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Magnachip Reports Results for Fourth Quarter and Year 2021

- Fourth quarter revenue of $110.3 million was down 13.1% sequentially and down 22.8% year-over-year (YoY) due mainly to severe supply shortages especially for 28nm 12" OLED wafers; Full-year revenue of $474.2 million decreased 6.5% YoY due primarily to a revenue decrease in our OLED business due to wafer supply shortages, offset in part by strong growth in our Power business.

SEOUL, South Korea, Feb. 16, 2022 — (PRNewswire) —  Magnachip Semiconductor Corporation (NYSE: MX) ("Magnachip" or the "Company") today announced financial results for the fourth quarter and full-year 2021.

Commenting on the results for the fourth quarter of 2021, YJ Kim, Magnachip's chief executive officer stated, "For the fourth quarter, the demand and signals from our customers remained strong across the board. However, severe supply constraints continued to significantly limit our OLED revenue potential, which was partially offset by strong Power business. We reported $110.3 million in revenue and 31 cents in non-GAAP diluted EPS for the fourth quarter."

Commenting on the full-year, YJ stated, "While our 2021 revenue was negatively impacted by continuing supply shortages, especially for 28nm 12" OLED wafers, we delivered higher profitability in all of our key measures in 2021 compared to 2020. In addition, our team at Magnachip achieved critical milestones to fuel future growth; we broadened our customer base, further penetrated new applications, and enhanced our supply chain for additional manufacturing capacity, which is expected to come online in the later part of 2022. While our near-term outlook is still being challenged by persisting supply constraints, these developments reinforce our confidence and optimism about our long-term growth."

 

Q4 and 2021 Financial Highlights




In thousands of U.S dollars, except share data




GAAP




Q4 2021



Q3 2021



Q/Q change



Q4 2020



Y/Y change


Revenues





























Standard Products Business





























Display Solutions



41,298




58,528




down




29.4

%



82,705




down




50.1

%

Power Solutions



58,212




58,887




down




1.1

%



46,861




up




24.2

%

Transitional Fab 3 foundry services(1)



10,825




9,585




up




12.9

%



13,379




down




19.1

%

Gross Profit Margin



35.0

%



36.7

%



down




1.7

%pts 



26.9

%



up




8.1

%pts 

Operating Income



63,870




20,001




up




219.3

%



9,206




up




593.8

%

Net Income



53,611




10,768




up




397.9

%



66,581




down




19.5

%

Basic Earnings per Common Share



1.16




0.23




up




404.3

%



1.87




down




38.0

%

Diluted Earnings per Common Share



1.12




0.23




up




387.0

%



1.45




down




22.8

%





In thousands of U.S dollars, except share data




Non-GAAP(4)




Q4 2021



Q3 2021



Q/Q change



Q4 2020



Y/Y change


Adjusted Operating Income



14,421




22,691




down




36.4

%



15,355




down




6.1

%

Adjusted EBITDA



18,144




26,361




down




31.2

%



18,582




down




2.4

%

Adjusted Net Income



14,606




20,073




down




27.2

%



17,268




down




15.4

%

Adjusted Earnings per Common Share—Diluted



0.31




0.42




down




26.2

%



0.40




down




22.5

%

 




In thousands of U.S dollars, except share data




GAAP




2021



2020



Y/Y Change


Revenues

















Standard Products Business

















Display Solutions



205,322




299,057




down




31.3

%

Power Solutions



227,777




166,462




up




36.8

%

Transitional Fab 3 foundry services(1)



41,131




41,540




down




1.0

%

Gross Profit Margin



32.4

%



25.3

%



up




7.1

%pts 

Operating Income(2)



83,407




27,016




up




208.7

%

Net Income(3)



56,708




344,965




down




83.6

%

Basic Earnings per Common Share



1.26




9.80




down




87.1

%

Diluted Earnings per Common Share



1.21




7.54




down




84.0

%





In thousands of U.S dollars, except share data




Non-GAAP(4)




2021



2020



Y/Y Change


Adjusted Operating Income



56,135




41,584




up




35.0

%

Adjusted EBITDA



70,701




52,919




up




33.6

%

Adjusted Net Income



51,059




28,260




up




80.7

%

Adjusted Earnings per Common Share—Diluted



1.09




0.73




up




49.3

%





(1)

Following the consummation of the sale of the Foundry Services Group business and Fab 4 in Q3 2020, and for a period of up to three years, we will provide transitional foundry services to the buyer for foundry products manufactured in our fabrication facility located in Gumi ("Transitional Fab 3 Foundry Services"). Management believes that disclosing revenue of Transitional Fab 3 Foundry Services separately from the standard products business allows investors to better understand the results of our core standard products display solutions and power solutions businesses.

