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. |
26 |
|||||
Item 3. |
44 |
|||||
Item 4. |
45 |
|||||
46 |
||||||
Item 1. |
46 |
|||||
Item 1A. |
46 |
|||||
Item 2. |
46 |
|||||
Item 6. |
47 |
|||||
48 |
Item 1. |
Interim Consolidated Financial Statements (Unaudited) |
March 31, 2022 |
December 31, 2021 |
|||||||
(In thousands of U.S. dollars, except share data) |
||||||||
Assets |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Accounts receivable, net |
||||||||
Inventories, net |
||||||||
Other receivables (Notes 1 6 and 18 ) |
||||||||
Prepaid expenses |
||||||||
Hedge collateral (Note 7) |
||||||||
Other current assets (Note 1 7 ) |
||||||||
Total current assets |
||||||||
Property, plant and equipment, net |
||||||||
Operating lease right-of-use |
||||||||
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 1 7 ) |
||||||||
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, 2022 |
March 31, 2021 |
|||||||
(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 |
||||||||
Merger-related costs |
— | |||||||
Other charges |
— | |||||||
|
|
|
|
|||||
Total operating expenses |
||||||||
|
|
|
|
|||||
Operating income (loss) |
( |
) | ||||||
Interest expense |
( |
) | ( |
) | ||||
Foreign currency loss, net |
( |
) | ( |
) | ||||
Other income, net |
||||||||
|
|
|
|
|||||
Income (loss) before income tax expense |
( |
) | ||||||
Income tax expense |
||||||||
|
|
|
|
|||||
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, 2022 |
March 31, 2021 |
|||||||
(In thousands of US dollars) |
||||||||
Net income (loss) |
$ | $ | ( |
) | ||||
Other comprehensive loss |
||||||||
Foreign currency translation adjustments |
( |
) | ( |
) | ||||
Derivative adjustments |
||||||||
Fair valuation of derivatives |
( |
) | ( |
) | ||||
Reclassification adjustment for loss (gain) on derivatives included in net income (loss) |
( |
) | ||||||
|
|
|
|
|||||
Total other comprehensive loss |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total comprehensive income (loss) |
$ | $ | ( |
) | ||||
|
|
|
|
Additional Paid-In Capital |
Accumulated Other Comprehensive Income (Loss) |
|||||||||||||||||||||||||||
Common Stock |
Retained Earnings |
Treasury Stock |
Total |
|||||||||||||||||||||||||
(In thousands of U.S. dollars, except share data) |
Shares |
Amount |
||||||||||||||||||||||||||
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, 2021: |
||||||||||||||||||||||||||||
Balance at December 31, 2020 |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||||||
Stock-based compensation |
— | — | — | — | — | |||||||||||||||||||||||
Exchange of exchangeable senior notes |
— | — | — | |||||||||||||||||||||||||
Exercise of stock options |
— | — | — | |||||||||||||||||||||||||
Settlement of restricted stock units |
( |
) | — | — | — | — | ||||||||||||||||||||||
Acquisition of treasury stock |
( |
) | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||
Other comprehensive loss, net |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Net loss |
— | — | — | ( |
) | — | — | ( |
) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at March 31, 2021 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
||||||||
March 31, 2022 |
March 31, 2021 |
|||||||
(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 |
||||||||
Amortization of debt issuance costs and original issue discount |
— | |||||||
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 |
( |
) | ( |
) | ||||
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 used in financing activities |
||||||||
Effect of exchange rates on cash and cash equivalents |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Net increase 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 interest |
$ | — | $ | |||||
Cash paid for income taxes |
$ | $ | ||||||
Non-cash investing activities |
||||||||
Property, plant and equipment additions in other accounts payable |
$ | $ | ||||||
Non-cash financing activities |
||||||||
