eastunder
9 years ago
SEOUL, South Korea and SAN JOSE, Calif., May 5, 2016 /PRNewswire/ -- MagnaChip Semiconductor Corporation ("MagnaChip") (NYSE: MX), a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products, today announced financial results for the first quarter ended March 31, 2016.
Revenue for the first quarter of 2016, a typically seasonally soft quarter, was $148.1 million, a 2.8% decline compared to $152.4 million for the fourth quarter of 2015, and down 10.2% compared to $164.9 million for the first quarter of 2015. Revenue was better-than-expected despite the closure of MagnaChip's legacy 6" semiconductor fab during the first quarter because of the strength in demand serviced by the company's 8" fabs. Foundry Services revenue in the first quarter of 2016 was $60.0 million and Standard Products Group revenue was $88.0 million.
Gross profit was $34.2 million, or 23.1% as a percent of revenue for the first quarter of 2016. This compared with gross profit of $29.9 million, or 19.6%, for the fourth quarter of 2015 and $35.0 million, or 21.2%, for the first quarter of 2015. Foundry gross profit was 23.8% and Standard Products Group gross profit was 23.6% in the first quarter of 2016.
Net income, on a GAAP basis, for the first quarter of 2016 totaled $8.1 million, or $0.23 per basic and diluted share, compared to net income of $22.9 million, or $0.66 per basic and diluted share in the fourth quarter of 2015 and a net loss of $20.0 million or $0.59 per basic share, for the first quarter of 2015. Net income in the first quarter of 2016 included a restructuring gain of $7.8 million from the sale of the Company's legacy 6" fab equipment, and a net foreign currency gain of $8.2 million, almost all of which is non-cash.
"Revenue in the first quarter exceeded our prior guidance, fueled by a 42% sequential increase in total sales for our AMOLED display drivers ICs, primarily for smartphones," said YJ Kim, Chief Executive Officer of MagnaChip. Mr. Kim added, "MagnaChip is well positioned to benefit from the growing adoption of AMOLED technology in a range of mobile and wearable devices such as smartphones, tablets, smartwatches and virtual reality headsets, as well as in large displays for high-end televisions."
Chief Financial Officer Jonathan Kim said, "As part of MagnaChip's focus on managing costs, we closed a legacy 6" fab in the first quarter." Mr. Kim added, "While we continue to explore opportunities to further control spending and strengthen our balance sheet, we also are devoting considerable attention and financial resources to support revenue growth and a gradual recovery in our business that we expect over the course of this year."
Adjusted Net Loss, a non-GAAP measurement, for the first quarter of 2016 totaled $2.8 million, or $0.08 per basic share, compared to Adjusted Net Income, also a non-GAAP measurement, of $5.2 million, or $0.15 per basic and diluted share, in the fourth quarter of 2015 and Adjusted Net Loss of $9.6 million, or $0.28 per basic share, for the first quarter of 2015.
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 MagnaChip's business and operations. However, such non-GAAP financial measures have limitations and should not be considered as a substitute for net income 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 following the financial statements.
Cash and cash equivalents totaled $73.5 million at the end of the first quarter, essentially flat compared with the fourth quarter when excluding the one-time effects in the fourth quarter of pre-paid deposits for the sale of our 6" fab equipment and prepayments received for end-of-life products related to the 6" fab.
http://www.streetinsider.com/Press+Releases/MagnaChip+Reports+First+Quarter+2016+Financial+Results/11593622.html
eastunder
10 years ago
MagnaChip Reports First Quarter 2015 Financial Results
- Reports Revenue of $164.9 million and gross margin of 21.2%
- Announces YJ Kim as CEO and a Member of Board of Directors; Jonathan Kim as CFO
- Launched a Comprehensive Cost and Portfolio Optimization Program; Engages Independent Business Advisory Firm to Assist with Evaluation
- Combines Display and Power Solutions into Newly Formed Standard Products Group
- Names a Chief Compliance Officer to Executive Team
SEOUL, South Korea and CUPERTINO, Calif., May 28, 2015 /PRNewswire/ -- MagnaChip Semiconductor Corporation ("MagnaChip") (NYSE: MX), a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products, today announced financial results for the first quarter ended March 31, 2015.
The Company also announced the appointment of YJ Kim, a semiconductor industry veteran, as Chief Executive Officer and a member of the Company's Board of Directors, and Jonathan Kim as Executive Vice President and Chief Financial Officer. Both held the same posts on an interim basis for the past year. In addition, the Company named Theodore Kim as Executive Vice President and Chief Compliance Officer, a newly created position, reporting directly to the Board of Directors. He continues to serve as General Counsel.