(2)

For the year ended December 31, 2021, operating income of $83.4 million included net gain of $35.5 million that represented $70.2 million income from the recognition of a reverse termination fee, net of professional service fees and expenses of $34.7 million incurred in connection with the contemplated merger transaction.

(3)

For the year ended December 31,2020, net income of $345.0 million included income from discontinued operations, net of tax, of $287.9 million, primarily attributable to the recognition of $287.1 million as gain on sale of the Foundry Services Group business and Fab 4. It also included income tax benefits of $46.2 million, mainly attributable to the recognition of differences between GAAP and cash tax expense of $43.9 million.

(4)

Non-GAAP financial measures are calculated based on the results from continuing operations. Management believes that non-GAAP financial measures, when viewed in conjunction with GAAP results, can provide a meaningful understanding of the factors and trends affecting our business and operations and assist in evaluating our core operating performance. However, such non-GAAP financial measures have limitations and should not be considered as a substitute for net income from continuing operations or as a better indicator of our operating performance than measures that are presented in accordance with GAAP. A reconciliation of GAAP results to non-GAAP results is included in this press release.

Q1 2022 Financial Guidance
Our near-term outlook is still being challenged by persisting supply constraints especially for 28nm 12" wafers.  While actual results may vary, looking into the next quarter, which typically presents seasonal softness, Magnachip anticipates Q1 2022 to be the bottom and currently expects:

Q4 2021 Earnings Conference Call
Magnachip will host a conference call at 5 p.m. Eastern Time on February 16, 2022. The conference call will be webcast live and also is available by dialing toll-free at 1-844-536-5472. International call-in participants can dial 1-614-999-9318. The conference ID number is 1582546. Participants are encouraged to initiate their calls at least 10 minutes in advance of the 5 p.m. Eastern Time start time to ensure a timely connection. The webcast and earnings release will be accessible at www.magnachip.com. A replay of the conference call will be available the same day and will run for 72 hours. The replay dial-in numbers are 1-404-537-3406 or toll-free at 1-855-859-2056. The access code is 1582546.

Safe Harbor for Forward-Looking Statements
Information in this release regarding Magnachip's forecasts, business outlook, expectations and beliefs are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. These statements include expectations about estimated historical or future operating results and financial performance, outlook and business plans, including first quarter 2022 revenue and gross profit margin expectations, and the impact of the COVID-19 pandemic or the emergence of various variants of the virus, escalated trade tensions and supply constraints on Magnachip's first quarter 2022 and future operating results. All forward-looking statements included in this release are based upon information available to Magnachip as of the date of this release, which may change, and we assume no obligation to update any such forward-looking statements. These statements are not guarantees of future performance and actual results could differ materially from our current expectations. Factors that could cause or contribute to such differences include, among others: the impact of changes in macroeconomic and/or general economic conditions, including those caused by or related to the COVID-19 pandemic or the emergence of various variants of the virus, other outbreaks of disease, recessions, economic instability or civil unrest; manufacturing capacity constraints or supply chain disruptions; the impact of competitive products and pricing; timely design acceptance by our customers; timely introduction of new products and technologies; ability to ramp new products into volume production; industry wide shifts in supply and demand for semiconductor products; industry and/or company overcapacity or supply constraints; effective and cost efficient utilization of manufacturing capacity; financial stability in foreign markets and the impact of foreign exchange rates; unanticipated costs and expenses or the inability to identify expenses which can be eliminated; compliance with U.S. and international trade and export laws and regulations by us, our customers and our distributors; change or ratification of local or international laws and regulations, including those related to environment, health and safety; public health issues, including the COVID-19 pandemic or the emergence of various variants of the virus; other business interruptions that could disrupt supply or delivery of, or demand for, Magnachip's products, including uncertainties regarding the impacts of the COVID-19 pandemic or the emergence of various variants of the virus that may result in factory closures, reduced workforces, scarcity of raw materials and goods produced in infected areas, as well as reduced consumer and business spending affecting demand for Magnachip's products due to government and private sector mandatory business closures, travel restrictions or the like to prevent the spread of disease; and other risks detailed from time to time in Magnachip's filings with the U.S. Securities and Exchange Commission (the "SEC"), including our Form 10-K filed on March 9, 2021 (amended on April 30, 2021), our Form 10-Qs filed on May 10, 2021, August 6, 2021 and November 5, 2021 (including that the impact of the COVID-19 pandemic, trade tensions and supply constraints may also exacerbate the risks discussed therein) and subsequent registration statements, amendments or other reports that we may file from time to time with the SEC and/or make available on our website. Magnachip assumes no obligation and does not intend to update the forward-looking statements provided, whether as a result of new information, future events or otherwise.