Exchange of exchangeable senior notes into common stock |
$ | — | $ | |||||
Acquisition of treasury stock to satisfy the tax withholding obligations in connection with equity-based compensation |
$ | ( |
) | $ | ( |
) |
March 31, 2022 |
December 31, 2021 |
|||||||
Finished goods |
$ | $ | ||||||
Semi-finished goods and work-in-process |
||||||||
Raw materials |
||||||||
Materials in-transit |
||||||||
Less: inventory reserve |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Inventories, net |
$ | $ | ||||||
|
|
|
|
Three Months Ended |
||||||||
March 31, 2022 |
March 31, 2021 |
|||||||
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, 2022 |
December 31, 2021 |
|||||||
Buildings and related structures |
$ | $ | ||||||
Machinery and equipment |
||||||||
Finance lease right-of-use |
||||||||
Others |
||||||||
|
|
|
|
|||||
Less: accumulated depreciation |
( |
) | ( |
) | ||||
Land |
||||||||
Construction in progress |
||||||||
|
|
|
|
|||||
Property, plant and equipment, net |
$ | $ | ||||||
|
|
|
|
March 31, 2022 |
||||||||||||
Gross amount |
Accumulated amortization |
Net amount |
||||||||||
Intellectual property assets |
$ | $ | ( |
) | $ | |||||||
|
|
|
|
|
|
|||||||
Intangible assets |
$ | $ | ( |
) | $ | |||||||
|
|
|
|
|
|
December 31, 2021 |
||||||||||||
Gross amount |
Accumulated amortization |
Net amount |
||||||||||
Intellectual property assets |
$ | $ | ( |
) | $ | |||||||
|
|
|
|
|
|
|||||||
Intangible assets |
$ | $ | ( |
) | $ | |||||||
|
|
|
|
|
|
Leases |
Classification |
March 31, 2022 |
December 31, 2021 |
|||||||
Assets |
||||||||||
Operating lease |
Operating lease right-of-use assets |
$ | $ | |||||||
Finance lease |
and equipment, net | |||||||||
|
|
|
|
|||||||
Total lease assets |
$ | $ | ||||||||
|
|
|
|
|||||||
Liabilities |
||||||||||
Current |
||||||||||
Operating |
Operating lease liabilities | $ | $ | |||||||
Finance |
s | |||||||||
Non-current |
||||||||||
Operating |
Non-current operating lease liabilities |
|||||||||
Finance |
non-current liabilities |
|||||||||
|
|
|
|
|||||||
Total lease liabilities |
$ | $ | ||||||||
|
|
|
|
|
|
March 31, 2022 |
|
December 31, 2021 |
| |||
Weighted average remaining lease term |
||||||||
Operating leases |
||||||||
Finance leases |
||||||||
Weighted average discount rate |
||||||||
Operating leases |
% | % | ||||||
Finance leases |
% | % |
|
|
Three Months Ended |
| |||||
|
|
March 31, 2022 |
|
|
March 31, 2021 |
| ||
Operating lease cost |
$ | $ | ||||||
Finance lease cost |
||||||||
Amortization of right-of-use |
||||||||
Interest on lease liabilities |
||||||||
|
|
|
|
|||||
Total lease cost |
$ | $ | ||||||
|
|
|
|
Three Months Ended |
||||||||
March 31, 2022 |
March 31, 2021 |
|||||||
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 2022 |
$ | $ | ||||||
2023 |
||||||||
2024 |
||||||||
2025 |
||||||||
|
|
|
|
|||||
Total future lease payments |
||||||||
Less: Imputed interest |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Present value of future payments |
$ | $ | ||||||
|
|
|
|
March 31, 2022 |
December 31, 2021 |
|||||||
Payroll, benefits and related taxes, excluding severance benefits |
$ | $ | ||||||
Withholding tax attributable to intercompany interest income |
||||||||
Outside service fees |
||||||||
Merger-related costs |
||||||||
Others |
||||||||
|
|
|
|
|||||
Accrued expenses |
$ | $ | ||||||
|
|
|
|
Date of transaction |
Total notional amount |
Month of settlement | ||||
|
$ | |||||
|
$ | |||||
|
$ | |||||
|
$ |
Date of transaction |
Total notional amount |
Month of settlement | ||||
|
$ | |||||
|
$ |
Derivatives designated as hedging instruments: |
March 31, 2022 |
December 31, 2021 |
||||||||
Asset Derivatives: |
||||||||||
Zero cost collars |
Other non-current assets |
$ | $ | |||||||
Liability Derivatives: |
||||||||||
Zero cost collars |
Other current liabilities | $ | $ | |||||||
Zero cost collars |
Other non-current liabilities |
$ | $ |
As of March 31, 2022 |
Gross amounts of recognized assets/liabilities |