On behalf of MagnaChip's Board, Chairman Doug Norby said, "I am pleased that, after conducting a broad and thorough search process, the Board has unanimously appointed YJ to lead MagnaChip and Jonathan to serve as CFO. As interim CEO, YJ provided strong leadership and strategic vision to the Company during this important period. Jonathan successfully led the completion of the restatement process, and has proven himself to be a very capable financial executive. The Board looks forward to working with the two leaders to improve MagnaChip's performance."
Revenue for the first quarter of 2015 was $164.9 million, a 1.7% decline compared to $167.7 million for the fourth quarter of 2014 and flat compared to $164.2 million for the first quarter of 2014.
Gross profit was $35.0 million or 21.2%, as a percent of revenue, for the first quarter of 2015. This compares to gross profit of $34.5 million or 20.6% for the fourth quarter of 2014 and $40.3 million or 24.5% for the first quarter of 2014.
Net loss, on a GAAP basis, for the first quarter of 2015 totaled $20.0 million or $0.59 per diluted share. This compares to a net loss of $63.8 million or $1.87 per diluted share for the fourth quarter of 2014 and a net loss of $21.6 million or $0.63 per diluted share for the first quarter of 2014. Net loss was impacted primarily by lower revenue and gross margin as well as by substantial accounting, legal and other related costs associated with our restatement and certain related litigation and other regulatory investigations and actions.
"We continue to face major challenges as a result of strategic missteps in the past, so we have implemented a comprehensive cost and portfolio optimization program to position MagnaChip for growth over the long-term while we also work to improve fab utilization and boost engineering efficiencies," said CEO YJ Kim. "Our goal is to broaden our customer base, expand into new markets including sensors and the Internet of Things (IoT), accelerate product innovation and improve engineering productivity. To help achieve these goals and streamline product functions, we recently combined our Display Solutions and Power Solutions divisions into a single Standard Products Group."
MagnaChip also announced today that HK Kim, Executive Vice President and General Manager of the Power Solutions Division, and Brent Rowe, Executive Vice President of Worldwide Sales, have resigned. The Company announced earlier this month that TY Hwang, formerly the President and Chief Operating Officer, resigned effective April 30.
"We devoted substantial efforts and resources to getting caught up on our delayed SEC filings. With today's filing of our 2014 10-K and with the filing of our 10-Q for the first quarter of 2015, which we expect to file within the next two weeks, we will be current with our filings and plan to be a timely filer starting in the second quarter," said Jonathan Kim, Chief Financial Officer. "We are committed to achieving and maintaining a strong internal control over financial reporting and financial reporting integrity." In addition, Mr. Kim said, "We have engaged a global consulting firm with considerable expertise in cost and portfolio optimization to help us focus on strategies to emerge from our current challenges and to drive our business forward and return long-term value to our shareholders."
Adjusted net loss, a non-GAAP measurement, for the first quarter of 2015 totaled $9.6 million or $0.28 per diluted share compared to an adjusted net loss of $10.8 million or $0.32 per diluted share for the fourth quarter of 2014 and an adjusted net loss of $6.4 million or $0.19 per diluted share for the first quarter of 2014.
Management believes that non-GAAP financial measures, when viewed in conjunction with GAAP results, can provide a more meaningful understanding of the factors and trends affecting MagnaChip's business and operations. However, such non-GAAP financial measures have limitations and should not be considered as a substitute for net income 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 following the financial statements.
Combined cash balances (cash and cash equivalents) totaled $91.4 million at the end of the first quarter of 2015, a decrease of $11.0 million from the end of the prior quarter.
First Quarter and Recent Company Events
•Appointed YJ Kim as CEO and Jonathan Kim as CFO
•Appointed Theodore Kim as Chief Compliance Officer
•Announced Diversified Products for Internet of Things Applications
•Announced 5th Annual Foundry Technology Symposium in Taiwan, California, and Texas
•Introduced Automotive Qualified Display Driver ICs for Major Japanese LCM Maker
•Completed Review and Restatement of Financial Results
•Introduced New Step-Down LED Backlight Drivers
•Offered Enhanced 0.13 Micron Embedded EEPROM Process Technology
The Company today filed its Annual Report on Form 10-K for the year ended Dec. 31, 2014, with the Securities and Exchange Commission. A copy of this and other MagnaChip SEC filings is available at www.magnachip.com.