About Magnachip Semiconductor 
Magnachip is a designer and manufacturer of analog and mixed-signal semiconductor platform solutions for communications, IoT, consumer, computing, industrial and automotive applications. The Company provides a broad range of standard products to customers worldwide. Magnachip with more than 40 years of operating history, owns a portfolio of approximately 1,150 registered patents and pending applications, and has extensive engineering, design and manufacturing process expertise. For more information, please visit www.magnachip.com. Information on or accessible through Magnachip's website is not a part of, and is not incorporated into, this release.

CONTACT:


In the United States:

So-Yeon Jeong

Jeong Consulting

Tel. +1-408-712-6151

Investor.relations@magnachip.com


 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of U.S. dollars, except share data)
(Unaudited)




Three Months Ended



Year Ended



  December 31,

      September 30,

     December 31,

     December 31,

     December 31,



2021



2021



2020



2021



2020


Revenues:





















Net sales – standard products business


$

99,510



$

117,415



$

129,566



$

433,099



$

465,519


Net sales – transitional Fab 3 foundry services



10,825




9,585




13,379




41,131




41,540


Total revenues



110,335




127,000




142,945




474,230




507,059


Cost of sales:





















Cost of sales – standard products business



62,206




71,641




92,503




283,503




338,420


Cost of sales – transitional Fab 3 foundry services



9,525




8,772




11,981




37,184




40,322


Total cost of sales



71,731




80,413




104,484




320,687




378,742


Gross profit



38,604




46,587




38,461




153,543




128,317


Gross profit as a percentage of standard products business net sales



37.5

%



39.0

%



28.6

%



34.5

%



27.3

%

Gross profit as a percentage of total revenues



35.0

%



36.7

%



26.9

%



32.4

%



25.3

%

Operating expenses:





















Selling, general and administrative expenses



13,255




12,550




12,576




52,440




49,974


Research and development expenses



12,197




12,270




11,604




51,212




45,698


Merger-related costs (income), net



(49,369)




1,552




653




(35,527)




653


Early termination and other charges, net



(1,349)




214




4,422




2,011




4,976


Total operating expenses (income)



(25,266)




26,586




29,255




70,136




101,301


Operating income:



63,870




20,001




9,206




83,407




27,016


Interest expense



(132)




(113)




(1,625)




(1,371)




(18,147)


Foreign currency gain (loss), net



147




(7,579)




13,256




(11,853)




(382)


Loss on early extinguishment of borrowings, net









(766)







(766)


Other income, net



947




1,608




767




3,786




3,110


Income from continuing operations before income tax expense



64,832




13,917




20,838




73,969




10,831


Income tax expense (benefit)



11,221




3,149




(47,064)




17,261




(46,228)


Income from continuing operations



53,611




10,768




67,902




56,708




57,059


Income (loss) from discontinued operations, net of tax









(1,321)







287,906


Net income


$

53,611



$

10,768



$

66,581



$

56,708



$

344,965


Basic earnings (loss) per common share—





















Continuing operations


$

1.16



$

0.23



$

1.91



$

1.26



$

1.62


Discontinued operations









(0.04)







8.18


Total


$

1.16



$

0.23



$

1.87



$

1.26



$

9.80


Diluted earnings (loss) per common share—





















Continuing operations


$

1.12



$

0.23



$

1.47



$

1.21



$

1.35


Discontinued operations









(0.02)







6.19


Total


$

1.12



$

0.23



$

1.45



$

1.21



$

7.54


Weighted average number of shares—





















Basic



46,369,520




46,449,234




35,582,966




44,879,412




35,213,525


Diluted



47,691,816




47,808,457




47,062,903




47,709,373




46,503,586



MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share data)
(Unaudited)



