Item 4. |
Mine Safety Disclosures
|
Item 5. |
Other Information
|
Item 6. |
Exhibits.
|
Exhibit
Number
|
Description
|
31.1#
|
|
31.2#
|
|
32.1†
|
|
32.2†
|
|
101.INS#
|
Inline XBRL Instance Document.
|
101.SCH#
|
Inline XBRL Taxonomy Extension Schema Document.
|
101.CAL#
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF#
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB#
|
Inline XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE#
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
104
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
|
# |
Filed herewith
|
† |
Furnished herewith
|
MAGNACHIP SEMICONDUCTOR CORPORATION
(Registrant)
|
||
Dated: May 8, 2023
|
By:
|
/s/ Young-Joon Kim
|
Young-Joon Kim
|
||
Chief Executive Officer and Interim Chief Financial Officer
|
||
(Principal Executive Officer and Principal Financial Officer) |
Dated: May 8, 2023
|
|
/s/ Young-Joon Kim
|
|
Young-Joon Kim
|
|
Chief Executive Officer and Interim Chief Financial Officer
|
|
(Principal Executive Officer)
|
Dated: May 8, 2023
|
|
/s/ Young-Joon Kim
|
|
Young-Joon Kim
|
|
Chief Executive Officer and Interim Chief Financial Officer
|
|
(Principal Financial Officer) |
Dated: May 8, 2023
|
/s/ Young-Joon Kim
|
Young-Joon Kim
|
|
Chief Executive Officer and Interim Chief Financial Officer
|
|
(Principal Executive Officer)
|
Dated: May 8, 2023
|
/s/ Young-Joon Kim
|
Young-Joon Kim
|
|
Chief Executive Officer and Interim Chief Financial Officer
|
|
(Principal Financial Officer)
|
)/[ AUBU;6=Y3[ M*"=^X#)'Y"MC5]4L='LGN]5O;:RME^]+<2B-1^)H OT$XKS?_A=?P^^T"#_A M)K;S,XSY,NW_ +[V;:[G2=4L-8L8[S2[RWO;63[LMO()$/XB@#@]+^,7AS4_ M'S^$+>'41JB74UH7:%!%OCW[^=^(>U>EU\7^"Y4A_:NO)9I$CC76M2+NQV M@ >?U-?1D_QE^']K>&TE\3VC2@XS&DDB?]]JI7]:2 ]$KSO5/BQH&F?$*+P= M-/.A,>Z602>9A?+X!QTVT,#U&BN<\0>,O#OAR]M[37=6M M;&YN!NBCF;!<9Q_.L_Q-\2_!WABZ:UUGQ!:0W*G#0*3+(G^\J D?C3 [.BN5 M\*^/O"_BN39H&M6EY-MW>0&*28]=C8;'X5U0H **** "N#^(/Q.\-^ XPNLW M;-?,N4LK<;Y6'KCH![G%-^+ECXROO#-Q%X%OH;6\P&(VXE<#.0DA.$)X[>O( MKX5\26.KZ=K%Q'XC@O8=2+EI?M8/F.?7)Z_6I; ]#^)_QM\1>-! 1]*+B1\X^*O"^ ML^%-1-AK^GSV-QU3S!Q(/5"."/I63%(\,B21.\ Z..GU!KYG^*'[.M_I8GU#P5(^H68.?L$G^O0?[!_C M _ _6E9C*OPP_:&U;17%GXR\[5K# "7"@?:(_J>/,_'GWKZ6\/Z_X9^(>@W) MTVXM]5TYU\JX@=.F1]QU(R*_/6ZM9[*YDM[N"2WN(CLDCE0HZ'T(/2K>@ZWJ M?A_4H[_1+Z>RNH^DD3X_ ^H]CQ33Z"/I?XF?LX6]V[7G@.1+.3^/3[B0F,_[ MC\D?[IX]Q7S7XBT#5?#>IR:?KMC/8WD?6.5,9]P>A'N.*^_?ACJ]WKW@'0=4 MU%D>\N[1))61=H+]SBK?BKPIHOBO3S::_IMO>Q8(4R+\\>>Z-U4_2G89\I?L MA#_BZ5R/^H7-_P"C(Z^S:\4^&GP9?X??$:?6-/U'[7I$ME) (YAB>-BZ$#CA MAP>>/I7M=" ^/_B1&DO[6UDDBAD?4=-!!Z$;(:71$C^$/[2#6+'[/HEZ?)4L M?E%O-S'U_N. ,_[!I?B)_P G=:?_ -A+3?\ T"&N_P#VM_"J:CX.M?$,$2M< MZ9+Y !?#FV2- MX(([*60G.^0X\V7'^X@/X&O?_P!INUAL?@I-:VJ".W@EMHXT'14!P!0!QW@? MQ=)X)_93J[N_7'S=N^?3DO-/GO?V1=.E@1W%IJKW$FP9PGF2)G_ ,?%>F_L MD:Q:7?PYETQ'07EA>2>9'GG8V"K_ $/(_"F!SGQ@^!&D:5X3O-;\&I<6EU81 MM-+;M.722$ [\9Y!QSUZ9%8'[+>LKX=\*?$?5W7?]AM;><)ZD+.0/Q-?07Q; MUZS\._#O7+R\=!FUDABC8X\R1T8*@_STS7SC^SCH\VO> OBCI=J-UQ W ML/B;]G/PC=:/(F@I 1"_\ M@]OIBO./V7/'NE^%[C5/#_B&9-. M%S*)8KBX/EHL@&'1RW0],9]#7T/XD^(GA70-*DOK[7=/*(F](XKA))).. B@ MY.:8'SQ^R>MVGQ:\1IJ+.]ZNGRBX+G),GGQ[^?KFN/\ ^$?O?%?QZ\3^'[*[ M>UCU'5KR.[D'/[@3F0@CO_JQ@>N*[']E&];4OBYXDOW7:UU8SSD#^'?<1MC] M:;\*_P#DZ_7/^PCJ?_H .F M">N *\\_9)\7RZ==Z_H=XQ_LY;5]43_IF4P'Q]01_P!\5]:5\1?LZ6;ZCXR\ M2V,7^MN=!O($^KE /YU74 T.PU/X\_%BZFOKE[6R ,S=_L]L' $:=L\_F2>: M]OUO]G3P7 6*0@Y!Q X!!],8Q[5M^/KO7?C1\7IO#&F3QQZ5I\TBPAQ MB.-$^5YC_>)/3Z@< MVGB#]K:/4M.<26 &;D-CKLQC&>WZTWX$_"WQ+X \0:I+J6LQ2Z1("D=M Q(N&XQ*P/W,#Y>. M?PZ^Y!P1D=/6N9TKQQX:)I^L6MQJ=K_K($;VYVGH^.^.G>F!\9:KH5 MSXE^/>N:+9SFWDOM ,M>\-7#G MR#;O.8\Y"S1R!#CZAOT%5?'G_)WEA_V$-/\ _1<='[-7_)>?$/\ U[W?_H]* M/'G_ "=Y9?\ 80L/_1<= $G[91QXO\/DWNHDD!4YQD ))DDN<-V621G7'MA@? MQHZ@>F44450!BN6\;>"-!\:6"VFOZ>MR$R8I Q62(G^ZPY'TZ5U-% 'QC\2/ MV?