Gross amounts offset in the balance sheets |
Net amounts of assets/liabilities presented in the balance sheets |
Gross amounts not offset in the balance sheets |
Net amount |
|||||||||||||||||||
Financial instruments |
Cash collateral pledged |
|||||||||||||||||||||||
Asset Derivatives: |
||||||||||||||||||||||||
Zero cost collars |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Liability Derivatives: |
||||||||||||||||||||||||
Zero cost collars |
$ | $ | $ | $ | $ | ( |
$ | ( |
As of December 31, 2021 |
Gross amounts of recognized liabilities |
Gross amounts offset in the balance sheets |
Net amounts of liabilities presented in the balance sheets |
Gross amounts not offset in the balance sheets |
Net amount |
|||||||||||||||||||
Financial instruments |
Cash collateral pledged |
|||||||||||||||||||||||
Liability Derivatives: |
||||||||||||||||||||||||
Zero cost collars |
$ | $ | $ | $ | $ | ( |
$ | ( |
Derivatives in ASC 815 Cash Flow Hedging Relationships |
Amount of Loss Recognized in AOCI on Derivatives |
Location/Amount of Gain (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, |
||||||||||||||||||||||||||||||
2022 |
2021 |
2022 |
2021 |
2022 |
2021 |
|||||||||||||||||||||||||||
Zero cost collars |
$ | ( |
) | $ | ( |
) | Net sales | $ | ( |
) | $ | Other income, net | $ | ( |
) | $ | ( | |||||||||||||||
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | $ | ( | ||||||||||||||||||
Counterparties |
March 31, 2022 |
December 31, 2021 |
||||||
SC |
$ | $ | ||||||
Total |
$ | $ | ||||||
Carrying Value March 31, 2022 |
Fair Value Measurement March 31, 2022 |
Quoted Prices in Active Markets for Identical Asset / Liability (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
||||||||||||||||
Assets: |
||||||||||||||||||||
Derivative assets (other non-current assets) |
$ | $ | — | $ | — | |||||||||||||||
Liabilities: |
||||||||||||||||||||
Derivative liabilities (other current liabilities) |
$ | $ | — | $ | — | |||||||||||||||
Derivative liabilities (other non-current liabilities) |
$ | $ | — | $ | — |
Carrying Value December 31, 2021 |
Fair Value Measurement December 31, 2021 |
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, 2022 |
March 31, 2021 |
|||||||
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 2022 |
$ | |||
2023 |
||||
2024 |
||||
2025 |
||||
2026 |
||||
2027 |
||||
2028 – 2032 |
Three Months Ended |
||||||||
March 31, 2022 |
March 31, 2021 |
|||||||
Revenues |
||||||||
Standard products business |
||||||||
Display Solutions |
$ | $ | ||||||
Power Solutions |
||||||||
Total standard products business |
$ | $ | ||||||
Transitional Fab 3 foundry services |
||||||||
Total revenues |
$ | $ | ||||||
Three Months Ended |
||||||||
March 31, 2022 |
March 31, 2021 |
|||||||
Gross Profit |
||||||||
Standard products business |
$ | $ | ||||||
Transitional Fab 3 foundry services |
||||||||
Total gross profit |
$ | $ | ||||||
Three Months Ended |
||||||||
March 31, 2022 |
March 31, 2021 |
|||||||
Korea |
$ | $ | ||||||
Asia Pacific (other than Korea) |
||||||||
United States |
||||||||
Europe |
||||||||
Others |
||||||||
Total |
$ | $ | ||||||
March 31, 2022 |
December 31, 2021 |
|||||||
Foreign currency translation adjustments |
$ | ( |
) | $ | ( |
) | ||
Derivative adjustments |
( |
) | ( |
) | ||||
Total |
$ | ( |
) | $ | ( |
) | ||
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, 2021 |
Foreign currency translation adjustments |
Derivative adjustments |
Total |
|||||||||
Beginning balance |
$ | $ | $ | |||||||||
Other comprehensive loss before reclassifications |
( |
) | ( |
) | ( |
) | ||||||
Amounts reclassified from accumulated other comprehensive income |
— | ( |
) | ( |
) | |||||||
Net current-period other comprehensive loss |
( |
) | ( |
) | ( |
) | ||||||
Ending balance |
$ | $ | ( |
) | $ | ( |
) | |||||
Three Months Ended |
||||||||
March 31, 2022 |
March 31, 2021 |
|||||||
(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 |