December 31, 


2021

2020

Assets



Current assets



Cash and cash equivalents

$  279,547

$  279,940

Accounts receivable, net

50,954

64,390

Inventories, net

39,370

39,039

Other receivables

25,895

4,338

Prepaid expenses

7,675

7,332

Hedge collateral

3,060

5,250

Other current assets

2,619

9,321

Total current assets

409,120

409,610

Property, plant and equipment, net

107,882

96,383

Operating lease right-of-use assets

4,275

4,632

Intangible assets, net

2,377

2,727

Long-term prepaid expenses

8,243

4,058

Deferred income taxes

41,095

44,541

Other non-current assets

10,662

9,739

Total assets

$  583,654

$  571,690

Liabilities and Stockholders' Equity



Current liabilities



Accounts payable

$     37,593

$     52,164

Other accounts payable

6,289

2,531

Accrued expenses

20,071

16,241

Accrued income taxes

11,823

12,398

Operating lease liabilities

2,323

2,210

Current portion of long-term borrowings, net

83,479

Other current liabilities

7,382

4,595

Total current liabilities

85,481

173,618

Accrued severance benefits, net

33,064

40,462

Non-current operating lease liabilities

1,952

2,422

Other non-current liabilities

10,395

9,588

Total liabilities

130,892

226,090

Commitments and contingencies



Stockholders' equity



Common stock, $0.01 par value, 150,000,000 shares authorized, 55,905,320 shares issued and 45,659,304 outstanding at December 31, 2021 and 44,943,854 shares issued and 35,783,347 outstanding at December 31, 2020

559

450

Additional paid-in capital

241,197

163,010

Retained earnings

343,542

286,834

Treasury stock, 10,246,016 shares at December 31, 2021 and 9,160,507 shares at December 31, 2020, respectively

(130,306)

(108,397)

Accumulated other comprehensive income (loss)

(2,230)

3,703

Total stockholders' equity

452,762

345,600

Total liabilities and stockholders' equity

$   583,654

$   571,690

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
(Unaudited)



 Three Months Ended



Year Ended




December 31,



December 31,



December 31,




2021



2021



2020


Cash flows from operating activities













Net income


$

53,611



$

56,708



$

344,965


Adjustments to reconcile net income to net cash provided by operating activities













Depreciation and amortization



3,663




14,239




16,481


Provision for severance benefits



2,768




8,282




16,743


Amortization of debt issuance costs and original issue discount






261




2,220


Loss (gain) on foreign currency, net



(175)




32,432




(23,233)


Restructuring and other charges









3,502


Merger-related costs (income), net



(12,142)




(12,142)




360


Provision for inventory reserves



760




2,244




3,695


Stock-based compensation



1,648




7,704




6,699


Loss on early extinguishment of borrowings, net









766


Gain on sale of discontinued operations









(287,117)


Deferred income tax assets



893




918




(44,441)


Other, net



(1,030)




(613)




217


Changes in operating assets and liabilities













Accounts receivable, net



809




7,505




(19,268)


Unbilled accounts receivable, net









14,260


Inventories



(1,378)




(5,939)




(816)


Other receivables



2,949




(2,338)




6,954


Other current assets



4,464




12,397




13,561


Accounts payable



4,755




(11,437)




3,960


Other accounts payable



(4,084)




(7,813)




(12,000)


Accrued expenses



(765)




(2,406)




(29,116)


Accrued income taxes



8,307




(1)




10,825


Deferred revenue



863




(131)




2,174


Other current liabilities



(104)




1,445




279


Other non-current liabilities



(732)




(1,398)




3,521


Contributions to severance insurance deposit accounts



(5,526)




(5,688)




(11,921)


Payment of severance benefits



(1,907)




(6,679)




(12,076)


Other, net



80




193




(3,724)


Net cash provided by operating activities



57,727




87,743




7,470


Cash flows from investing activities













Proceeds from settlement of hedge collateral



1,219




5,214




13,762


Payment of hedge collateral



(605)




(3,349)




(8,839)


Proceeds from disposal of property, plant and equipment



1,419




1,446




65


Purchase of property, plant and equipment



(18,844)




(32,212)




(36,100)


Payment for intellectual property registration



(159)




(614)




(741)


Collection of guarantee deposits






3,192




1,024


Payment of guarantee deposits



(41)




(5,001)




(1,236)


Proceeds from sale of discontinued operations









350,553


Other, net



16




(114)




(6)


Net cash provided by (used in) investing activities



(16,995)




(31,438)