Business Outlook
For the second quarter of 2015, MagnaChip anticipates:
•Revenue will be in the range of $155 million to $165 million.
•Gross margin will be 17.0% to 19.0% as a percent of revenue.
eastunder
10 years ago
3/6/15 MagnaChip Adopts Shareholder Rights Plan
http://www.streetinsider.com/Press+Releases/MagnaChip+Adopts+Shareholder+Rights+Plan/10347882.html
SEOUL, South Korea and CUPERTINO, Calif., March 6, 2015 /PRNewswire/ -- The Board of Directors of MagnaChip Semiconductor Corporation ("MagnaChip" or the "Company") (NYSE: MX), a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products, announced today that it has adopted a stockholder rights plan following evaluation and consultation with outside counsel.
The Board of Directors implemented the plan to ensure that all stockholders realize the long-term value of their investment. The rights plan is designed to reduce the likelihood that any person or group would gain control of the Company through open market accumulation without appropriately compensating the Company's stockholders for such control or allowing the Board and the stockholders sufficient time to make informed judgments. The rights plan will not prevent a takeover, but will incentivize anyone seeking to acquire the Company to negotiate with the Board of Directors before making a takeover attempt.
Pursuant to the plan, the Board of Directors declared a dividend of one preferred stock purchase right (a "Right") on each outstanding share of the Company's common stock as of March 16, 2015. If a person or group of affiliated or associated persons acquires beneficial ownership of 10% (or 20% in the case of a passive institutional investor) or more of the Company's common stock ownership (including any common stock in respect of certain derivative securities that increase in value as the value of the Company's common stock increases or that provide the holder with an opportunity to profit from any increase in the value of the Company's common stock, that are disclosed pursuant to a Schedule 13D or Schedule 13G under the Securities Exchange Act of 1934 or, if not disclosed on a Schedule 13D or Schedule 13G, if the Company's Board of Directors determines that such person is deemed to beneficially own the common stock in respect of such derivative securities) or commences a tender offer the consummation of which would result in ownership by a person or group of affiliated or associated persons of 10% (or 20% in the case of a passive institutional investor) or more of the common stock, subject to certain exceptions, the Rights would entitle the Company's stockholders, other than the acquirer and its affiliates and associates, the opportunity to purchase for each share of common stock owned, $24 worth of shares of the Company's common stock having a market value of twice such price. In addition, if the Company is acquired in a merger or other business combination transaction after a person or group acquires 10% (or 20% in the case of a passive institutional investor) or more of the Company's outstanding common stock, the Rights would entitle the Company's stockholders, other than the acquiror, the opportunity to purchase for each share of common stock owned, $24 worth of shares of the other party's common stock having a market value of twice such price.
Prior to the acquisition by a person or group of 10% (or 20% in the case of a passive institutional investor) or more of the Company's common stock, the Rights are redeemable for $0.001 per Right, subject to adjustment, at the option of the Board of Directors. The Rights will expire at the close of business on March 5, 2016. The Rights distribution is not taxable to stockholders.
eastunder
10 years ago
Rating Action: Moody's affirms MagnaChip's Caa1 ratings; outlook remains negative
https://www.moodys.com/research/Moodys-affirms-MagnaChips-Caa1-ratings-outlook-remains-negative--PR_318642?WT.mc_id=AM%7eWWFob29fRmluYW5jZTQyX1NCX1JhdGluZyBOZXdzX0FsbF9Fbmc%3d%7e20150216_PR_318642
Global Credit Research - 16 Feb 2015
Hong Kong, February 16, 2015 -- Moody's Investors Service has affirmed MagnaChip Semiconductor Corporation's Caa1 corporate family rating, as well as the Caa1 senior unsecured bond rating on its USD225 million, 6.625% notes due 2021, following the filing of the company's restated financial results with the Securities and Exchange Commission (SEC) on 12 February 2015.
The outlook on the ratings remains negative.
MagnaChip filed its financial statements for the fiscal year ended 31 December 2013 (FY2013) on Form 10-K, which also included restated financial statements for 2011 and 2012. In addition, the company filed its quarterly reports on Form 10-Q for the first three quarters of 2014, with each report including the comparative quarterly financials for 2013 on a restated basis.