-?\/-<7?AHG6=+7+^6@Q OT[Q7FGQ*^#_A MOQQ%)+/"-/U8G(O[:-0['_;'1Q]>>.M)KL*Q\@?#_P"(_B7P+<$Z)>D6K/OE MLY1OBD_#L?<8-?5OPW^.?AGQ>]O9W3G2-9E(06UP X]CFOE'XB_!/Q1X-AFO5C34]'B&]KJV^]&G^VG4?49'O6M\&/B MWXPT?48]*AM+WQ-:, $L\N\L0']Q\$@>QX^E?8]H[W-E$\UN\#21AF@D()3( MY0XR..G%-#.3^"/_ "2;PM_UXQUW-5[>WAM(4AMHTAB082.-0H'T%6*8!111 M0!\_^+?A/XCU3X]6WC"U:R_LF*\LYR&F(DQ&(P_&W_8/>O;-?TBUU[1[O3-2 MC+VEU$T4J@X.#Z'L:U** /(OA;\%-*\ ^('U>*^FU&Z\HPQ>?$J^5GJ1[XX^ MA-;?QN\)ZEXU\ 7.C:-Y NY)HI!Y[[$PK9/.#7H5% 'G/PB\%77AOX71^&O$ M<=O-(WGI/'&^]721C\N>.QKQ[6/@'XM\->(FU+X<:RL<+9\L- ,'^ G&' M7\OI7U/12L!\P:=\&/'?B[5[:;XFZ^TNF6^2(1=-))G'\('R+VRW7BNT_9U^ M&VM_#W_A(1KK69%]]G\K[/*7_P!7YF<\#'WQ7M=!Z46 ^=O&'A#X8?$GQEJ& MG:7JXLO$X^:62T'[J9N2^0?D=P,YP0>YS@U4A^ W@_P/87.N>-M;FU&RM1O\ MOR_L\9_V2 Q+D^@(S6I\1/V>+/6]7?5_"NH+HUVYW/ T9,1?^\"IRGZ_A7+M M^SMXRU5XX=>\80RVB'<,R3W!7Z*^!^M'H!3_ &.[.6Y\9^(M55 D,=F(#C@ MR2!P!^$9KN/ _P *O$.B_'+4O%MXUE_95Q=7DL828F3;*SE F?#?P+ MI7@+P\FF:2'DW/YD]Q*!OG?U./T':NPHL C9[5\]? GX0^)/ _CRYU?6FL3: MR6 ;?%PZ^X RWT:OJFBE8#YP\$_ S5 M/"/Q9TK5[.XMY]"LU&YW?$K.8-KG9CC,C$@9X%==\:O@[9?$#R]0T^6+3M=0 M",SNF8YUQP'QW'&&_#GC'L-%,#Y)7X0?%^/3O[&37O\ B5;/*,0U23R-GIMQ MG'MBO2/@O\$+?P1?1ZQK5Q'?ZXH*P^5GRK8$8.W."QP<9POT[U[=12L!\[>& M?A!XDTWX[2^+KEK#^R7U*[N\+,3)LD\S9QMZ_..]?1-%%,#P/X._"KQ#X1^) M^K:_JQL38W$4Z1^3.6?+R(PR,>BTWQ1\*O$6I?'RV\8V[67]DQW5K,0TY$F( MT0'C;_LGO7OU%*P'R1^V9_R-V@?]>+_^C#5K3_A'\2O#$9D\ Z^BZ=>@3^6+ MDQ.,CC>A&,XXR#^5>C?&_P"$-Y\1]:TZ^M=5@L5M;=H&22(N3ELYX->MZ9;F MTTZUMG()AB2,D=\#%%@/F?PK^S]K^L>)EU;XD:G'=1,^Z>)+AY)[C X#/V'3 MH>GI7TY:016EM%!;HL<$2"-$7HH' JQ10D 4444P"BBB@ HHHH @GACN(7C ME1'C<%61AD,#U!%>*>,/V<_#&N:I!=:5<2Z)'NS<6]O&'CD7_8!/[L_F/]FO M
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
CONSOLIDATED BALANCE SHEETS [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 |
Common stock, shares issued (in shares) | 56,437,182 | 56,432,449 |
Common stock, shares outstanding (in shares) | 42,589,315 | 43,824,575 |
Treasury stock, shares (in shares) | 13,847,867 | 12,607,874 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) [Abstract] | ||
Net income (loss) | $ (21,470) | $ 9,528 |
Other comprehensive loss | ||
Foreign currency translation adjustments | (1,908) | (3,045) |
Derivative adjustments | ||
Fair valuation of derivatives | (1,135) | (1,264) |
Reclassification adjustment for loss on derivatives included in net income (loss) | 603 | 762 |
Total other comprehensive loss | (2,440) | (3,547) |
Total comprehensive income (loss) | $ (23,910) | $ 5,981 |
Business, Basis of Presentation and Significant Accounting Policies |
3 Months Ended |
---|---|
Mar. 31, 2023 | |
Business, Basis of Presentation and Significant Accounting Policies [Abstract] | |
Business, Basis of Presentation and Significant Accounting Policies |
1. Business, Basis of Presentation and Significant Accounting Policies
Business
Magnachip Semiconductor Corporation (together with its subsidiaries, the “Company”) is a designer and manufacturer of analog and mixed-signal
semiconductor platform solutions for communications, Internet of Things (“IoT”) applications, consumer, computing, industrial and automotive applications.
The Company’s standard products business includes its Display Solutions and Power Solutions business lines. The Company’s Display Solutions
products provide panel display solutions to major suppliers of large and small rigid and flexible panel displays, and a wide range of applications including smartphones, TVs, automotive and IT applications such as monitors, notebook PCs, tablet
PCs as well as AR/VRs. The Company’s Power Solutions products include discrete and integrated circuit solutions for power management in communications, consumer, computing, servers, automotive, and industrial applications.