318,482


Cash flows from financing activities













Repurchase of long-term borrowings









(224,250)


Proceeds from exercise of stock options



359




4,279




3,918


Acquisition of treasury stock






(1,653)




(1,125)


Acquisition of stock under accelerated stock repurchase agreement



(20,073)




(20,073)





Payment under accelerated stock repurchase agreement



(17,427)




(17,427)





Repayment of financing related to water treatment facility arrangement



(136)




(563)




(546)


Others



(58)




(107)




(278)


Net cash used in financing activities



(37,335)




(35,544)




(222,281)


Effect of exchange rates on cash and cash equivalents



(151)




(21,154)




24,612


Net increase (decrease) in cash and cash equivalents



3,246




(393)




128,283


Cash and cash equivalents at beginning of period



276,301




279,940




151,657


Cash and cash equivalents at end of period


$

279,547



$

279,547



$

279,940


 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
RECONCILIATION OF OPERATING INCOME TO ADJUSTED OPERATING INCOME
(In thousands of U.S. dollars)
(Unaudited)




Three Months Ended



Year Ended



December 31,


September 30,


December 31,


December 31,


December 31,



2021


2021


2020


2021


2020


Operating income


$

63,870



$

20,001



$

9,206



$

83,407



$

27,016


Adjustments:





















Equity-based compensation expense



1,648




2,005




1,945




7,704




6,311


Inventory reserve related to Huawei impact of downstream trade restrictions



(379)




(1,081)




(871)




(1,460)




1,460


Expenses related to Fab 3 power outage















1,168


Merger-related costs (income), net



(49,369)




1,552




653




(35,527)




653


Early termination and other charges, net



(1,349)




214




4,422




2,011




4,976


Adjusted operating income


$

14,421



$

22,691



$

15,355



$

56,135



$

41,584


We present Adjusted Operating Income as a supplemental measure of our performance. We define Adjusted Operating Income for the periods indicated as operating income adjusted to exclude (i) Equity-based compensation expense, (ii) Inventory reserve related to Huawei impact of downstream trade restrictions, (iii) Expenses related to Fab 3 power outage, (iv) Merger-related costs (income), net and (v) Early termination and other charges, net.

For the year ended December 31, 2021, we recorded in our consolidated statement of operations net gain of $35,527 thousand that represented income of $70,200 thousand from the recognition of a reverse termination fee, net of professional service fees and expenses of $34,673 thousand incurred in connection with the contemplated merger transaction of the Company that was terminated in December 2021. For the same period, we also recorded $3,430 thousand of non-recurring professional service fees and expenses incurred in connection with the regulatory requests, partially offset by $1,419 thousand gain on sale of certain legacy equipment of the closed back-end line in our fabrication facility in Gumi (which was closed during the year ended December 31, 2018).

For the year ended December 31, 2020, we recorded in our consolidated statement of operations $4,422 thousand of early termination and other charges, net, in connection with the headcount reduction program offered and paid to the employees during the fourth quarter of 2020. During the same period, we also recorded $554 thousand of non-recurring professional service fees and expenses incurred in connection with certain treasury and finance initiatives.

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA AND ADJUSTED NET INCOME
(In thousands of U.S. dollars, except share data)
(Unaudited)




Three Months Ended



Year Ended



December 31,


September 30,


December 31,


December 31,


December 31,



2021


2021


2020


2021


2020


Income from continuing operations


$

53,611



$

10,768



$

67,902



$

56,708



$

57,059


Adjustments:





















Interest expense, net



(726)




(439)




863




(1,238)




15,404


Income tax expense (benefit)



11,221




3,149




(47,064)




17,261




(46,228)


Depreciation and amortization



3,663




3,578




3,148




14,239




11,116


EBITDA



67,769




17,056




24,849




86,970




37,351


Equity-based compensation expense



1,648




2,005




1,945




7,704




6,311


Foreign currency loss (gain), net



(147)




7,579




(13,256)




11,853




382


Derivative valuation loss (gain), net



(29)




(237)




74




(123)




(148)


Loss on early extinguishment of borrowings, net









766







766


Inventory reserve related to Huawei impact of downstream trade restrictions



(379)




(1,081)




(871)




(1,460)




1,460


Expenses related to Fab 3 power outage















1,168


Merger-related costs (income), net



(49,369)




1,552




653




(35,527)




653


Early termination and other charges, net



(1,349)




(513)