RATINGS RATIONALE
"The rating affirmations reflect MagnaChip's vulnerable business and financial profile, as revealed in its most recent filings of financial statements for the reporting periods from 31 December 2011 to 30 September 2014," says Annalisa DiChiara, a Moody's Vice President and Senior Analyst.
The impact of MagnaChip's restatement of its revenues and earnings was more significant than Moody's had expected. In particular, the restatement adjustments on revenue recognition were the most severely negatively affected in the first nine months of 2013, and totaled USD78 million, and additional factors contributing another USD2 million.
Company explained that the revenue adjustments were mainly related to correcting the timing and amount of revenue recognized on the sale of products sold through certain distributors.
The company also made adjustments to costs, which, when combined with the revenue adjustments, resulted in a restated operating profit for the first nine months of 2013 of just USD6 million; an amount which was significantly lower than the USD84 million the company had originally reported for the same period.
"Moreover, the weak financial results for fiscal year 2013 and also in the first nine months of 2014 indicate significant operational challenges, which, when coupled with the company's high level of expenses related to the restatement process and legal costs, have significantly deteriorated the company's profitability and cash flows," adds DiChiara.
According to the restated financials, the company reported a 9% year-on-year fall in revenues in 2013, and a 5% fall for the first nine months of 2014. The company attributed some of the revenue decline to a slower than anticipated growth of certain high-end smartphone OEMs, and the resultant inventory correction in parts of the semiconductor supply chain.
Lower revenues, combined with lower fab utilization rates, and the slower rate of business development also negatively affected the company's gross margins. As a result, MagnaChip's restated gross margins contracted to around 20% for FY2013 and for the first nine months of 2014 versus 30% achieved in FY2012.
In early 2014, the company started incurring significant costs associated with the internal investigation into the company's internal controls and the restatement of its financials, as well as shareholder litigation. Such costs totaled USD29 million as at 30 September 2014; further widening the company's operating losses, which totaled approximately USD80 million for the 12 months to 30 September 2014.
Moody's notes that the company's profitability and credit metrics deteriorated significantly in 2013 and 2014.
Nonetheless, the company reported a cash balance of USD125 million as at 30 September 2014. While MagnaChip does not have any scheduled debt maturities over the next 12 months, its interest expenses total approximately USD14 million in 2015.
The $225 million, 6.625% senior unsecured notes due 2021 is the only debt outstanding.
On 20 June 2014, the company was served a notice of default for breaching a financial reporting covenant under the bond indenture. Moody's current ratings for MagnaChip assume that the recent filing of the financial reports has cured the covenant breach and has averted a potential notes acceleration, which was due to trigger on 14 February 2015.
Management has also indicated that capex for 2015 will total just USD25 million, an amount which is approximately half the USD50 million three-year average for capex between FY2011 and FY2013. The lower spending will help preserve cash against the backdrop of weak industry fundamentals.
However, Moody's does not expect any significant cash flow generation from MagnaChip's operations over the next 6-12 months, given that the company's operating profit is expected to remain under pressure over this period.
While the company's cash position remains adequate at this time, higher than expected costs associated with efforts to resolve the material weaknesses in the company's internal controls and potential cash outlays associated with shareholder lawsuit, could deplete cash more quickly than Moody's expects, and present a more fragile liquidity position over time, particularly given that the company has no back up banking facilities in place.
Moody's notes that any delay in the filing of its financial reports could once again trigger a breach of the financial reporting covenant under the company's bond indenture.
The negative ratings outlook reflects the challenges the company needs to overcome to restore its operating and financial profile, including generating positive earnings and cash flows, as well as the successful completion of the remediation of material weaknesses in its internal controls.
Given the negative outlook, an upgrade of the company's ratings is unlikely over the near-term.
However, the outlook could revert to stable if the company:
(1) Resumes the timely filing of its financial statements with the SEC;
(2) Successfully turns around its operations such that operating profit turns positive on a meaningful and sustained basis;
(3) Maintains an adequate liquidity profile; and
(4) Demonstrates evidence of improved financial controls and practices.
Furthermore, a change in the ratings outlook would only occur if the pending litigation with respect to the class action lawsuit is resolved, and if the SEC's investigation is resolved, with limited adverse impact on the company's operating performance, including revenue growth, liquidity and cash flows.
On the other hand, downward ratings pressure could emerge if the company:
(1) Fails to file its quarterly statement for 1Q2015 or annual report for 2014 in a timely manner;
(2) Encounters any significant delays or hurdles in completing by 2015, the remediation of material weaknesses in internal controls;
(3) Fails to turn around its operations, such that it continues reporting operating losses; or
(4) Reports cash on hand below USD50 million.