On September 1, 2020, the Company completed the sale of the Company’s Foundry Services Group business and its fabrication facility located in
Cheongju, Korea, known as “Fab 4”. Following the consummation of the sale, and for up to three years, the Company is expected to provide transitional foundry services associated with its fabrication facility located in Gumi, Korea, known as
“Fab 3”, at an agreed upon cost plus mark-up (the “Transitional Fab 3 Foundry Services”).
Basis of Presentation
The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with generally accepted
accounting principles in the United States of America (“U.S. GAAP”). These interim consolidated financial statements include normal recurring adjustments and the elimination of all intercompany accounts and transactions which are, in the
opinion of management, necessary to provide a fair statement of the Company’s financial condition and results of operations for the periods presented. These interim consolidated financial statements are presented in accordance with Accounting
Standards Codification (“ASC”) 270, “Interim Reporting” and, accordingly, do not include all of the information and note disclosures required by U.S. GAAP for complete financial statements, except for the changes below. The results of
operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for a full year or for any other periods.
The December 31, 2022 balance sheet data was derived from the Company’s audited financial statements, but does not include all disclosures required
by U.S. GAAP. The interim consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
There have been no material changes to the Company’s significant accounting policies as of and for the three months ended March 31, 2023 as
compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
|
Inventories |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories |
2. Inventories
Inventories as of March 31, 2023 and December 31, 2022 consist of the following (in thousands):
Changes in inventory reserve for the three months ended March 31, 2023 and 2022 are as follows (in thousands):
Inventory reserve represents the Company’s best estimate in value lost due to excessive inventory level, physical deterioration,
obsolescence, changes in price levels, or other causes based on individual facts and circumstances. Inventory reserve relates to inventory items including finished goods, semi-finished goods, work-in-process and raw materials. Write off of
this reserve is recognized only when the related inventory has been disposed or scrapped.
|
Property, Plant and Equipment |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment |
3. Property, Plant and Equipment
Property, plant and equipment as of March 31, 2023 and December 31, 2022 are comprised of the following (in thousands):
Aggregate depreciation expenses totaled $4,193
thousand and $3,706 thousand for the three months ended March 31, 2023 and 2022, respectively.
|
Intangible Assets |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
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Intangible Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets |
4. Intangible Assets
Intangible assets as of March 31, 2023 and December 31, 2022 are comprised of the following (in thousands):
Aggregate amortization expenses for intangible assets totaled $164 thousand and $185 thousand for the three months ended March 31, 2023
and 2022, respectively.
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Leases |
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases |
5. Leases
The Company has operating and finance leases for buildings and other assets such as vehicles and office equipment. The Company’s leases have
remaining lease terms ranging from 1 year to 5 years.
The tables below present financial information related to the Company’s leases.
Supplemental balance sheets information related to leases as of March 31, 2023 and December 31, 2022 are as follows (in thousands):
The following table presents the weighted average remaining lease term and discount rate:
The components of lease cost included in the Company’s consolidated statements of operations, are as follows (in thousands):
The above table does not include an immaterial cost of short-term leases for the three months ended March 31, 2023 and 2022.
Other lease information is as follows (in thousands):
The aggregate future lease payments for operating and finance leases as of March 31, 2023 are as follows (in thousands):
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Accrued Expenses |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses |
6. Accrued Expenses
Accrued expenses as of March 31, 2023 and December 31, 2022 are comprised of the following (in thousands):
Payroll, benefits and related taxes
payable as of March 31, 2023 in the table above includes termination related charges under the voluntary resignation program (the “Program”) of $8,449
thousand, which are expected to be paid in the second quarter of 2023.
See
“Note 10. Early Termination Charges” for more information regarding the Program.
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Derivative Financial Instruments |
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments |
7. Derivative Financial Instruments
The Company’s Korean subsidiary from time to time has entered into zero cost collar contracts to hedge the risk of changes in the
functional-currency-equivalent cash flows attributable to currency rate changes on U.S. dollar denominated revenues.
Details of the zero cost collar contracts as of March 31, 2023 are as follows (in thousands):
Details of the zero cost collar contracts as of December 31, 2022 are as follows (in thousands):
The zero cost collar contracts qualify as cash flow hedges under ASC 815, “Derivatives and Hedging,” since at both the inception of the contracts
and on an ongoing basis, the hedging relationship was and is expected to be highly effective in achieving offsetting cash flows attributable to the hedged risk during the term of the contracts.
The fair values of the Company’s outstanding zero cost collar contracts recorded as assets and liabilities as of March 31, 2023 and December 31,
2022 are as follows (in thousands):
Offsetting of derivative assets and liabilities as of March 31, 2023 is as follows (in thousands):
Offsetting of derivative liabilities as of December 31, 2022 is as follows (in thousands):
For derivative instruments that are designated and qualify as cash flow hedges, gains or losses on the derivative aside from components excluded
from the assessment of effectiveness are reported as a component of accumulated other comprehensive income or loss (“AOCI”) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.
Gains and losses on the derivative, representing hedge components excluded from the assessment of effectiveness, are recognized in current earnings.
The following table summarizes the impact of derivative instruments on the consolidated statements of operations for the three months ended March
31, 2023 and 2022 (in thousands):
As of March 31, 2023, the amount expected to be reclassified from accumulated other comprehensive loss into loss within the next 12 months is $1,757 thousand.
The Company set aside cash deposit to the counterparty, Standard Chartered Bank Korea Limited (“SC”), as required for the zero cost collar
contracts. This
cash deposit is recorded as hedge collateral on the consolidated balance sheets. Cash deposits as of March 31, 2023 and December 31, 2022 are as follows (in thousands):
The Company is required to deposit additional cash collateral with Nomura Financial Investment (Korea) Co., Ltd. (“NFIK”) and SC for any exposure
in excess of $500 thousand. As of March 31, 2023, $1,820 thousand of additional cash collateral was required by NFIK, and recorded as hedge collateral on the consolidated balance sheet. As of December 31, 2022, $1,840 thousand and $100 thousand of
additional cash collateral were required by NFIK and SC, respectively, and recorded as hedge collateral on the consolidated balance sheet.
