MagnaChip Reports Results for Third Quarter 2020

 

 


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








Three Months Ended






Nine Months Ended




September 30,


June 30,



September 30,


September 30,


September 30,




2020


2020



2019


2020


2019


Operating income


$

3,223


$

8,622


$

14,336

$

17,810


$

18,034

Adjustments:




















Equity-based compensation expense



2,101



1,503



430


4,366



1,661

Inventory reserve related to Huawei



2,331






2,331



Expenses related to Fab 3 power outage



1,168






1,168



Others








554



585

Adjusted operating income


$

8,823


$

10,125


$

14,766

$

26,229


$

20,280

We present Adjusted Operating Income as supplemental measures 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, (iii) Expenses related to Fab 3 power outage and (iv) Others. For the three and nine months ended September 30, 2020, inventory reserve related to Huawei eliminates a $2,331 thousand excess and obsolete inventory charge that we recorded in relation to the US Government's export restrictions on Huawei. During the same periods, expenses related to Fab 3 power outage eliminate $1,168 thousand related to the write-off of the damaged work in process wafers and charges for facility recovery. For the nine months ended September 30, 2020, others primarily eliminates non-recurring professional fees and expenses incurred in connection with certain treasury and finance initiatives incurred during the three months ended March 31, 2020. For the nine months ended September 30, 2019, others eliminates a $0.6 million legal settlement charge related to dispute with a prior customer and a legal expense related to the indemnification of a former employee, which was borne by us under a negotiated separation agreement during the three months ended March 31, 2019 .

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