Moreover, any additional findings of material weaknesses related to internal controls and/or any adverse outcomes of litigation or SEC investigation proceedings, such that the company incurs significant cash outflows, will also be negative for the ratings.
The principal methodology used was the Global Semiconductor Industry Methodology published in December 2012. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.
MagnaChip Semiconductor Corporation is a Korean-based designer and manufacturer of analog and mixed-signal semiconductor products, mainly for high-volume consumer applications, such as TVs, PCs, mobile phones, and tablets.
eastunder
10 years ago
Bernstein Liebhard LLP Announces That It Is Investigating Claims Against MagnaChip Semiconductor Corporation
11:26 AM ET, 02/13/2015 - PR Newswire
(1st one of many to come)
NEW YORK, Feb. 13, 2015 /PRNewswire/ -- Bernstein Liebhard LLP today announced that it is investigating possible claims against MagnaChip Semiconductor Corporation ("MagnaChip" or the "Company") (NYSE: MX). The investigation concerns whether MagnaChip and certain of its officers and/or directors have violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.
MagnaChip is a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products for high-volume consumer, computer and communication applications.
On March 11, 2014, MagnaChip announced that it would be restating its 2011-2013 results after concluding that it had "incorrectly recognized revenue on certain transactions."
On March 28, 2014, MagnaChip announced that Margaret Sakai had resigned as CFO and executive vice president, effective immediately, and that Senior Vice President and Chief Accounting Officer Jonathan Kim would stand as interim CFO until a replacement had been found.
It took almost one year for the Company to figure out its accounting and finalize its restatement. On February 13, 2015, MagnaChip announced that it had completed its restatement of fiscal years 2011, 2012, and the first three quarters of 2013. The restatement was purportedly caused by a host of accounting errors, including revenue recognition, cost of goods sold, inventory reserves, capitalization, expense recognition and allocation, as well as related business practices, for distributor, non-distributor customers and vendors. The restatement was substantial – reducing net income for 2011 and 2012 by approximately 50% and 45%, respectively.
On this news, MagnaChip stock went into free fall, dropping almost 50% in intra-day trading on February 13, 2015.
Jonathan Kim, interim Chief Financial Officer and Chief Accounting Officer for MagnaCip, commented: "The management team and the Board are intensely focused on improving our internal controls, including our control environment and our corporate culture, to ensure that we have the right processes, people and financial discipline in place. We believe we have made solid progress to date, and we expect to fully address all of the material weaknesses in internal control over financial reporting described in our filings today by the end of 2015."
If you lost money in MagnaChip, or are interested in discussing your rights as a MagnaChip shareholder and/or have information relating to the matter, please contact Joseph R. Seidman, Jr. at (877) 779-1414 or seidman@bernlieb.com.
Bernstein Liebhard LLP has pursued hundreds of securities, consumer and shareholder rights cases and recovered over $3 billion for its clients. The National Law Journal has recognized Bernstein Liebhard for twelve consecutive years as one of the top plaintiffs' firms in the country.
eastunder
10 years ago
MagnaChip Updates Timeline for Restatement
SEOUL, South Korea, Jan. 28, 2015 /PRNewswire/ -- MagnaChip Semiconductor Corporation ("MagnaChip" or the "Company") (MX), a designer and manufacturer of analog and mixed-signal semiconductor products, announced today that the Company expects to complete and file its Annual Report on Form 10-K for the fiscal year ended December 31, 2013, which will include its restated annual financial statements for the years ended December 31, 2012 and 2011 (the "2013 Form 10-K"), and simultaneously complete and file its Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2014, June 30, 2014 and September 30, 2014, which will include the corresponding comparative restated financial statements for the quarterly periods ended March 31, 2013, June 30, 2013 and September 30, 2013, respectively (the "2014 Form 10-Qs"), during the week of February 9, 2015, but no later than February 13, 2015.
eastunder
10 years ago
MagnaChip Announces Completion of Audit Committee's Investigation; Update on Restatement Process
November 12, 2014 4:05 PM
http://finance.yahoo.com/news/magnachip-announces-completion-audit-committees-210500117.html
SEOUL, South Korea, Nov. 12, 2014 /PRNewswire/ -- MagnaChip Semiconductor Corporation ("MagnaChip" or the "Company") (MX), a designer and manufacturer of analog and mixed-signal semiconductor products, today announced the completion of an independent internal review into the Company's accounting practices and procedures (the "Investigation") that was conducted by the Audit Committee of the Company's Board of Directors (the "Audit Committee").