These zero cost collar contracts may be terminated by the counterparties if the Company’s total cash and cash equivalents is less than $30,000 thousand at the end of a fiscal quarter, unless a waiver is obtained.
|
Fair Value Measurements |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements |
8. Fair Value Measurements
Fair Value of Financial Instruments
As of March 31, 2023, the following table represents the Company’s assets and liabilities measured at fair value on a recurring basis and the basis
for that measurement (in thousands):
As of December 31, 2022, the following table represents the Company’s liabilities measured at fair value on a recurring basis and the basis
for that measurement (in thousands):
Items not reflected in the table above include cash equivalents, accounts receivable, other receivables, accounts payable, and other accounts
payable, fair value of which approximate carrying values due to the short-term nature of these instruments. The fair value of assets and liabilities whose carrying value approximates fair value is determined using Level 2 inputs.
|
Accrued Severance Benefits |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Severance Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Severance Benefits |
9. Accrued Severance Benefits
The majority of accrued severance benefits are for employees in the Company’s Korean subsidiary. Pursuant to the Employee Retirement Benefit
Security Act of Korea, eligible employees and executive officers with one or more years of service are entitled to severance benefits upon the termination of their employment based on their length of service and rate of pay. As of March 31,
2023, 97% of all employees of the Company were eligible for severance benefits.
Changes in accrued severance benefits are as follows (in thousands):
The severance benefits funded through the Company’s National Pension Fund and group severance insurance plan will be used exclusively for payment
of severance benefits to eligible employees. These amounts have been deducted from the accrued severance benefit balance.
Beginning in July 2018, the Company contributes to certain severance insurance deposit accounts a certain percentage of severance benefits that
are accrued for eligible employees for their services from January 1, 2018 pursuant to Employee Retirement Benefit Security Act of Korea. These accounts consist of time deposits and other guaranteed principal and interest, and are maintained
at insurance companies, banks or security companies for the benefit of employees. The Company deducts the contributions made to these severance insurance deposit accounts from its accrued severance benefits.
The Company is liable to pay the following future benefits to its non-executive employees upon their normal retirement age (in thousands):
The above amounts were determined based on the non-executive employees’ current salary rates and the number of service years that will be
accumulated upon their retirement dates. These amounts do not include amounts that might be paid to non-executive employees that will cease working with the Company before their normal retirement ages.
Korea’s mandatory retirement age is 60
years of age or older under the Employment Promotion for the Aged Act. The Company sets the retirement age of employees at 60.
|
Early Termination Charges |
3 Months Ended |
---|---|
Mar. 31, 2023 | |
Early Termination Charges [Abstract] | |
Early Termination Charges |
10. Early Termination Charges
During the first quarter of 2023, the Company commenced the Program, which was available for the employees with more than 20 years of service. For the three months ended March 31, 2023, the Company recorded in its consolidated statement of operations $8,449 thousand of termination related charges as “early termination charges”, which are expected to be paid during the second quarter of 2023.
|
Foreign Currency Loss, Net |
3 Months Ended |
---|---|
Mar. 31, 2023 | |
Foreign Currency Loss, Net [Abstract] | |
Foreign Currency Loss, Net |
11. Foreign Currency Loss, Net
Net foreign currency gain or loss includes non-cash translation gain or loss associated with intercompany balances. A substantial portion of
the Company’s net foreign currency gain or loss is non-cash translation gain or loss associated with intercompany long-term loans to the Company’s Korean subsidiary. The loans are denominated in U.S. dollars and are affected by changes in the
exchange rate between the Korean won and the U.S. dollar. As of March 31, 2023 and December 31, 2022, the outstanding intercompany loan balances including accrued interest between the Korean subsidiary and the Dutch subsidiary were $301,860 thousand and $310,988
thousand, respectively. The Korean won to U.S. dollar exchange rates were 1,303.8:1 and 1,267.3:1 using the first base rate as of March 31, 2023 and December 31, 2022, respectively, as quoted by the KEB Hana Bank.
|
Income Taxes |
3 Months Ended |
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Mar. 31, 2023 | |
Income Taxes [Abstract] | |
Income Taxes |
12. Income Taxes
The Company and its subsidiaries file income tax returns in Korea, Japan, Taiwan, the U.S. and in various other jurisdictions. The Company is
subject to income or non-income tax examinations by tax authorities of these jurisdictions for all open tax years.
For the three months ended March 31, 2023, the Company recorded an income tax benefit of $1,227 thousand, primarily related to its primary operating entity in Korea based on the estimated taxable loss for the respective period.
For the three months ended March 31, 2022, the Company recorded an income tax expense of $3,483 thousand, primarily related to its primary operating entity in Korea based on the estimated taxable income for the respective period.
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Geographic and Other Information |
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Geographic and Other Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Geographic and Other Information |
13. Geographic and Other Information
The following sets forth information relating to the single operating segment (in thousands):
The following is a summary of net sales—standard products business (which does not include the Transitional Fab 3 Foundry Services) by geographic
region, based on the location to which the products are billed (in thousands):
For the three months ended March 31, 2023 and 2022, of the Company’s net sales – standard products business in Asia Pacific (other than Korea), net
sales – standard products business in China and Hong Kong together represented 57.9% and 71.1%, respectively, and net sales—standard products business in Vietnam represented 17.8% and 14.4%, respectively.
Net sales from the Company’s top ten largest customers in the standard products business (which does not include the Transitional Fab 3 Foundry
Services) accounted for 71% and 72%
for the three months ended March 31, 2023 and 2022, respectively.
For the three months ended March 31, 2023, the Company had two customers that represented 16.4% and 13.7% of its net sales—standard products business, respectively.
For the three months ended March 31, 2022, the Company had two customers that represented 25.5% and 12.9% of its net sales—standard products business, respectively.
As of March 31, 2023, two customers of the Company’s standard products business accounted for 22.3% and 14.3% of its accounts receivable – standard
products business (which does not include the Transitional Fab 3 Foundry Services), respectively. As of December 31, 2022, two customers of the Company’s standard products business accounted for 25.1% and 15.2% of its accounts receivable – standard
products business (which does not include the Transitional Fab 3 Foundry Services), respectively.
|
Accumulated Other Comprehensive Loss |
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss |
14. Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss consists of the following as of March 31, 2023 and December 31, 2022, respectively (in thousands):
Changes in accumulated other comprehensive loss for the three months ended March 31, 2023 and 2022 are as follows (in thousands):
|
Stock Repurchases |
3 Months Ended |
---|---|
Mar. 31, 2023 | |
Stock Repurchases [Abstract] | |
Stock Repurchases |
15. Stock Repurchases
Accelerated Stock Repurchase Program
On December 21, 2021, the Board of Directors authorized the Company to repurchase up to $75,000 thousand of its outstanding common stock and the Company entered into an accelerated stock repurchase agreement (the “ASR Agreement”) with JPMorgan Chase Bank,
National Association (“JPM”) to repurchase an aggregate of $37,500 thousand of its common stock.