4,422




1,284




4,976


Adjusted EBITDA



18,144




26,361




18,582




70,701




52,919


Income from continuing operations


$

53,611



$

10,768



$

67,902



$

56,708



$

57,059


Adjustments:





















Equity-based compensation expense



1,648




2,005




1,945




7,704




6,311


Foreign currency loss (gain), net



(147)




7,579




(13,256)




11,853




382


Derivative valuation loss (gain), net



(29)




(237)




74




(123)




(148)


Loss on early extinguishment of borrowings, net









766







766


Inventory reserve related to Huawei impact of downstream trade restrictions



(379)




(1,081)




(871)




(1,460)




1,460


Expenses related to Fab 3 power outage















1,168


Merger-related costs (income), net



(49,369)




1,552




653




(35,527)




653


Early termination and other charges, net



(1,349)




(513)




4,422




1,284




4,976


GAAP and cash tax expense difference



907







(43,874)




907




(43,874)


Income tax effect on non-GAAP adjustments



9,713







(493)




9,713




(493)


Adjusted Net Income


$

14,606



$

20,073



$

17,268



$

51,059



$

28,260


Adjusted Net Income per common share—





















- Basic


$

0.31



$

0.43



$

0.49



$

1.14



$

0.80


- Diluted


$

0.31



$

0.42



$

0.40



$

1.09



$

0.73


Weighted average number of shares – basic



46,369,520




46,449,234




35,582,966




44,879,412




35,213,525


Weighted average number of shares – diluted



47,691,816




47,808,457




47,062,903




47,709,373




46,503,586


 

We present Adjusted EBITDA and Adjusted Net Income as supplemental measures of our performance. We define Adjusted EBITDA for the periods indicated as EBITDA (as defined below), adjusted to exclude (i) Equity-based compensation expense, (ii) Foreign currency loss (gain), net, (iii) Derivative valuation loss (gain), net, (iv) Loss on early extinguishment of borrowings, net, (v) Inventory reserve related to Huawei impact of downstream trade restrictions, (vi) Expenses related to Fab 3 power outage, (vii) Merger-related costs (income), net and (viii) Early termination and other charges, net.

EBITDA for the periods indicated is defined as Income from continuing operations before interest expense, net, income tax expense (benefit) and depreciation and amortization. We prepare Adjusted Net Income by adjusting income from continuing operations to eliminate the impact of a number of non-cash expenses and other items that may be either one time or recurring that we do not consider to be indicative of our core ongoing operating performance. We believe that Adjusted Net Income is particularly useful because it reflects the impact of our asset base and capital structure on our operating performance. We define Adjusted Net Income for the periods as income from continuing operations, adjusted to exclude (i) Equity-based compensation expense, (ii) Foreign currency loss (gain), net, (iii) Derivative valuation loss (gain), net, (iv) Loss on early extinguishment of borrowings, net, (v) Inventory reserve related to Huawei impact of downstream trade restrictions, (vi) Expenses related to Fab 3 power outage, (vii) Merger-related costs (income), net, (viii) Early termination and other charges, net, (ix) GAAP and cash tax expense difference and (x) Income tax effect on non-GAAP adjustments.

For the year ended December 31, 2021, we recorded in our consolidated statement of operations net gain of $35,527 thousand that represented income of $70,200 thousand from the recognition of a reverse termination fee, net of professional service fees and expenses of $34,673 thousand incurred in connection with the contemplated merger transaction of the Company that was terminated in December 2021. For the same period, we also recorded $3,430 thousand of non-recurring professional service fees and expenses incurred in connection with the regulatory requests, partially offset by $1,419 thousand gain on sale of certain legacy equipment of the closed back-end line in our fabrication facility in Gumi (which was closed during the year ended December 31, 2018 and $727 thousand legal settlement gain related to certain expenses incurred in prior periods in connection with our legacy Fab 4 (which was sold during the year ended December 31, 2020) and awarded in the third quarter of 2021.

For the year ended December 31, 2020, we recorded in our consolidated statement of operations $4,422 thousand of early termination and other charges, net in connection with the headcount reduction program offered and paid to the employees during the fourth quarter of 2020. During the same period, we also recorded $554 thousand of non-recurring professional service fees and expenses incurred in connection with certain treasury and finance initiatives.

 

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SOURCE Magnachip Semiconductor Corporation

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Company Name: Magnachip Semiconductor Corporation
Financial data for Magnachip Semiconductor Corporation