The Company previously reported that as a result of the preliminary findings of the Investigation, the Company's financial statements for each of the fiscal years ended December 31, 2012 and December 31, 2011 and the quarters ended March 31st, June 30th, and September 30th in 2013 and 2012 included in the Company's 2012 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q for 2013, and together with all three, six and nine month financial information contained therein, should no longer be relied upon, and that the Company will be restating as appropriate its financial statements.
Legal counsel engaged by the Audit Committee to conduct the Investigation, with the assistance of outside forensic accountants, has recently reported to the Audit Committee and the Board of Directors that the Investigation, which began in January 2014, has been completed.
As previously announced, the Investigation had found that the Company incorrectly recognized revenue on certain transactions when products were shipped to a distributor; such revenue should have been recognized when the distributor shipped the product to the customer. In addition, the Investigation identified the following, among other, undisclosed business practices at the Company's Korean subsidiary (the Company's principal operating entity), that involved a lack of adequate controls and procedures:
various manufacturing-related business practices that facilitated premature revenue recognition on unfinished goods, semi-finished goods, and inventory manufactured in advance that affected revenue and sales targets;
various sales practices that resulted in overstated revenue for particular reporting periods, including premature shipment of products to and pulled-in orders from distributors and customers at quarter end;
cash payments to certain vendors, using expense and capital expenditure accounts at the Company, that (i) the vendors used to purchase products from certain distributors; (ii) the distributors then paid to the Company for those products; and (iii) in turn were applied to aged accounts receivable;
various improper inventory reserve accounting, non-recurring engineering (NRE) accounting, warranty reserve accounting and capitalization of repair expenses as capital expenditures that affected gross margins;
improper allocations of selling, general, and administrative costs ("SG&A") that understated such costs and smoothed the SG&A-to-revenue ratio trend;
improper deferral of outsourcing and free sample expenses that smoothed expense trends;
improper revenue recognition on a gross rather than net basis for certain products and customers; and
various undisclosed business practices and related concessions for distributors and customers (including credit limit increases, payment term extensions, provision of free samples, future discounts, and stock rotations), with distributor and customer consent, that affected the Company's sales.
The materials reviewed during the Investigation did not reveal any evidence that the Company's Audit Committee, the current directors, or the Company's independent registered public accounting firm, Samil PricewaterhouseCoopers ("Samil PwC"), were aware of the undisclosed business practices described above.
In addition to the Investigation, management of the Company has also concurrently undertaken a comprehensive review of the Company's accounting practices during the restatement periods in connection with the preparation of restated financial statements, including a Company-wide review of its revenue recognition practices and policies, and to date has identified certain additional errors and adjustments that it expects to correct as part of the restatement. When completed, the restatement will correct the accounting errors that were identified during the Investigation and review process. Due to the ongoing nature of the Company's internal review and restatement process, the Company cannot at this time provide an estimate of the individual or net effect of these errors and adjustments for any given period, but currently expects that the impact of some of the adjustments on certain periods in the restatement periods will be material. The Company's management and its outside advisors continue to evaluate and review the various types of errors and adjustments that have been identified as of the date of this release, and these adjustments are subject to change until the Company completes its restatement of its financial statements. Additional errors or adjustments may be identified prior to the completion of the restatement, some or all of which may be material to the Company's financial statements.
As a result of the accounting and other issues identified by management and the Investigation, management has concluded that one or more material weaknesses exist in the Company's internal control over financial reporting and that, as a result, the Company's disclosure controls and procedures were not effective as of the end of each of the restatement periods, and that the Company did not maintain effective internal control over financial reporting as of December 31, 2013.
While the Company has not yet completed its assessment of disclosure controls and procedures and internal control over financial reporting for the restatement periods, the Company has already initiated a number of remedial measures that are ongoing in response to the Investigation, including:
the development of more detailed revenue recognition practices and policies, including consideration for sales and payment discounts, price protections, returns, stock rotation, samples, payment terms and credit limit extensions;
the strengthening of the accounting, finance and internal audit teams with additional personnel with extensive US GAAP experience;
the strengthening of overall controls and disclosure processes and systems;
implementing financial accounting and reporting literacy training for the accounting, finance, internal audit and sales teams, including acceptable business practices;
the enhancement of enterprise resource planning reporting to highlight changes in exceptions or sales terms and to prohibit the manual acceleration of inventory through the manufacturing process;
the building of an overall culture of compliance and establishment of a compliance office; and
the development of distributor inventory policy, process and system controls.