Pursuant to the terms of the ASR Agreement dated December 21, 2021, the Company paid to JPM $37,500 thousand in cash and received an initial delivery of 994,695
shares of its common stock in the open market for an aggregate purchase price of $20,073 thousand and a price per share of $20.18 on December 22, 2021.
As of December 31, 2021, the Company accounted for the remaining portion of the ASR Agreement as a forward contract indexed to its own common stock
and recorded $17,427 thousand in additional paid-in capital in stockholders’ equity in its consolidated balance sheets.
In March 2022, the previously announced repurchase of $37,500
thousand of the Company’s common stock was completed pursuant to the ASR Agreement, and as a result, the Company additionally received 1,031,576
shares of its common stock for an aggregate purchase price of $17,217 thousand at a price per share of $16.69, which was reclassified as treasury stock from additional paid-in capital in stockholder’s equity in its consolidated balance sheets.
Expanded Stock Repurchase Program
On August 31, 2022, the Board of Directors has authorized an expansion of the Company’s previously announced stock repurchase program from $75,000 thousand to $87,500 thousand
of its common stock. The remaining $50,000 thousand of the expanded $87,500 thousand program was planned to be repurchased in the open market or through privately negotiated transactions. In connection with the repurchase program, the Company
established a stock trading plan with Oppenheimer & Co. Inc. in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.
From September 2022 to December 2022, the Company repurchased 1,235,650
shares of its common stock in the open market for an aggregate purchase price of $12,511 thousand and a price per share of $10.13 under the stock repurchase program.
During the first quarter of 2023, the Company repurchased 1,238,472
shares of its common stock in the open market for an aggregate purchase price of $11,887 thousand and a price per share of $9.60 under the stock repurchase program.
|
Earnings (Loss) Per Share |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings (Loss) Per Share |
16. Earnings (Loss) Per Share
The following table illustrates the computation of basic and diluted earnings (loss) per common share for the three months ended March 31,
2023 and 2022:
Diluted earnings (loss) per share adjusts basic earnings (loss) per share for the potentially dilutive impact of stock
options. As the Company has reported loss for the three months ended March 31, 2023, all potentially dilutive securities, including stock options, are antidilutive and accordingly not considered, therefore basic net loss per share equals
diluted net loss per share.
The following outstanding instruments were excluded from the computation of diluted earnings (loss) per share, as they have an anti-dilutive effect
on the calculation:
|
Merger Agreement |
3 Months Ended |
---|---|
Mar. 31, 2023 | |
Merger Agreement [Abstract] | |
Merger Agreement |
17. Merger Agreement
On March 25, 2021, the Company, South Dearborn Limited, an exempted company incorporated in the Cayman Islands with limited liability (“Holdco”),
formed by an affiliate of Wise Road Capital LTD (“Wise Road”), and Michigan Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Holdco (“Merger Sub”), entered into an Agreement and Plan of Merger (as amended, the “Merger
Agreement”), providing for, among other things and subject to the terms and conditions thereof, the merger of Merger Sub with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned subsidiary of Holdco.
The closing of the Merger was subject to certain conditions, including clearance by the Committee on Foreign Investment in the United States
(“CFIUS”) under the Defense Production Act of 1950, as amended. The Company and Holdco were advised that CFIUS clearance of the Merger would not be forthcoming and received permission from CFIUS to withdraw their joint filing. In connection
therewith, the Company and Holdco entered into a Termination and Settlement Agreement, dated December 13, 2021 (the “Termination Agreement”), pursuant to which Holdco agreed to pay $70,200 thousand (the “Termination Fee”) to the Company on the terms specified in the Termination Agreement in satisfaction of Holdco’s obligation to pay a termination fee
in connection with the termination of the Merger Agreement. On December 20, 2021, the Merger Agreement was terminated pursuant to the Termination Agreement after the Company’s receipt of a fee of $51,000 thousand from Holdco and a standby letter of credit, which secures a deferred fee of $19,200 thousand from Holdco due on or before March 31, 2022. As of December 31, 2021, of the Termination Fee, $19,200
thousand deferred fee was recorded as other receivables. In connection therewith, the Company, Holdco and Wise Road entered into a First Amendment to the Termination Agreement, dated April 4, 2022, pursuant to which Holdco paid $14,400 thousand on April 4, 2022, with $4,800
thousand remaining outstanding. The Company, Holdco and Wise Road entered into a Second Amendment to the Termination Agreement, dated August 5, 2022 pursuant to which Holdco paid $3,000 thousand on August 5, 2022, of the deferred fee and payment of the remaining $1,800 thousand was due on or before October 31, 2022. The Company, Holdco and Wise Road entered into a series of letter agreements pursuant to which the parties ultimately agreed to defer the remaining $1,800 thousand due on or before March 31, 2023. As of March 31, 2023, the remaining fee of $1,800 thousand was recorded as other receivables. On April 6, 2023, Holdco paid the remaining $1,800 thousand.
|
Commitments and Contingencies |
3 Months Ended |
---|---|
Mar. 31, 2023 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies |
18. Commitments and Contingencies
Advances to Suppliers
The Company, from time to time, may make advances in form of prepayments or deposits to suppliers, including external foundries, to meet its
planned production. The Company recorded advances of $4,372 thousand and $6,605 thousand as other current assets as of March 31, 2023 and December 31, 2022, respectively.
COVID-19 Pandemic
In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic, and governmental authorities throughout the world implemented numerous restrictions and containment measures that
resulted in rapidly changing market and economic conditions. Many of these restrictions and
containment measures have since been lifted or scaled back. The Company will continue to monitor and evaluate the nature and scope of the impact of the COVID-19 pandemic to its business, consolidated results of operations, and financial condition, and may take actions it deems necessary or
appropriate to respond in the event of a reemergence of the pandemic.
|
Subsequent Events |
3 Months Ended |
---|---|
Mar. 31, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events |
19. Subsequent Events
Derivative contracts
In April 2023, the Company and SC entered into derivative contract of zero cost collar for December 2023. The total notional
amounts are $5,000 thousand.
In April 2023, the Company and NFIK entered into derivative contracts of zero cost collars for the period from January 2024 to
June 2024. The total notional amounts are $18,000 thousand.
|
Business, Basis of Presentation and Summary of Significant Accounting Policies (Policies) |
3 Months Ended |
---|---|
Mar. 31, 2023 | |
Business, Basis of Presentation and Significant Accounting Policies [Abstract] | |
Business |
Business
Magnachip Semiconductor Corporation (together with its subsidiaries, the “Company”) is a designer and manufacturer of analog and mixed-signal
semiconductor platform solutions for communications, Internet of Things (“IoT”) applications, consumer, computing, industrial and automotive applications.