Following the Company's initial announcement of the restatement in March 2014, a purported class action lawsuit was filed against the Company and certain of the Company's current and now-former officers. On September 30, 2014, an amended complaint was filed against the Company, certain current and former officers, certain members of the Company's Board of Directors and a shareholder of the Company, alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The Company intends to vigorously defend itself.
The Company is continuing the process of completing the preparation, review and audit of its financial statements for its fiscal year ended December 31, 2013 and its Annual Report on Form 10-K for such period (the "2013 Form 10-K"), and the preparation and review of its financial statements for the quarterly periods ended March 31, 2014, June 30, 2014 and September 30, 2014. As a result, the Company cannot at this time provide specific financial information or operating results for such periods.
Subject to management's completion of the restated financial statements and related disclosures for the restatement periods as well as the reviews and audit to be conducted by Samil PwC, the Company currently anticipates filing its 2013 Form 10-K by January 30, 2015, with the quarterly reports on Form 10-Q for the first three quarters of 2014 to be filed as soon as practicable thereafter. However, because of the nature and amount of work that needs to be completed to file the 2013 Form 10-K, the Company cannot be certain how much time will ultimately be required to complete the restatement process and accordingly there remains a substantial risk that additional time will be required.
About MagnaChip Semiconductor
Headquartered in South Korea, MagnaChip is a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products for high-volume consumer applications. MagnaChip believes it has one of the broadest and deepest ranges of analog and mixed-signal semiconductor platforms in the industry, supported by its 30-year operating history, a large portfolio of registered and pending patents, and extensive engineering 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.
eastunder
11 years ago
MagnaChip Provides Update on Financial Statement Review
- Announces Non-Reliance on Previously Issued Financial Statements
- Appoints Jonathan W. Kim Chief Accounting Officer
- Estimates Year-End 2013 Cash Balance of $153.6 million
PR Newswire
MagnaChip Semiconductor Corporation
17 hours ago
http://finance.yahoo.com/news/magnachip-provides-financial-statement-review-201000122.html
SEOUL, South Korea and CUPERTINO, Calif., March 11, 2014 /PRNewswire/ -- MagnaChip Semiconductor Corporation ("MagnaChip" or the "Company") (MX), a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products, today announced that the Audit Committee of the Company's Board of Directors has determined that the Company incorrectly recognized revenue on certain transactions and as a result will restate its financial statements. This conclusion is based upon preliminary findings of an ongoing internal review into practices and procedures by management, conducted at the Audit Committee's request by outside professional advisors and after consultation with management and the Company's independent auditors. Revenue on these transactions was recognized when products were shipped to a distributor but should have been recognized when the distributor shipped the product to the customer. As a result, revenue on these transactions will be reversed and recognized in the period when the products were shipped by the distributor.
MagnaChip Semiconductor logo.
The correction of the Company's revenue recognition methodology will be applied retroactively, which the Company currently expects will require the restatement of its financial statements for each of the first, second and third quarters of 2013 and 2012 and for the years ending 2012 and 2011. Accordingly, the Audit Committee has determined that the Company's financial statements for each of the fiscal years ended December 31, 2012 and December 31, 2011 and the quarters ended March 31st, June 30th, and September 30th in 2013 and 2012 included in the Company's Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q for such periods and together with all three, six and nine month financial information contained therein, should no longer be relied upon. Therefore, all earnings press releases and similar prior communications issued by the Company as well as other prior statements made by or on behalf of the Company relating to those periods should not be relied upon. In addition, as a result of this correction and associated ongoing internal review and its expected impact on the Company's fourth quarter 2013 financial statements, the Company is withdrawing all prior financial guidance for fourth quarter 2013.
The Company does not anticipate that the restatement will cause any changes to the previously reported cash and debt balances as of the end of each of the periods being restated. Based on preliminary unaudited results, the Company currently estimates that its balance of cash and cash equivalents as of December 31, 2013 was approximately $153.6 million.