The Company’s standard products business includes its Display Solutions and Power Solutions business lines. The Company’s Display Solutions
products provide panel display solutions to major suppliers of large and small rigid and flexible panel displays, and a wide range of applications including smartphones, TVs, automotive and IT applications such as monitors, notebook PCs, tablet
PCs as well as AR/VRs. The Company’s Power Solutions products include discrete and integrated circuit solutions for power management in communications, consumer, computing, servers, automotive, and industrial applications.
On September 1, 2020, the Company completed the sale of the Company’s Foundry Services Group business and its fabrication facility located in
Cheongju, Korea, known as “Fab 4”. Following the consummation of the sale, and for up to three years, the Company is expected to provide transitional foundry services associated with its fabrication facility located in Gumi, Korea, known as
“Fab 3”, at an agreed upon cost plus mark-up (the “Transitional Fab 3 Foundry Services”).
|
Basis of Presentation |
Basis of Presentation
The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with generally accepted
accounting principles in the United States of America (“U.S. GAAP”). These interim consolidated financial statements include normal recurring adjustments and the elimination of all intercompany accounts and transactions which are, in the
opinion of management, necessary to provide a fair statement of the Company’s financial condition and results of operations for the periods presented. These interim consolidated financial statements are presented in accordance with Accounting
Standards Codification (“ASC”) 270, “Interim Reporting” and, accordingly, do not include all of the information and note disclosures required by U.S. GAAP for complete financial statements, except for the changes below. The results of
operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for a full year or for any other periods.
The December 31, 2022 balance sheet data was derived from the Company’s audited financial statements, but does not include all disclosures required
by U.S. GAAP. The interim consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
There have been no material changes to the Company’s significant accounting policies as of and for the three months ended March 31, 2023 as
compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
|
Inventories (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Inventories |
Inventories as of March 31, 2023 and December 31, 2022 consist of the following (in thousands):
|
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Changes in Inventory Reserve |
Changes in inventory reserve for the three months ended March 31, 2023 and 2022 are as follows (in thousands):
|
Property, Plant and Equipment (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Property, Plant and Equipment |
Property, plant and equipment as of March 31, 2023 and December 31, 2022 are comprised of the following (in thousands):
|
Intangible Assets (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Intangible Assets |
Intangible assets as of March 31, 2023 and December 31, 2022 are comprised of the following (in thousands):
|
Leases (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Balance Sheet Information |
Supplemental balance sheets information related to leases as of March 31, 2023 and December 31, 2022 are as follows (in thousands):
|
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Lease, Cost |
The following table presents the weighted average remaining lease term and discount rate:
|
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Other Lease Information |
The components of lease cost included in the Company’s consolidated statements of operations, are as follows (in thousands):
The above table does not include an immaterial cost of short-term leases for the three months ended March 31, 2023 and 2022.
Other lease information is as follows (in thousands):
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Schedule of Future Lease Payments |
The aggregate future lease payments for operating and finance leases as of March 31, 2023 are as follows (in thousands):
|
Accrued Expenses (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Accrued Expenses |
Accrued expenses as of March 31, 2023 and December 31, 2022 are comprised of the following (in thousands):
|
Derivative Financial Instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Details of Derivative Contracts |
Details of the zero cost collar contracts as of March 31, 2023 are as follows (in thousands):
Details of the zero cost collar contracts as of December 31, 2022 are as follows (in thousands):
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Fair Values of Outstanding Zero Cost Collar and Forward Contracts Recorded as Assets and Liabilities |
The fair values of the Company’s outstanding zero cost collar contracts recorded as assets and liabilities as of March 31, 2023 and December 31,
2022 are as follows (in thousands):
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Offsetting of Derivative Assets and Liabilities |
Offsetting of derivative assets and liabilities as of March 31, 2023 is as follows (in thousands):
Offsetting of derivative liabilities as of December 31, 2022 is as follows (in thousands):
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Impact of Derivative Instruments on Consolidated Statement of Operations |
The following table summarizes the impact of derivative instruments on the consolidated statements of operations for the three months ended March
31, 2023 and 2022 (in thousands):
|
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Summary Of Cash Deposits | This
cash deposit is recorded as hedge collateral on the consolidated balance sheets. Cash deposits as of March 31, 2023 and December 31, 2022 are as follows (in thousands):
|
Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Assets and Liabilities Measured at Fair Value on Recurring Basis |
As of March 31, 2023, the following table represents the Company’s assets and liabilities measured at fair value on a recurring basis and the basis
for that measurement (in thousands):
As of December 31, 2022, the following table represents the Company’s liabilities measured at fair value on a recurring basis and the basis
for that measurement (in thousands):
|
Accrued Severance Benefits (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Severance Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Accrued Severance Benefits |
Changes in accrued severance benefits are as follows (in thousands):
|
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Future Benefits Payments to Employees |
The Company is liable to pay the following future benefits to its non-executive employees upon their normal retirement age (in thousands):
|
Geographic and Other Information (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Geographic and Other Information [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Operating Segments |