The Company expects that the primary impact of the correction of prior revenue recognition errors will be to recognize revenue on certain transactions in the periods in which the distributor ships the products to the end customer rather than the periods in which the products are shipped to distributors. This correction is not expected to impact revenue generated from the Company's non-distributor customers. The Company's internal review including a review of the practices and procedures that led to the errors, preparation of fourth quarter and full year 2013 financial statements and restatement of prior periods are not yet concluded, and the actual impact of the revenue recognition corrections and other matters that may arise from the ongoing internal review on the Company's prior and future financial results may vary materially.
As a result of the preliminary findings of the ongoing internal review and restatement, management is continuing to assess the Company's disclosure controls and procedures and internal controls over financial reporting. Nevertheless, management has concluded that one or more material weaknesses exist in the Company's internal controls over financial reporting and that, as a result, internal controls over financial reporting and disclosure controls and procedures were not effective. As part of the ongoing internal review and restatement, new Chief Accounting Officer Jonathan W. Kim will work with the Company's outside professionals to review and make those changes to the control environment necessary to improve the procedures related to revenue recognition under US GAAP.
As a result of the ongoing internal review and information known to date, the Company does not expect that it will be in a position to complete the restatement and preparation of its fourth quarter and full year 2013 financial statements and audit and file its Annual Report on Form 10-K before its due date of March 17, 2014. Accordingly, the Company expects to file a Form 12b-25 with the Securities and Exchange Commission and currently does not expect that the restatement and Form 10-K will be completed and filed within the 15-day extension period.
The Company also announced today that it has appointed Jonathan W. Kim as Senior Vice President, Chief Accounting Officer and principal accounting officer of the Company, effective immediately, and expects that Mr. Kim will assist in the financial statement restatement, accounting policy change and evaluation of internal controls associated with the Audit Committee's internal review. As a result of Mr. Kim's appointment, Margaret Sakai, Executive Vice President and Chief Financial Officer of the Company, will no longer serve as the Company's principal accounting officer.
Mr. Kim brings more than 15 years of experience in corporate accounting, finance, financial reporting and internal control and financial statements audits serving numerous privately-held and US publicly traded companies, including foreign private issuers located in South Korea. Prior to joining the Company, Mr. Kim served since July 2010 as the Chief Financial Officer of Startforce, Inc., a VC backed desktop virtualization company, which was acquired in February 2011 by Zero Desktop, Inc., a Silicon Valley based global provider of next generation cloud operating system, cloud service brokerage and Android platform extender solutions for telecoms, service providers, OEMs and ISVs, where Mr. Kim continued to serve as the Chief Financial Officer. Mr. Kim also served since September 2009 as the Chief Financial Officer and Principal of Booga Ventures, a Silicon Valley based private investment and advisory firm. Prior to that time, from January 2000 to September 2009, Mr. Kim served as an Audit Senior Manager with Deloitte & Touche in San Jose, California and Deloitte Anjin in Seoul, South Korea.
About MagnaChip Semiconductor Corporation
Headquartered in South Korea, MagnaChip is a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products for high-volume consumer applications. MagnaChip believes it has one of the broadest and deepest ranges of analog and mixed-signal semiconductor platforms in the industry, supported by its 30-year operating history, a large portfolio of registered and pending patents, and extensive engineering 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.
eastunder
11 years ago
MagnaChip to Present and Discuss Growth Opportunities and Strategies at Two Investor Conferences in September
SEOUL, South Korea and CUPERTINO, Calif., Aug. 26, 2013 /PRNewswire/ -- MagnaChip Semiconductor Corporation (MX), a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products, today announced that management will be presenting and discussing the company's growth opportunities and strategies at the following investor conferences in September:
•2013 Citi Global Technology Conference, New York City, September 4, 2:20 p.m. ET. Presenting is Margaret Sakai, EVP and CFO, and Brent Rowe, EVP of Worldwide Sales.
•Deutsche Bank Technology Conference, Las Vegas, September 10, 8:40 a.m. PT. Presenting is Sang Park, MagnaChip Chairman and CEO.
(Logo: http://photos.prnewswire.com/prnh/20120305/NY61184LOGO)
The presentations will be webcast live and archived on MagnaChip's investor relations website at www.magnachip.com.
About MagnaChip Semiconductor
Headquartered in South Korea, MagnaChip Semiconductor is a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products for high volume consumer applications. MagnaChip Semiconductor believes it has one of the broadest and deepest range of analog and mixed-signal semiconductor platforms in the industry, supported by its 30-year operating history, a large portfolio of registered and pending patents and extensive engineering and manufacturing process expertise. For more information, please visit www.magnachip.com.
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