The following sets forth information relating to the single operating segment (in thousands):
|
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Net Sales by Region, Based on Location of Products are Billed |
The following is a summary of net sales—standard products business (which does not include the Transitional Fab 3 Foundry Services) by geographic
region, based on the location to which the products are billed (in thousands):
|
Accumulated Other Comprehensive Loss (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Loss |
Accumulated other comprehensive loss consists of the following as of March 31, 2023 and December 31, 2022, respectively (in thousands):
|
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Changes in Accumulated Other Comprehensive Loss |
Changes in accumulated other comprehensive loss for the three months ended March 31, 2023 and 2022 are as follows (in thousands):
|
Earnings (Loss) Per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Computation of Basic and Diluted Earnings (Loss) Per Common Share |
The following table illustrates the computation of basic and diluted earnings (loss) per common share for the three months ended March 31,
2023 and 2022:
|
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Schedule of Antidilutive Securities Excluded from Computation of Earnings (Loss) Per Common Share |
The following outstanding instruments were excluded from the computation of diluted earnings (loss) per share, as they have an anti-dilutive effect
on the calculation:
|
Inventories, Summary of Inventories (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|---|---|
Inventory, Net [Abstract] | ||||
Finished goods | $ 5,523 | $ 6,799 | ||
Semi-finished goods and work-in-process | 39,427 | 40,265 | ||
Raw materials | 6,351 | 7,460 | ||
Materials in-transit | 0 | 36 | ||
Less: inventory reserve | (14,941) | (14,677) | $ (5,555) | $ (5,730) |
Inventories, net | $ 36,360 | $ 39,883 |
Inventories, Changes in Inventory Reserve (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Changes in Inventory Reserve [Abstract] | ||
Beginning balance | $ (14,677) | $ (5,730) |
Change in reserve [Abstract] | ||
Inventory reserve charged to costs of sales | (2,584) | (1,607) |
Sale of previously reserved inventory | 1,476 | 1,452 |
Change in reserve | (1,108) | (155) |
Write off | 415 | 211 |
Translation adjustments | 429 | 119 |
Ending balance | $ (14,941) | $ (5,555) |
Property, Plant and Equipment (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|
Property, Plant and Equipment [Abstract] | |||
Property, plant and equipment, gross | $ 193,293 | $ 196,725 | |
Less: accumulated depreciation | (102,768) | (101,502) | |
Land | 12,670 | 13,034 | |
Construction in progress | 1,373 | 2,490 | |
Property, plant and equipment, net | 104,568 | 110,747 | |
Depreciation expenses | 4,193 | $ 3,706 | |
Buildings and Related Structures [Member] | |||
Property, Plant and Equipment [Abstract] | |||
Property, plant and equipment, gross | 24,214 | 24,780 | |
Machinery and Equipment [Member] | |||
Property, Plant and Equipment [Abstract] | |||
Property, plant and equipment, gross | 134,843 | 137,666 | |
Finance Lease Right-of-Use Assets [Member] | |||
Property, Plant and Equipment [Abstract] | |||
Property, plant and equipment, gross | 707 | 389 | |
Others [Member] | |||
Property, Plant and Equipment [Abstract] | |||
Property, plant and equipment, gross | $ 33,529 | $ 33,890 |
Intangible Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|
Intangible Assets [Abstract] | |||
Gross amount | $ 8,916 | $ 9,111 | |
Accumulated amortization | (7,132) | (7,181) | |
Net amount | 1,784 | 1,930 | |
Amortization expense for intangible assets | 164 | $ 185 | |
Intellectual Property Assets [Member] | |||
Intangible Assets [Abstract] | |||
Gross amount | 8,916 | 9,111 | |
Accumulated amortization | (7,132) | (7,181) | |
Net amount | $ 1,784 | $ 1,930 |
Leases, Weighted Average Remaining Lease Term and Discount Rate (Details) |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Weighted average remaining lease term [Abstract] | ||
Operating leases | 3 years 4 months 24 days | 3 years 8 months 12 days |
Finance leases | 4 years 1 month 6 days | 2 years 4 months 24 days |
Weighted average discount rate [Abstract] | ||
Operating leases | 6.60% | 6.60% |
Finance leases | 7.70% | 7.60% |
Leases, Components of Lease Cost (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Leases [Abstract] | ||
Operating lease cost | $ 555 | $ 569 |
Finance lease cost [Abstract] | ||
Amortization of right-of-use assets | 32 | 16 |
Interest on lease liabilities | 7 | 2 |
Total lease cost | $ 594 | $ 587 |
Leases, Other Lease Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Cash paid for amounts included in the measurement of lease liabilities [Abstract] | ||
Operating cash flows from operating leases | $ 567 | $ 569 |
Operating cash flows from finance leases | 7 | 2 |
Financing cash flows from finance leases | $ 24 | $ 16 |
Leases, Aggregate Future Lease Payment (Details) $ in Thousands |
Mar. 31, 2023
USD ($)
|
---|---|
Operating Leases [Abstract] | |
Remainder of 2023 | $ 1,448 |
2024 | 1,925 |
2025 | 1,419 |
2026 | 937 |
2027 | 644 |
Total future lease payments | 6,373 |
Less: Imputed interest | (755) |
Present value of future payments | 5,618 |
Finance Leases [Abstract] | |
Remainder of 2023 | 91 |
2024 | 122 |
2025 | 121 |
2026 | 108 |
2027 | 95 |
Total future lease payments | 537 |
Less: Imputed interest | (83) |
Present value of future payments | $ 454 |
Accrued Expenses (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|
Accrued Expenses [Abstract] | |||
Payroll, benefits and related taxes, excluding severance benefits | $ 14,475 | $ 7,620 | |
Withholding tax attributable to intercompany interest income | 473 | 43 | |
Outside service fees | 1,625 | 1,642 | |
Others | 552 | 383 | |
Accrued expenses | 17,125 | $ 9,688 | |
Early termination charges | $ 8,449 | $ 0 |
Derivative Financial Instruments, Fair Values of Outstanding Zero Cost Collar and Forward Contracts Recorded as Assets and Liabilities (Details) - Zero Cost Collars [Member] - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Asset Derivatives [Abstract] | ||
Derivative asset | $ 2 | $ 0 |
Derivative Asset, Statement of Financial Position [Extensible Enumeration] | Other Assets, Current | Other Assets, Current |
Liability Derivatives [Abstract] | ||
Derivative liabilities | $ 2,641 | $ 2,015 |
Derivative Liability, Statement of Financial Position [Extensible Enumeration] | Other Liabilities, Current | Other Liabilities, Current |
Derivative Financial Instruments, Offsetting of Derivative Assets and Liabilities (Details) - Zero Cost Collars [Member] - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Asset Derivatives [Abstract] | ||
Gross amounts of recognized assets | $ 2 | |
Gross amounts offset in the balance sheets | 0 | |
Net amounts of assets presented in the balance sheets | 2 | $ 0 |
Gross amounts not offset in the balance sheets Financial instruments | 0 | |
Gross amounts not offset in the balance sheets Cash collateral pledged | 0 | |
Net amount | 2 | |
Liability Derivatives [Abstract] | ||
Gross amounts of recognized liabilities | 2,641 | 2,015 |
Gross amounts offset in the balance sheets | 0 | 0 |
Net amounts of liabilities presented in the balance sheets | 2,641 | 2,015 |
Gross amounts not offset in the balance sheets, Financial instruments | 0 | 0 |
Gross amounts not offset in the balance sheets, Cash collateral pledged | (1,820) | (1,940) |
Net amount | $ 821 | $ 75 |
Derivative Financial Instruments, Cash Deposits (Details) - Zero Cost Collar and Forward Contracts [Member] - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Cash Deposits [Abstract] | ||
Cash deposits | $ 1,000 | $ 1,000 |
NFIK [Member] | ||
Additional Cash Collateral [Abstract] | ||
Threshold amount of cash collateral | 500 | |
Threshold additional amount of cash collateral | 1,820 | 1,840 |
Termination provisions for cash and cash equivalents | 30,000 | |
SC [Member] | ||
Cash Deposits [Abstract] | ||
Cash deposits | 1,000 | 1,000 |
Additional Cash Collateral [Abstract] | ||
Threshold amount of cash collateral | $ 500 | |
Threshold additional amount of cash collateral | $ 100 |
Fair Value Measurements (Details) - Recurring [Member] - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Carrying Value [Member] | ||
Assets [Abstract] | ||
Derivative asset | $ 2 | |
Liabilities [Abstract] | ||
Derivative liabilities | 2,641 | $ 2,015 |
Estimate of Fair Value Measurement [Member] | ||
Assets [Abstract] | ||
Derivative asset | 2 | |
Liabilities [Abstract] | ||
Derivative liabilities | 2,641 | 2,015 |
Quoted Prices in Active Markets for Identical Liability (Level 1) [Member] | ||
Assets [Abstract] | ||
Derivative asset | 0 | |
Liabilities [Abstract] | ||
Derivative liabilities | 0 | 0 |
Significant Other Observable Inputs (Level 2) [Member] | ||
Assets [Abstract] | ||
Derivative asset | 2 | |
Liabilities [Abstract] | ||
Derivative liabilities | 2,641 | 2,015 |
Significant Unobservable Inputs (Level 3) [Member] | ||
Assets [Abstract] | ||
Derivative asset | 0 | |
Liabilities [Abstract] | ||
Derivative liabilities | $ 0 | $ 0 |
Accrued Severance Benefits, Changes in Accrued Severance Benefits (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|
Accrued Severance Benefits [Abstract] | |||
Percentage of employees eligible for severance benefits | 97.00% | ||
Beginning balance | $ 48,496 | $ 51,567 | |
Provisions | 2,330 | 1,670 | |
Severance payments | (871) | (1,389) | |
Translation adjustments | (1,381) | (1,077) | |
Ending balance | 48,574 | 50,771 | |
Less: Cumulative contributions to severance insurance deposit accounts | (24,747) | (17,954) | |
The National Pension Fund | (40) | (50) | |
Group severance insurance plan | (179) | (195) | |
Accrued severance benefits, net | $ 23,608 | $ 32,572 | $ 23,121 |
Accrued Severance Benefits, Future Benefits Payments to Employees (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2023
USD ($)
| |
Future Benefits to Non-Executive Employees [Abstract] | |
Remainder of 2023 | $ 634 |
2024 | 906 |
2025 | 1,502 |
2026 | 1,829 |
2027 | 1,718 |
2028 | 3,699 |
2029 - 2033 | $ 21,043 |
Retirement age of employees | 60 years |
Korea [Member] | Minimum [Member] | |
Future Benefits to Non-Executive Employees [Abstract] | |
Korea's mandatory retirement age | 60 years |
Early Termination Charges (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Early Termination Charges [Abstract] | ||
Minimum requisite period of service for voluntary resignation program | 20 years | |
Early termination charges | $ 8,449 | $ 0 |
Foreign Currency Loss, Net (Details) $ in Thousands |
Mar. 31, 2023
USD ($)
|
Dec. 31, 2022
USD ($)
|
---|---|---|
Foreign Currency Loss, Net [Abstract] | ||
Intercompany loan balances | $ 301,860 | $ 310,988 |
Exchange rates using first base rate | 1,303.8 | 1,267.3 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Income Taxes [Abstract] | ||
Income tax expense (benefit) | $ (1,227) | $ 3,483 |
Accumulated Other Comprehensive Loss, Schedule of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Accumulated Other Comprehensive Loss [Abstract] | ||
Foreign currency translation adjustments | $ (13,236) | $ (11,328) |
Derivative adjustments | (1,757) | (1,225) |
Total | $ (14,993) | $ (12,553) |
Stock Repurchases, Expanded Stock Repurchase Program (Details) - Stock Repurchase Program [Member] - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 4 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
Aug. 31, 2022 |
Dec. 21, 2021 |
|
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Stock repurchase program, authorized amount | $ 87,500 | $ 75,000 | ||
Stock repurchase program, remaining authorized repurchase amount | $ 50,000 | |||
Stock repurchased (in shares) | 1,238,472 | 1,235,650 | ||
Aggregate purchase price | $ 11,887 | $ 12,511 | ||
Sale of aggregate purchase price (in dollars per share) | $ 9.6 | $ 10.13 |
Earnings (Loss) Per Share - Schedule of Computation of Basic and Diluted Earnings (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Basic Earnings (Loss) per Share [Abstract] | ||
Net income (loss) | $ (21,470) | $ 9,528 |
Basic weighted average common stock outstanding (in shares) | 43,390,832 | 45,603,208 |
Basic earnings (loss) per share (in dollars per share) | $ (0.49) | $ 0.21 |
Diluted Earnings (Loss) per Share [Abstract] | ||
Basic weighted average common stock outstanding (in shares) | 43,390,832 | 45,603,208 |
Net effect of dilutive equity awards (in shares) | 0 | 1,090,086 |
Diluted weighted average common stock outstanding (in shares) | 43,390,832 | 46,693,294 |
Diluted earnings (loss) per share (in dollars per share) | $ (0.49) | $ 0.2 |
Earnings (Loss) Per Share - Schedule of Antidilutive Securities Excluded from Computation of Earnings (Loss) Per Common Share (Details) - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Options [Member] | ||
Computation of Diluted Earnings (Loss) Per Share [Abstract] | ||
Outstanding units and warrants excluded from computation of diluted earnings (loss) per share/unit (in shares) | 1,116,158 | 130,000 |
Restricted Stock Units [Member] | ||
Computation of Diluted Earnings (Loss) Per Share [Abstract] | ||
Outstanding units and warrants excluded from computation of diluted earnings (loss) per share/unit (in shares) | 1,434,827 | 0 |
Commitments and Contingencies (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
|
Payments to Suppliers and Employees [Abstract] | ||
Prepayments to suppliers | $ 4,372 | $ 6,605 |
Subsequent Events (Details) - Subsequent Event [Member] - Zero Cost Collar and Forward Contracts [Member] $ in Thousands |
Apr. 30, 2023
USD ($)
|
---|---|
SC [Member] | |
Derivative Contracts [Abstract] | |
Derivative notional amount | $ 5,000 |
NFIK [Member] | |
Derivative Contracts [Abstract] | |
Derivative notional amount | $ 18,000 |
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